 To talk story with John Whitehead, here we are another Monday with another interesting guess and subject. As you all know, the Hawaii State Legislature just adjourned its 2019 session last week Thursday. So I have with me this afternoon Colin Moore, the Director of Public Policy at the University of Hawaii, Manoa. So we are, you know, he is our, what, our university expert. I suppose so, what a pleasure to be here. You are. So we're going to talk about this recently ended legislature, but first of all, welcome. Thank you. Thank you. You've been here before and as usual our listeners have enjoyed your wisdom, so we're going to give them another shot at it. I'm excited. There's a lot to talk about. All right, let's get started. But before we, you know, we get to a lot of meat, let's start with the, with dessert. Now, as I understand it, there's this tradition that's evolved at the, at the legislature where, well, back in my day, back a long time ago, we used to do our own Hawaii Aloha. You know, the house did it and the Senate did it. But over the years, they've evolved this idea of all coming together and doing it as, you know, one massive entity and yet this year, this year, apparently, the Senate leadership anyway, moved over to the house and tried to get in and they couldn't get the, no more. The door was locked. They were locked out. They went home already. Yeah. So what have you heard? I mean, was that deliberate or was that, or? I don't know if it was deliberate, but the relations between the Senate and the house aren't so good. They weren't so good this session. Really? Partly because the Senate leadership was incredibly frustrated because the house didn't send people to conference committee. I mean, they, they, they used this hardball tactic of refusing to send representatives. So the Senate was forced to either pass the bill in the House version, the House version of that bill or nothing at all. And the Senate leadership was extremely angry about that. In fact, Senator English had some, some choice words to say on, on Hawaii Public Radio about it. He was really frustrated that the house wasn't sending representatives to conference. But the speaker, the speaker appoints the conferees. I mean, at least that's the nominal power of the speaker. And so he wouldn't appoint the conferees or the conferees just, as a tactic, just refused to show up. They weren't, they weren't being appointed. And they, and so there wasn't anyone to negotiate with. And that was really frustrating to, to the Senate. Now, as I understand, they weren't even appointed. Oh, really? Now, maybe, maybe there are some, it may be a varied by bill. I'm not, I'm not sure exactly. But that's what I've heard. And so when the senators went over this time to sing, they found that they were locked out. And who knows if that was on purpose or not? Well, I'm sure that we got people saying that it wasn't, but, but nobody knows for sure. And it sort of is the, well, the icing on the cake, you know, they, they get locked out. Exactly. It's the perfect metaphor for the session. Right. So they're not exactly standing around doing Hawaii. No. So, okay. So the session ends with its usual four parts, right? That's right. I mean, the role was locked. And, and now let's talk about what they accomplished. Now, in the beginning of the session, there was a lot of talk about, well, I guess illegal rentals. Oh, yeah. All the, all the Airbnb illegal renters vacation rentals and maybe, maybe you can come back to that because at the start of the session, people did think they were going to deal with that. But if you, if you think back to what people made a big deal about and what Governor E. Gay made us his priorities in the state of the state were things like early childhood education. And we've been working on this for years here, Governor Abercrombie worked on it. We're one of, you know, we're one of the few blue states that doesn't have it. Even Oklahoma has universal pre-K education. So Governor E. Gay wanted to make that a priority. And then he had this really innovative and pretty radical housing policy where there was going to be condos built on state land with 99 year leases. And this was going to make a dent in our affordable housing crisis, sort of based on what they've done. So both of these programs were touted by the, by the E.G.A. administration. The E.G.A. administration. He just won a reelection. And if I remember correctly, they also seem to have been at least given some verbal support by the leadership of both houses. Absolutely. You know, the other thing which we'll talk about too, minimum wage, everyone was talking about that. Senate President Ron Cochise said it was a priority and an early childhood education. You're right. Maybe the support might have been a little softer for the housing program, but the champion of that was Senator Stanley Chang. So it had some legislative support for sure. But the housing that really didn't go anywhere. Early childhood education, a little bit of money, but just to build it