 I'm Jake Fidel. This is Talking Tax with Tom Yamachika, the president of the Hawaii Tax Foundation. Good morning, Tom. Nice to see your smile and face. Morning, Jane. Thanks for having me on the show once again. Well, we're talking today about, you know, government transparency, I guess, and the reliability of government information. And for that matter, the application of the Constitution. We've talked before, you know, about being able to get information from the government. The Supreme Court on two occasions in the last few days has made it clear the First Amendment religious freedom is more important than COVID. I personally don't agree with them about that. But you know, we have constitutional questions, information questions, and reliability, transparency, those kinds of questions, and we have those questions right here. So what about questions involving tax receipts and the public fiscal operation and policy? What about reliability? Yeah, I wanted to talk about that today, Jane, because of the famous saying that, you know, there are lies, damned lies, and statistics. And when you look at the numbers that the government's throwing out at you, it's easy to get misled, and you have to kind of like maybe do a little bit more work to, you know, see what these numbers are actually saying. So I mean, you take a look at the department's website right now, the Department of Taxes website, and to their credit, they have set up a data page where they are, you know, showing some real-time graphs of collection reports, they have historical data, all tax types, you know, that kind of good stuff. And when you look at that, you look at, you know, the big figure in the upper right hand corner, and it says, general fund receipts fiscal year to date are down 8% from last year. And then you look at that and you think, oh, that's not bad. 8% is not a severe contraction. I mean, it's, you know, not as good as one would like, but, you know, 8% is not a bad thing. But then you have to realize a couple of things that go into it. Number one, for individual income tax, which makes up a large portion of the collections, the other big taxes, general excise, of course, then kind of everything else when added together is of the level of, you know, one of those two. OK, but you remember what happened when the pandemic first hit? OK, the governments extended the reporting date for your final income tax returns. So they moved it from April to July. OK, the significant thing about that is that the fiscal year starts in July. So all of these end of year payments that would normally have come in in April in the fiscal year 2019 to 2020 are now getting put into this fiscal year 2020 to 2021, OK, which is making this fiscal year look a lot more rosy than last one. And you can see in the data, in the data graphs that the department puts out, and we haven't come to ours yet, that there is a spike in individual tax collections in the month of July. And this is why. So if you do a direct comparison, you know, just involving fiscal year to date, you're going to be confronted with that effect. That's misleading. A little bit. So what we're trying to do here at the Foundation, we're trying to put the data together, you know, a few different ways. And really, I think the problem that we have to address and we have to address very quickly is what's happening to our business. What's what's happening to our economic engine? Because the businesses are the things that throw off most of our tax dollars in the general excise tax. So so I put together a graph and can we can we go to slide one, please? And what this shows is general excise and use tax data, collections by month. Okay, the data comes from the Department of Taxation. They have collection reports. And here's what the monthly collections look like. Now the gray bars in the back are 2018. The orange bars in the middle are 2019. The blue bars in the front are 2020. Okay, and it's very interesting that when you start looking at May and you're going through to every month after that, there is a lot of daylight between last year's mark and this year's mark. And if you take a look at the graph lines, sometimes it's, you know, one, almost two, sometimes a little bit more than two graph lines. Well, each graph line is $50 million. So we're talking that you have a dip in collections in general excise tax of about a hundred million dollars, which is close to a third of the economic activity that's being reported by the business community. Now, one third is not 8%, one third is 33%. So you look at the, you know, you look at the numbers reflecting business activity, we've got a serious problem. What do you think, Jay? Yeah, well, you know, this goes to a whole public policy thing. And I think, you know, your question really drives to that. Why aren't we getting more accurate, less confusing, less misleading information? And it's hard enough for the press to get it on a specific request or demand. But when it comes out from the tax office, we should be able to rely on it as an accurate statement because we have to plan our business and fiscal juncture on that basis. There should be no question about it. And yet there is. Yeah. Now, the, let me just kind of talk about that article for a second, if that's okay. The Sylvie article was kind of complaining about a problem that we pointed out in the past and we've been in discussions with other nonprofits about this. And that is, you know, for the first few supplementary emergency proclamations, I think beginning with the sixth, we're not up to like 15 or so. But beginning with the sixth supplementary emergency proclamation, they said, basically that the uniform records laws and the open meetings laws were suspended in full. Okay. So, so there were no stands at all for deciding on when and whether agencies have to give public requesters any information whatsoever. Okay. Since our organization, the Sylvie Law Center and a few others kind of ganged up on the attorney general's office to say, well, what the hell is going on here? The governor's office and the AG kind of walked back their suspension and basically said, okay, well, if