 Hi, I'm Jay Fidel. This is Sink Tech Hawaii on a given Thursday, and it's Talking Tax with Tom. That's Tom Yamachika. He is the president of the Tax Foundation of Hawaii, and we gain so much knowledge and insight from him. Welcome back to the show, Tom. Morning, Jay. How are you doing? Thank you for having me back on the show. Absolutely. So let's talk about the title question is what's happening with the procurement code in the state in the face of all these chained proclamations? The finding terms, Tom, what is a proclamation and what is a chained proclamation? And then I'm going to ask you, what is the procurement code? OK, so today we're going to be talking about not so much the tax part of state government but the spend part. The procurement code, which is what we're going to get to in a moment, tells us how we can spend the money that the legislature has appropriated. But before we get there, we probably realize that we're under a state of emergency. And the proclamation is the piece of paper that the governor signs to tell all of us that we are under a state of emergency. And he then, with that piece of paper, invokes some emergency powers that are granted to him under our laws. Whenever you have an emergency, the governor has the right to do a few extra things. So one of the extra things that he gets to do in an emergency is he gets to spend laws that interfere with the orderly operation of emergency response. Things that make it tough or inconvenient or inappropriate to do when you have an emergency. But the initial emergency proclamation was, as you might imagine, some months ago. So emergency proclamations only last for 60 days. But what the governor has been doing, he's been chaining them. And what I mean is, before the end of the 60th day, he issues another emergency proclamation saying, oh, we're still in emergency. I still find that we're in emergency. And then the end date is 60 days from that proclamation. We are now on the 12th supplementary proclamation, which is the 13th in the series. And this obviously has been going on a very long time, since each one can last up to two months. So we're on the 13th, 12th supplementary proclamation. And there are 20 pages of laws that are suspended. And just as a general overview, one of the things that we talk about in government is buying things, or procuring things for the use of government. And this is governed by a procurement code that tells people when they need to go out for bids, what kind of competition are they looking for, when you have exemptions to competition, and when losing bidders can fight and do what's called a bid contest. In one sentence, in the 12th supplementary proclamation, and of course in a few before that, the entire chapter constituting the state procurement code is made inapplicable. It's suspended in total. So where does that leave us in terms of the government being able to buy stuff? Well, what that means is the government can buy what it wants, when it wants, and is answerable to know it. Wow. So in an ordinary time, pre-COVID, the procurement code had some troubles. I mean, there was always a lot of criticism of the procurement code. And as you say, there were contests under the provisions for contesting the awards of procurement code contracts. It was never a wonderful time. And a lot of people didn't like it. A lot of people criticized it. There have always been efforts to try to fix it, make it more equitable, make it more, we call it, incorruptible. More fair. More fair, thank you. And it never really came to rest. And I don't know, I haven't done the data on this, but I imagine that the number of contested cases and other litigation that flows from disagreements under the procurement code in this state have probably increased, just as state spending has increased. And I suppose this happens in a lot of states, because every state has a procurement code. But I suggest, and I'm interested in your thought about it, is the procurement code has not been a better roses here in Hawaii, am I right? Well, it's better than nothing. And nothing is what we have now. Yeah, let's talk about that. What you imply in your comment that what the governor could have done is just take out the part, for example, that slows everything down for the three bids, whatever it is, the bidding process, and streamline the bidding process. But I guess he didn't want to go to the trouble of doing that. What I think the governor should have done is that if the agency had a real bona fide emergency purchase, something they had to do because of COVID-19, you could have the director of the agency certify, hey, we're doing this because of the COVID-19 emergency, and then it goes through without being burdened by the law. But the procurement code applies to all government purchases. It applies to public-private partnerships. It applies to the stadium. It applies to RAIL because I think it also applies to two city procurement. So why do you think he cut it with this kind of dull ax and by just taking it all out in total right away in one sentence instead of done a more surgical job on it? My guess, and it's purely a guess, is that he went to his agency as in he says, OK, now that we're in an emergency, what has prevented you from doing your job? And one of the comments that came back was, well, we've