in 10 more classrooms. And of course, minimum wage failed, which I know is a disappointment to a lot of people. But what's the why behind all of this? You know, that's a great question. So the first, for the housing issue, I think it was just too radical. I mean, the Hawaii legislature is a cautious group of people. Yeah, it's amazing because, you know, oh boy, where do we start with that? Because, you know. Was it always that way? Was it that way? Well, actually we were, the legislature were a bunch of radical conservatives. I mean, in personal, you know, in some respects, the people that came out of the 442nd Revolution and the Democratic Revolution and the rest of it, in some respects, were very, from very traditional backgrounds. But politically speaking, they were revolutionary. I mean, Hawaii was, you know, the first state in the nation for doing this and the first state in the nation for doing that. You've got universal health care, you've got workers' compensation, all of these things. First state to legalize abortion. Legalize abortion. And all of a sudden, you know, as their grandchildren, at least metaphorically speaking, start to take their seats in the legislature, it's not the same. I mean, they may be coming from less traditional backgrounds, but their politics have gotten very conservative. I don't know what's happening. I think that's right. I think it's that they, it's not that they're ideologically conservative, right, but it's that they're really cautious. I think they don't want to do anything that would upset them. Well, there's this whole thing about not being the one that will get caught. Exactly. No one wants to make a mistake. No one wants to do anything out of the ordinary. And so then the easiest solution when there's a tough problem is to just not do anything, which they've been pretty good at. Or to do something that is, you know, pie in the sky and call it a great victory. Exactly. I mean, we did not pie in the sky. I shouldn't say that. But universally, you know, because they did pass. This legislature did pass, for example, all mail-in voting. Sure. And I guess for the next election. 2020. That's right. So the guys, so we are trusting the people who couldn't pull off the last election, well, to go out and completely redo the system in two years. You're saying you don't have a lot of faith? No, no, no. You know, I'm a fan. I am a fan of the idea that the elections should remain with, should have remained with the lieutenant governor. Well, that's, yeah. When you were a lieutenant governor, that's how it worked, right? Because I want to, I want to know, I want, when the election is happening, I want to be, I want there to be someone who's sweating blood and tear, you know, just sweating blood that everything will go perfect, as opposed to people who are, you know, in a sense, bureaucrats. Sure, sure, exactly. Just bureaucrats. No, I know the bureaucrats like the fact that they're bureaucrats and everybody else likes that. I mean, it's smacks of professionalism. But when nobody's sweating that the ballots were accurately counted, that the laws were taken. You know, I mean, you're sitting as lieutenant governor and you're in charge of elections and nothing else, essentially. You sort of know that your whole re-election rises and falls on somebody in the chain, making a stupid mistake, you know, and yeah, it's, I prefer that system. But anyway, they had a chance to do something radical about housing and they didn't do it. Was there a lot of opposition to it? There wasn't so much opposition. I think there just never was given a chance. I mean, it got a lot of attention, and there were a couple of hearings, but that was sort of it. I mean, I think it was just thought of as too much too soon. And I know that there is this study group that's going to Singapore this summer to explore these options. Go see the crazy rich Asians. Yeah, right, exactly. I want to see that hotel in Singapore where you... Oh yeah, the Floating Boat Hotel, yeah. So they're going to Singapore, they're going to learn, it's ironic, isn't it? I mean, people used to come to America to steal our, you know, the way we make cars and everything else. Now we have to go there. And find out how they build houses. Exactly. It's going to be tough to bring that model over here, though. I mean, first, Singapore is in a democracy. We should be real clear on that. Right. And the second thing is their construction costs are a lot lower, and that's one of the reasons we have such a challenge building affordable housing. When everybody wants to pass minimum wage, why didn't it pass? You know, that to me is really discouraging. And the claim was that there were some legal questions about whether or not they could set the minimum wage at 15, but then make it 13 for employers who provided healthcare for their employees. And so there were concerns that there might be a legal challenge around those issues. But that was really just the excuse. Yeah. You know, I think they heard a lot from small businesses