a public record request comes in, the agency has to acknowledge it, which they didn't have to before. And then, you know, get to it as resources permit. Because, oh my God, I mean, it's a pandemic. So these agencies are busy. Okay. Well, okay. But then, you know, one month turns into two turns into three turns into four. And this is the kind of problem that Christine at Jedra was experiencing. And that's what she wrote about recently being Jiminy Christmas. Why does it take so darn long to get any information out of the government at all? Well, you know, it goes deeper than that. If you permit me a slight digression. I think what she's saying, clear enough, is that they don't want to turn it over. They drag their heels intentionally. You're not a question of resources or staffing. They just don't want to do it. And this is a resistance that's really not lawful, not constitutional either, for that matter. But it's worse than that, Tom. It's a cultural point. I don't know if you've been involved in this in the course of your practice over the years. But I remember being, you know, in the business practice as a lawyer, trying to get information from the government here in Hawaii, and using the Freedom of Information Act through various agencies and finding they just didn't want to give you any information. And then you would say, look, you're under law, you're obligated to provide this information within certain deadlines. How about it? And they say, well, you know, we're reluctant. We're not sure that we have to. So why don't you go to court? If you go to court and get an order, then there won't be, you know, any ambiguity about it. Then we'll know that we have to give it to you and then we'll give it to you. So what they did is many agencies, they overlaid the notion of Freedom of Information Act under the Freedom of Information Act statute with their own gloss requiring you to go to court, which cost money and time. And I found that was a regular kind of thing over years and years of state practice. And I think that's deeply embedded in the culture of government here. It's an us and a them thing. And they just don't want to give you information, so they'll find any reason not to. And I think we're seeing that puppets head up now. That may be. Yeah, that may be. Yeah. Anyway, so, you know, the problem is, as I expressed earlier, is we should be able to get good and valid information, accurate information, timely information, timely being a very important word so that we can plan business moves. You know, if everybody's so excited about trying to reopen the economy, any good economic business planner is going to want to have that information to know what the market's like. And if you're not getting good information or timely information, you don't know that. A lot of companies here are dependent on the status of the market, the expectations of the market, the trends of the market, and that means looking at tax receipts. So, you know, I'm very troubled by the article, by Christina, Jedra, and I'm troubled by what you're reporting today. Yeah, I mean, there are many ways to dress up data, even when you're providing the data. If you're not providing the information, then, you know, there's nothing you can do about the data because, you know, you don't have it in the first place. But let me show you something else. Let me show you graph number two. And what we did here was we compared, for any given months, the trailing 12 months versus the prior year. Okay, and what that means is that, for like, for example, the entry under March, it would be from March to last year to March of this year. Okay, and you compare that to the March of two years ago to March of one year ago, and see how much the collections increased or decreased. So, we thought we were faring a little better than last year until about March, April, May. And then we kind of hit the skits. You see that the graph moves down and down and down and down and down, kind of corresponding to the number of pandemic months that are put into the trailing 12 months. So, when you look at this comparison, you know, it looks like we're kind of going into the ash can. And that's, again, just another way of dressing up existing data to kind of show that there is, in fact, a disturbing trend like you mentioned. Well, there is a disturbing trend. You know, I don't have, maybe you can help me with this, I don't have a clear feeling on exactly where we are in the economy. I sense that there's some hotel activity, but that doesn't really affect the level of it. It doesn't really affect the economy in general and why. I think restaurants are largely out of business. I think a lot of, you know, consumer operations are out of business and a lot of them have closed permanently. But so, if you go anecdotally, you say, it's a lot of companies that are going out of business. On the other hand, you go to Alma Juana Center and it's filled with people, people who are much too close. Many are too close for comfort. They're not maintaining social distancing. They're going to the restaurants there last time I looked. And so, it's hard to, you know, make a demographic count or anything, but that suggests that there is an economic activity. So, the average citizen really can't get a handle on exactly how much activity there is, how the changes are, whether it's increasing, decreasing, whether there's promise at the end of the tunnel. I mean, if you look at the number of COVID cases and deaths, you know, that gives you a bit of a handle. Although, as we were talking before the show, it's very anecdotal and it changes from week to weakness. It's hard to get a trend when you only see, you know, the numbers that come at you on a given day. So, how can we best tell, Tom, from government or otherwise, how this economy is doing? Is it on the rise? Is it falling? What are the strong points? What are the weak points? I mean, you and me, we have to rely on government for that information. Is it available or is it accurate? Well, at least some of it's available. I mean, I was very grateful, you know, for the data that I put into these graphs, came directly from