got to go out for bids and do emergency purchases and stuff. And the governor said, OK, fine, we'll get rid of that. They come back and say, well, people from the press and from the public pester us for information and government records all the time. OK, we'll get rid of that, too. Oh, we have difficulty under the open meeting law, the sunshine law, because we're not even opening the buildings. So how can we get the public in there? OK, fine, that can go, too. And it went something like that. A wish list of whatever troubled anybody, we just repeal it, make it disappear for the duration of COVID. That's what it sounds like. It's the easy way. It didn't require a lot of work. I mean, nobody sat and drafted on this and nobody sat and figured out what residual provisions should stay in place. That's interesting. But I think, arguably, he's going on trust. He's saying to his agencies, and I suppose he's saying to his bidders, I'm going to trust you to be fair. I'm going to trust you not to rip off the state. I'm going to trust my agents here, my officials, to behave in a way so that there is accountability and fairness. I mean, don't you think that was his expectation? No, not at all. What was his expectation? I think the first thing that the expectation was was to shut off the information flow. It's too much trouble. We can operate better if nobody's bothering us. So that's why, I mean, that's consistent with, number one, suspending the open records laws, suspending the meeting laws with the chief of staff, Lidita Qayama, going down to the agencies and telling everybody to shut up. I'm talking about the procurement code now. I mean, don't you think his expectation was that people would act in an accountable and honorable and honest manner? I suppose. Whether they actually do that is very much a question. My next question, I mean, are they? Well, we don't hear. That's the problem. The information flow is pretty much stopped. Although the governor has since walked back on his open records request prohibition or suspension. So one side, there's actually three sides to this. One is we're going to suspend it in substance procurement code. Two is we're going to freeze the information. So you won't be able to find out exactly what we're doing. In order to let these contracts. And I guess the third is, does it work? We have emergency things. Nobody can deny that. We have emergency things in terms of getting testing in place. We have emergency things and getting tracing in place and people to do it, both the machinery and the people. And then we have emergency things in terms of managing the lockdown, like quarantine, like the enforcement of the rules that apply to the public and tourists and the like. So query without the procurement code, this kind of dark hole there, is it working? Is he actually having a benefit? Is he able to achieve testing in a way that would reflect the free for all notion of doing it without the procurement code? Is he able to achieve tracing unfettered by the procurement code, a better kind of tracing? Is he able to do the deploy and do what is necessary to handle the enforcement of these things and quarantines in the absence of procurement code? Is it working? I think that's very much open to question. The whole contact tracing effort before pretty much fell flat on its face for several reasons, probably none of which had anything to do with the procurement code. There's now a new leadership in place. The four-person team, as I read, that is handling the contact tracing response. One of the four is not within government. And it seems to be working better. But again, I'm not really sure that the procurement code had anything to do with it. Troubles me on that is that for a time, thanks to some special federal money from the Surgeon General, we were able to do a free testing. And that stopped suddenly without a replacement, without any continuity. And now that's no longer available, no longer happening. It strikes me that if you wanted to continue it, you'd have to acquire test kits. And you'd have to arrange people to make that happen. And that would be covered by either a procurement code process or no procurement code, one way or the other. And I don't see anything happening to replace the Surgeon General's Initiative. So where a few weeks ago, I could have gotten a free test in a number of places very quickly, very easily, that's no longer available. So I'm saying, why didn't the state continue that and perpetuate this very important benefit? Well, that's a very big question. I mean, we had talked in an earlier show about the appropriations that the legislature had made of the emergency monies that we got from Uncle San. And how a number of them were a line item vetoed by the fifth floor. And that kind of left me scratching my head in and of itself, because why are you restricting your own agency's flexibility to use the money that never came from you in the first place? But that's what they did. And it really doesn't, it's not obvious to me where the authority for any further spending over and above the caps that were line item is coming from. I don't think the governor has inherent authority to spend money. He's got to be appropriate at that by the legislature. That's a job. Why do I feel, Tom, that if you were the governor, or if I were