that are already struggling, that were worried they weren't going to be able to meet that. Well, I know a number of small businesses who, you know, really were adamantly opposed to there, especially restaurant. Yes. The restaurant industry tends to be the most vocal about that because their profit margins aren't too big to be able to... And because they know that their employees make tips. So assuming that that's all kosher and being done correctly, I can see where for that group of people, there is actually another way to make money, it's not dependent on your salary. I remember when we were involved, when I was involved with hotel negotiations, the lowest paid person in the hierarchy of hotel employees actually ended up making the most money. And the lowest paid person was the doorman. Oh, because of the tips. Yeah, the doorman then was the most prized job in the entire employee hierarchy outside of management. And those, in fact, I know a lot of doorman who would refuse management jobs so that they could get paid minimum wage, opening doors for people, and every time they did that, you know, they would get a tip, you know, and so I can see where there are industries that made... But still, still, it was a priority, everybody acknowledged, and I can't, well, I don't know, maybe the lobby against raising the minimum wage is stronger than we think. And I think they feel like they have some more time, I mean, that this is something they can address in the next session. Except you're the person getting paid. Right, if you're the minimum wage person, this isn't so great for you, and to me, the strange thing, too, is all of the issues that came up could have been anticipated ahead of time, you know, that there was going to be this issue about employers who pay health insurance, there was going to be this issue where they might want to try to give a tax break, a little tax credit to small businesses to help them absorb the cost. So it's not as if these were unanticipated issues, I sort of think that they decided they weren't going to deal with this session from the beginning. You know, this is a very interesting session, because there were a number of issues that seemed like they were, like there was an invisible hand to quote Adam Smith, except this may be a negative one or maybe good one, depending on your point of view, an invisible hand, like guiding the machinations, the political movements of the legislature, you know, and not necessarily the same hand, but they seem to be a lot of undercurrent, you know, most of the tax bills failed, I mean, the increase in the GET to fund the DOE and UH, even the cigarette tax bill failed, and usually they can, you know, they go after smokers, that's usually a pretty easy sell, but that didn't happen. A lot of these breaks for working families didn't pass, increasing the food credit, increasing the renters credit. Well, here we are, you know, the democratic, most democratic legislature in the country acting like we could have been in North Carolina, you know, a little bit more progressive in the South. Anyway, we're going to take a short commercial break and come back, and we're going to start picking the brains of the University of Hawaii Public Policy Center. Aloha, I'm Gwen Harris, the host here at Think Tech Hawaii, a digital media company serving the people of Hawaii. We provide a video platform for citizen journalists to raise public awareness in Hawaii. We are a Hawaii non-profit that depends on the generosity of the supporters to keep on going. We'd be grateful if you'd go to thinktechhawaii.com and make a donation to support us now. Thanks so much. Hello, I'm Lauren Pair, a host here at Think Tech Hawaii, a digital media company serving the people of Hawaii. We provide a video platform for citizen journalists to raise public awareness in Hawaii. We are a Hawaii non-profit that depends on the generosity of its supporters to keep on going. We'd be grateful if you'd go to thinktechhawaii.com and make a donation to support us now. Thanks so much. Welcome back to Talk Story with John Wahee. Today we're doing our recap of the 2019 legislative session with the director of the Public Policy Center at the University of Hawaii, Colin Moore. Colin, we were just before the break talking about the fact that a lot of the initiatives that would have helped the individual families with their tax code and given them something, none of that passed. None of that passed. So we talked about this food tax credit, a renter's credit, a whole lot of these things to cut folks' taxes a bit because we know that our GET ends up being a really regressive tax system. Everything is taxed. So it really hurts poor folks a lot. And this didn't pass. And you know, one thing I want to point out, I mean, this along with the housing bills, all of these cost of living issues for the most part didn't pass. Yeah, see, I'm saying these are cost of living. And that was the big thing, the big thing. Every politician that I know, you know, maybe there might be one legislator someplace that I, you know, haven't, but almost every one of them talk about the need to do something about the cost of living. And this is because this is reflected in the polling. 