the department. The website in theory is supposed to let you download the data into spreadsheet or some kind of usable form. It wasn't doing that, so I had to like copy and paste numbers, but at least in theory, that information is supposedly readily available. The economic data, that's kind of more of D-Beds-Baileywick. They have economists and they have reports that come out periodically, and that's supposed to be looking at our economy. I'm not an economist myself, so I can't say, you know, or I can't really opine on the accuracy or the sufficiency of the data that is coming out. But, you know, from the data that I've seen out of the tax office, you know, we really have a problem with the level of business activity and legislative and executive leadership in our state really ought to be looking at that. And so far, I haven't heard so much about, you know, what they're planning to do along those lines. Yeah, the average business person, manager or entrepreneur, if he sees the trend is this way, you know, he may, I mean, if it's a good trend, he may say, well, I'll hold on. I'll wait. I'll wait for more CARES money or I'll wait for the market to recover and I'll be okay. But if he sees it's declining, that's certainly going to affect his planning into the future for next year. You know, if all you get is this spike information and you get it from the mainland, it may not be accurate for Hawaii, then, you know, you're not playing with a full deck. You just don't know. And I think there are some decisions made by some businesses and investors to kill the business because it looks so bleak when possibly they don't have to do that. Or vice versa, not to kill the business because it looks better than it really looks. We ought to have, you know, more information. And that's why I'm, you know, concerned about the article in Civil Beat. Now, the article in Civil Beat dealt in large part with the police. And the issue of whether a cop who was disciplined for improper conduct, whether that's private to him or public, and of course it's public. And HPT should be making that information available. We have to hold the police accountable on me. Isn't it clear enough from all the protests on the mainland? They have to be accountable. If I did extraordinary that HPT doesn't release that information or that holds up Civil Beat the way they have. But it's not just the police. It's this whole thing about we are only going to spoon feed you. We are not going to allow the people who are actually developing that data to come on the media and tell you. It all has to get vetted through our PR people. And their inclination is always no. Their inclination is always, oh, no, no, no, we can't discuss that in public. And so I think we've lost something. I think there was a time we had this, but I think we've lost something in terms of being candid with the public. Candor being the operative word. Yeah. No, you make a great point. And for there, I need to give some credit to the court system because they've been issuing some very significant rulings that have been cracking down on the proclivity of government agencies to withhold information. There was a very key ruling that came out a couple of years ago that basically said that the, you know, the deliberative process privilege, which is what federal agencies usually lie upon to withhold information, wasn't available here in the state of Hawaii to state agencies. So if the information's there, even if they're looking at it to possibly, you know, come up with decisions or solutions or whatever, they still have to cough up the information. And specifically with regard to the police situation that you were talking about, Circuit Judge Dean Ochiai recently ruled against the police union and said, you know, this information is public, you got to cough it up or the HPD's got to cough it up. Yeah, I'm at the good point and good for him, kudos to him for that ruling. We have, you know, it seems to me that if you want to really change the culture on this, it takes leadership. I mean, if the governor said, I want you guys to share information, and I never want to hear that your, you know, stonewalling requests for information to the press or otherwise. And the same thing with the mayor and the new mayor, I'm confident that Rick Blanchiardi, who is a media guy himself, you know, will recognize this issue and deal better with it. But this idea of us and them really has to go away. The way it goes away is by the leadership, by the governor and by the mayor. The mayor is, I should say, county by county. And if we have that, I think this could change overnight. It's not like you absolutely need to have a court case, or for that matter, you know, a statute. You can have the leader of that particular jurisdiction say, okay, I want us to be candid. That is my policy. And I wanted to filter all throughout my government, every man, woman and child in my government. Wouldn't that be able to change this? Wouldn't that be easier on everybody? Including the tax foundation, including, you know, businesses, hither and yonk. Well, of course, I mean, that's the, I think that's the ideal solution that, you know, a chief executive or maybe more than one chief executive, because, you know, we do have different levels of government comes out and says, you know, this is our policy. And hopefully it'll permeate through the industry, the culture of government. To, you know, share information with, you know, our bosses, which is the people who elected us and put us here. Yeah. But there could be more, more public expression of this. I mean, for example, if I'm a business person, and I say, gee, I'm trying to do a business plan here, and I don't have the information, I can't get the information. I'd like to see that business person write an op-ed. I'd like to see him join in this discussion. I'd like to see him say, this is what I need, and I can't get it. Why can't I get it? The public conversation, when I say conversation, I mean, both sides, that is business and government is incomplete. Yeah. So I think there's a real problem with, you know, having people in the business community getting