the governor, or if the two of us were working together as governor, we would have found a way to perpetuate that test program, because we would have realized it's critical to suppressing the curve. Right. I mean, what is currently happening is, again, very much open to question. There is new leadership. That said, new leadership hasn't been in place very long, and we're not really sure what they're doing. And we, I guess, in fairness, need to give them some time to come up with their plans and their expectations and their program for how. You know what, Tom, I don't agree with you about that. We're in an emergency. You mentioned that. All this is an emergency. I wouldn't give them any time. They have to hit the ground running. I don't, you know, somebody said, oh, they're going to need two or three months to get their act together and be able to do anything. That's really not acceptable. They have to do it right now. They have to step in and do it right now. Furthermore, I don't think if you asked a person on the street, who are they? He would know, or she would know. They haven't really talked to us. They haven't said what their plan is and what they intend to do and how they want us to be confident and why. I don't think that's acceptable. We're in an emergency. Nobody is telling us, nobody is doing anything. They're all getting ready for some next chapter. Not acceptable. Yeah, I agree with you on that front. I mean, we are in very trying times and we need swift responses and we don't seem to be getting it. If that means they have to work 24 hours, work 24 hours, lives are at stake. This is not casual. There are no weekends here. Anyway, that's- Yes, the virus doesn't recognize weekends at all. Yeah. So anyway, let's go to the next one, tracing. Tracing is very problematic. And I suppose that in a world of procurement code, you would go out and you would get machines, you would get software, you would hire people, you'd have to go through all that process and it would take you a while in the state of Hawaii to organize a tracing program with the machines and the software and the people and the space, I suppose. And now we have a bit of a scandal, a disruption, call it, of what was going on before, which was inadequate. And we're supposed to be, now we're supposed to be tracing. And so my question to you is there's the lack of the procurement code because of the emergency, the chained emergency proclamations help. Have you seen it help? I haven't seen where it makes a difference. But again, I'm not really questioning the need for speed in procurement when it comes to actual emergency stuff. I'm questioning the need for getting rid of the procurement code in areas where there is no emergency. What the heck does Honolulu Rail have to do with emergency? What the heck does the Lola Stadium have to do with the emergency? And both of those projects are going to involve billions of taxpayer dollars with a B. I got it. Well, you mentioned there's been what, a dozen of these proclamations and they've pretty much all said the same thing. We are repealing temporarily the procurement code. So if anybody there on the fifth floor was listening or thinking about this, they would say, well, you know, maybe that was a little bit too broad. Maybe we really don't care about rail right now. We care more about testing and tracing and quarantines and enforcement of these rules, like safe space. And so maybe we should revise this general statement and the proclamations, all of them, one after the other all chained together. Maybe we should get smarter about it and limited. So it doesn't apply to rail and it doesn't apply to the stadium. It only applies to things that are truly emergency. But that hasn't happened, has it? No. The, and as you said, the reaction of the administration has been to eliminate stuff with a broad brush. We're not just getting rid of the part of the law that impedes our ability to function in emergency. We'll get rid of the whole law. Yeah. The entire chapter goes down to 2Bs. Right. And we'll make it open swath here. It's the parting of the Red Sea, no law. On the other hand, now that we have this open channel without law, we actually don't do anything. That's very troubling to me. We should have found a way to obtain test kits galore here for everybody as much as they wanted and free and apply all the resources necessary to test everyone anytime. We should have done the same thing with tracing. We should be tracing galore. And I can tell you from the people I've spoken with in the tech community that the Department of Health hasn't really tapped into their expertise. It hasn't asked them to create the dashboards and the software and the tracing database functionality that could make Hawaii, you know, that we could suppress the curve. We haven't done that. And I would say our tracing program for all that I know and I think I do know is on yellow legal pads. That's how we keep a record of this. That's how our tracers trace to the extent we have tracers. Now, a real procurement would have involved A, emergency over the weekend overnight and B, it would have gotten procured, all these things that we need to do this right away. We haven't done it. We're a banana republic on this. And so we need to have more than two fax machines. Exactly. Receiving reports