80% of people say that it's cost of living is our number one concern. There's a poll that showed, and this to me was pretty shocking. 45% of people in this state have considered leaving because of the cost of living. Yeah, I think that's the conversation. When you ask people why you go into Vegas, nobody's going to say because I want to play at the, you know, at the California hotel. Exactly. Every weekend. What they're going to say is because I can buy a cheaper house. Exactly. I, you know, I can get a job and live with the same salary I'm making here. And so, you know, this, then we have this extraordinary situation here where, you know, this is a beautiful place to live with a strong economy. And yet, Hawaii's population has decreased for two years in a row. Yeah, which is very, very unusual. Yeah. And, you know, okay. And then so, but what, well, you know, you look at the minimum wage issue and it can go both ways. I mean, if you're a small business person, not passing minimum wage was a victory for fighting the cost of living. But on the other hand, if you had to earn a living here, you know, that meant that you keep being underwater. Yeah, or you've got to have a couple of jobs because even, I mean, from what I understand, the calculation is $17 actually would get you to be about a living wage and even 15 going up to that wouldn't quite cut it. But it's a lot better than 1010, which it is right now. Yeah. And then, well, let me ask you a question, though, they did raise the tax on and despite formidable opposition, I mean, back, I still heard the, the ad, I was listening to Hawaiian kind radio this morning, and that's a tip if anybody's and because they're still playing the advert advertisements against Oh, the reads raising the tax on read. Yeah. That so that that was a little surprising. I didn't, I didn't, I didn't think that was going to go through. Do you think it had anything to do with the fact that a lot of these reads used to be Hawaii corporations that pay taxes that, you know, transition into read so they could avoid paying the same tax. I think that's exactly it. So there's not a lot of political sympathy for, you know, the now reads that you stayed at one day were part of the big five and invented themselves. I mean, they're not a very politically sympathetic group. And so I think that that was a little less risky. But they also tend to have pretty powerful lobbyists. And this is, this is unique in the United States. I think we're the first state to have a tax reads this way. Well, yeah, because the whole idea of a read was to have a vehicle that would avoid corporate taxation, and not personal tax tax, income tax, but corporate. Right, exactly. And so here, you know, people are, well, we're now taxing REITs in Hawaii. So we'll see whether all the doomsday predictions come to pass, whether it even makes a difference if they did. Now, on the other hand, one major cost of living factor in Hawaii is the cost of energy. So did have the legislature do anything in that respect? As far as I know, there wasn't any big, big energy related bill this year. I mean, they still have these clean energy goals that that they've been moving forward with. But in terms of reducing the cost of energy, this this wasn't really a session that I mean, no one really talks about it. But you know, I just came back from Washington state. And I got to tell you, because I'm involved with a company up there, it makes a big difference. I mean, there are some things in Hawaii that, you know, land, for example, is going all Wisconsin is scarce. So in no matter what, we'll probably be on the more expensive side of the continuum. But when you with the company that that I was working with, got charged three cents an hour of power. And if we bought that company back to Hawaii, which is what I would love to do, we would have to pay 38 cents a kilowatt hour. And I'm thinking to I mean, we can't do it. It's all that hydropower in Washington state. There is cheap power. And one of the things that's happening in Hawaii, as a matter of public policy, is the divide between those that can afford to buy cheap power up front, and those that get stuck after everybody else leaves. Yeah. And so I don't know whether things people are doing anything about it. But the other area which I thought, you know, the Legislature would act, which apparently they didn't is in the illegal rentals. That's right. So they they they basically the legislature decided to take the money but not worry that most of that money was coming from illegal rentals. Yeah, they set it up so that the computer, the what air Bob Airbnb and home away, these big companies, yeah, what they would have to collect the taxes. Yeah, you know, have we done that for Amazon and the rest of I mean, I remember when console woman Fuku Naga was in the state Senate, that was her