information to government in a way that they will notice number one and number two understand. The plight of the Irish themed and other bars comes to mind because they felt that they had to organize a rally at the state capital in just a few months ago because they were getting decimated because of the punishing stay-at-home restrictions that basically wiped out what is permissible for a bar to do, which is at that time it's always nothing. So did it help? I'm not sure. Certainly, we haven't seen remedial action come out of the state legislature because it's been out of session. The mayor came out with, the mayor of Honolulu came out with the new multi-tiered structure, which is kind of digital for me to understand. And I'm not sure how much, if anything, that helped, but that's kind of what they've come up with. So we have a number of approaches and, you know, thankfully the number of COVID cases seems to be flattening out or going down. So I hope and pray that we're not going to be mired in the situations for too much longer. Well, that's, you know, that's the big question mark, the 64 zillion dollar question mark about whether there's a vaccine, where it goes, whether it's effective, lots of issues about that. And we do cover that in our coronavirus program, which follows this one. But let me say that there are so many variables now that government has to be as smart as it possibly can be. That includes the legislature time. I'm sure you've thought about it and some of them are thinking about it. We can't have a done legislature again. We can't go home in the middle of the session because somebody tests positive. We can't do that. We have to be as engaged or more than ever before. Every single legislator ought to be writing to his constituents and making public statements and engaging with governmental agencies directly for the lack of engagement by the governor. The legislature has to be thinking about how to save the state. These are critical times. It's a time for the legislature to be hyperactive, not, not, um, superific. As opposed to Congress. I mean, you see what happens when Congress goes neutral. I mean, it is neutralized. The state legislature should not be doing, we should be a model for being attentive to the needs of the community, both personal and business. This is, this is a time for the legislature to really take, take, take up a lot of the issues and deal with things. Yeah, I agree. The legislatures primarily are the ones that are supposed to set policy and the chief executives are supposed to be the ones carrying out. For better or for worse, you know, Hawaii does not have, you know, the deep partisan divisions that Washington does. But I think it has its own internal divisions of different kinds and it's just harder to see as a result of that. It's tough to see what's getting done. Um, and, and you wonder if anything can get done given the amount of money that we're going to be short. Uh, let's, let's not, let's not share that problem. You know, if, if our economic engine shuts down, uh, government's going to have a problem because that's their, that's their revenue source. Yeah, so they got to be thinking about that. You know, they have to, you know, think about that really hard, uh, you know, like on an airplane and if those oxygen masks drop, you have a kid, you know, who, who you're going to put the, you know, whose mask is going to go on first, right? Your own so you can survive and save the kid, right? Uh, in, in, in this point in time, you know, uh, the, the attention's got to be given to, you know, saving the economy and then, and then hopefully, um, you know, giving more to, you know, folks who really need it, like the, you know, the homeless and the, um, the working poor and the Alice population, that kind of thing. Yeah, we, we can talk on another show about what happens in Ghosts of Christmas Future if we don't do that. The fact is the federal government has abdicated on the CARES Act. That's the reality of it. They can, they can give you aspirations from various places in Washington, but the fact is, um, the Democrats came up with a, a, a second CARES program in May. Nothing has happened. May is like how many months already? That's six months ago. Nothing has happened. That's leading into the state. And so I think we have to recognize that for the lack of federal attention here, we have to do things ourselves. It's, it's a question of being self-reliant, resilient. And, uh, this is going to be the time for it. We're in a, we're in a great test and we have to pass the test or what's going to happen is people are going to find it impossible to live here. And so, um, it's, it's really all about leadership. And by the way, that includes leadership in the legislature, in the Senate, in the House. And, and there's no room for petty bickering. Um, you know, you, you, you made the point that we don't have a two-party system, two-party squabbles, uh, in the legislature. But we do have squabbles among the one party. We can't afford that. We have to get together on this. That's leadership too. Yeah. So I think part of it's going to be, uh, you know, crossing the ideological divisions, crossing the philosophical divisions, and, and coming up with, you know, consensus plan, nobody's going to get everything they want. But, you know, we're in trouble and somebody's going to do something about it. Yeah. So let's figure out a way to, you know, to save ourselves. Yeah. And part of that is, um, is lobbying, you know, I say lobbying, I mean, expressing policy opinions, comments on policy from the public. And I think it's a time for us to do that. It's a time for the government to hear us. Um, so that means, uh, appearing in the media, it means writing op-ed pieces like you do. Uh, it means generally participating in the fabric of government. They need us. It's so clear. It's always been clear. They need us to speak up and speak up. And so we should continue these conversations, Tom. Yes, definitely. So I guess that means I'll see you another couple of weeks. That's exactly what it means. Tom Yamachika, talking tax with Tom. Thank you so much. See you soon.