of the contact tracing program. Yeah. And I guess, you know, the other point, I'm not sure how it connects up. Maybe you can think of how it does. I mean, is the enforcement of these rules, the enforcement of social distancing, the enforcement of masks, you know, the enforcement of the quarantine. You know, I firmly believe that when a tourist tells you, hey, I'm not getting pre-checked, but I will stay in my hotel room for two weeks after I get to Hawaii, looking up at the sun in the sky and the surf and the ocean and the hula girls, I'm gonna stay in my hotel for two weeks. I don't believe that's being done. I don't know how the police can ever enforce. And we have, one of our hosts goes out on Waikiki Beach with his cell phone. And he takes pictures of all these people on the beach without masks and without social distancing, only a few yards away from the police station there on Waikiki Beach. And you say to yourself, exactly what resources shall we be putting into trying to enforce the quarantines or the social distancing rules or the mask rules? It's really remarkable. I don't know if that's subject to what we're talking about here today, the procurement law, but it's certainly a failure. In fact, I think we have a multiple, a multilateral failure of our efforts to stop the COVID. Well, I mean, certainly the loosening of the restrictions on the procurement code was, you know, looking at it charitably, intended to help speed agencies' response. But I think you bring up a great point that okay, where is the agency response? We got to see it. We got to see that it's coming and it's coming quickly and it's coming, you know, in the speed that is normally associated with the emergency that it is. Is that happening? No. No, and frankly, if I was procuring, you know, I did see one advertisement on television and said, where am I asking? It was by the state health department. But I mean, I think they ought to be literally covering the media with warnings, with dramatic warnings, emergency warnings, about having people follow the rules. People are not following the rules. They say that the police have given 44,000 tickets out. Actually, most recently, 55,000 tickets, you know, for violation of social distancing or masks. Whatever that is, whether it's true or not, it's not working. Surely there's a way to make that work. And people are snubbing their nose at it. Tourists are snubbing their nose at it and nobody is applying the resources and the will, you know, to make it happen. If we made it happen, we would be able to suppress the curve, for sure. Yeah, one of the things that helps in the enforcement effort is trust in government. You see it on Kauai. People trust their government in Kauai. You know, the entire population turns into vigilantes and they're getting a lot better in terms of enforcement because you take off your mask in view of somebody on the street. That person on the street is gonna call the cops. You know, walk with it as it happened. So Tom, here we are talking about the procurement code and how it's been effectively repealed for the duration really, whatever that may mean. I mean, whether it's three months more or six or nine or a year or more, who knows whether a vaccine will work or even be accepted by the public. But my question to you is if you were running this, if you were running the law end of it, the procurement code end of it, what would you do? I mean, the answer may be obvious from our discussion, but here at the end of the show, I would like to ask you that. What would you do? Again, I would go back to something along the lines of, if it's a real emergency and it can be certified as such and probably be by the department head or wherever, let it go through. But if it doesn't have anything to do with the emergency, follow the rules, like the literature enacted them and was signed into law beforehand. And what about the funding? I mean, you're into that for the tax foundation, right? I mean, would there be a question of funding and to the extent that funding is necessary, even quote, emergency funding and quote, in the context of all that we've seen come and go this year, what would you do to make sure there was funding? Well, we would, I think need to get the legislative leaders and the governor on the same page and figure out who's spending what and if the governor is basically going hog wild and saying, well, I don't really care what the legislature does. I don't care what I line that in veto and I'm gonna spend the money the way I want. You know, we need something to ensure that our system of government just doesn't break down. Because it's, there's a danger that it would devolve into some kind of dictatorship. Yeah, I was gonna say, you know, to me, the takeaway from all of this is that emergencies like COVID test the quality of our leadership and we can see much more clearly how qualified our leaders are. They also test our adherence to the rule of law and to our respectful law. And I guess in this case, you can- And our confidence in government, yeah. Yeah, we haven't done a good job. So this is good that we have this discussion and we take a look at it. I hope somebody's listening, Tom. Very important points. Thank you very much for appearing today and for this discussion. And thank you for having me on the show, Jim. Aloha.