perennial bill every year was to collect taxes off of Internet sale. We're doing that now that actually is a bill that passed this session. It got a little less attention. Yeah, but companies, I think they do more than $100,000 of business in Hawaii now will pay GT taxes on online sales. Is that how the air Bob thing will work? No, that's that's very different. Because I mean, well, not very different, but I think a little different because the issue there is the Airbnb companies essentially want to say, we're not going to give you data on who and where these Airbnb is are, trust us, we'll collect the taxes and we'll write a check to the state, which sounds like it'll be about $46 million. The trouble with a lot of senators was that this makes it look like the state of Hawaii is complicit in breaking its own laws, because it knows that a lot of that money coming from rentals that that shouldn't exist to begin with or are illegal according to city and county regulations. And the legislature came back and said, look, this isn't a state problem. This is a city and county problem. Talk to the council. They have these regulations, they should enforce them. The real trouble here, I think, though, is that in everyone knows this, in some ways, the state has become a bit addicted to Airbnb because we've gone from 8 million tourists to 10 million tourists. We thought of me the whole time. Those two million extra people are staying in Airbnbs, yeah. Yeah, but you know, yeah, so we, you know, in terms of I, well, I come as I told you from the Lee Catalina, you know, way of thinking, which is people weren't interested. If you ask the public, they're not interested in how much money your budget, the budget got right from these illegal rentals, they wanted to stop. Well, that's their word. It's destroying their neighborhoods. And if you go to Kailua, you can, you can see the effects of that. Oh, yeah. Or it's, it's, it's extraordinary. Well, I went up to see a former president, Senate president, Dicky Wong, in Paolo. Oh, yeah. Right up in Paolo, which is a basic family neighborhood. I mean, the thought that it would ever become a tourist haven is like, I don't think that entered anybody's mind. So I went up to see him. He's bedridden, unfortunately, and isn't able to get around. But when right next to his house across the street, where these two huge places, the monster houses, yeah, and they had something like 24 bedrooms and you know, it's like that. And these are my, my, my, I guess, orientation to monster houses. I mean, what do you got? Every room is a self-sufficient unit with its own bathroom. And I guess not technically a kitchen, because it's a hot way, or a micro way. Oh, right. Yeah, a hot plate, though, like the old hot plate type thing, you know, you got it. And so it's not completely, you know, you can't do it. But and I'm thinking to myself, if the president was still functioning, I think we would have stopped. Yeah. Well, and this is an example of what happens when you keep kicking the can down the road. People knew this was going to become an issue 10 years ago or more. But they never really got together with the city and county to regulate it properly. And so now it's exploded. It's so big. It's hard to imagine how you do it. This is going to be an issue for the next man, the next memorial campaign. Oh, absolutely. Not all of this stuff. This is what people are furious about. So if I would, if I was a man right now, and I wanted to run for a higher, for another office, I would be taking care of this problem. And if I was a councilman or any other politician planning to run from here, one of the questions you might get asked on the trail is what's your credentials for dealing with this problem? I think that's exactly right. This this along with rail, because this is something people can really understand. You're right, these obscure financial issues and how much tax money the state is taking in that. That's a little more difficult. But this really hits people in the back, you know, and, and, ultimately, I think these Cataluna is right. I mean, that's not really the issue for people get out of it. Well, I got to tell you, though, it was an interesting session. It was an interesting session where because it seemed that there was, it seemed like we had all the momentum going for progressive issues and very few of them passed. Exactly. And so then the question is, so what, how are they? Are they progressive Democrats? I mean, they like to they like to use that rhetoric. And so does the governor. So what's holding them back? There's only one Republican in the state Senate. It's not an opposition party. You know, it's, it's well, it's gonna be our challenge. We got nine months to look for a solution and see what happens in 2020, our new upcoming legislative session. I want to thank our guests this afternoon, Colin. Thank you so much for being here. It's always fun to join you to get your insight on our politics, public policy in Hawaii. So we'll come back in two weeks. Aloha, everyone.