WMTA Shares these commentaries, without taking a position unless otherwise noted, to bring information to our readers To view the archives of the Tax Foundation of Hawaii's commentary click here. Weekly Commentary
For the Week of May 28, 2017 Human Casualties at the Legislature By Tom Yamachika, President Our legislature this year has had several casualties. We expect quite a few bills to be tossed aside during the legislative process. However, in recent years we have had more than the average number of human casualties, the most recent being Speaker of the House Joe Souki and Senate Ways and Means Chair Jill Tokuda. The casualties in this legislature were not limited to those two. Rep. Beth Fukumoto used to be the House Minority Leader, which made her the ranking Republican in our legislature (our Senate has no Republican members this year). She was deposed and replaced on February 1st. Rep. Angus McKelvey from Maui was chair of the influential House Committee on Consumer Protection and Commerce, but was shown the door on March 13th in a three-way switcheroo of House committee chairs. Significant shake-ups occurred in the Senate two years earlier. Senate President Donna Kim was given the boot on May 5, 2015, the last day of the 2015 session. Four days earlier, Senate Health Committee Chair Josh Green was stripped of his chairmanship in the thick of conference committee negotiations over the medical marijuana bill. These politicians are still alive and well, and they all still hold seats in the current legislature. But it can't be a pleasant experience having a Trump-type "You're fired" resolution with your name on it being discussed and voted on in a large Capitol auditorium with the outcome predetermined. The question I have is this. If there is a position taken by a committee chair on one bill or one issue that is not reflecting the wishes of the committee, why can't the committee simply reject the chair's recommendation and take the position they need to? Or why can't the body come up with a different position in a floor vote, which is not at all uncommon and was in fact done this year (leading to the second Senate conference draft on the rail bill SB 1183)? The legislative system is set up so we don't need to expect the chair to be right 100% of the time. In these instances, all of the legislative leaders worked really hard, were familiar with the issues, and came to a reasoned judgment. Everyone went along with the chair 98% of the time. In Chair Tokuda's case, for example, the "unreasonable" position of giving the City no surcharge extension was in Senate Draft 2, which was approved by her committee 8-0 and by the full Senate 25-0. Senate members who want to express concerns or displeasure have the option to vote “Aye with reservations” as well as “No,” but no one did either. And then, of course, literally hundreds of other bills passed through her committee with no visible indication of dissent. To be fair, we can't see what went on in the back rooms, where the committee chairs can quietly kill bills by refusing to schedule a hearing or vote on them. If a committee chair is abusing power or acting despotically, stripping away the position may be appropriate; barring that, the strong committee chair system is designed to give chairs a great deal of discretion, and when that discretion is used to someone’s disadvantage both the system and the person using it bear responsibility. In most places, if you get it right 98% of the time you won't get a pink slip. In our legislature, you can get the ax. It's hard to imagine a more thankless job. Except, maybe, being on the board of directors of a condominium association. If we want talented people serving us in the halls of our legislature, we can’t get in the habit of switching them around like the Flavor of the Month. We need to figure out a way to treat them with dignity. WMTA Shares these commentaries, without taking a position unless otherwise noted, to bring information to our readers
To view the archives of the Tax Foundation of Hawaii's commentary click here. Weekly Commentary For the Week of May 21, 2017 A Raid by Any Other Name... By Tom Yamachika, President We have written before about GEMS (Green Energy Market Securitization), a program adopted by our state government in 2013. The state wanted to facilitate the buildout of “clean energy infrastructure,” a necessary step to reaching its clean energy goals. GEMS was supposed to be a financing program that provides low-cost capital to finance solar photovoltaic systems and other clean energy improvements for those who may otherwise have difficulty obtaining financing for these projects. Low-credit homeowners and renters, as well as nonprofits, are among those who qualify for project financing through GEMS. The “securitization” part refers to how the State was going to get the money to loan out, by borrowing $150 million on the bond market. That debt would be repaid, with interest, by the “Green Energy Infrastructure Fee” which is paid by everyone who gets an electric bill. For residential customers, the fee is around $1.50 per month. It is determined by the Public Utilities Commission (PUC), and the fee amount changes every six months or so. Commercial customers, of course, pay more. According to a report prepared by DBEDT at the end of 2016, principal and interest on the bonds is approximately $13.4 million per year. Of the $150 million borrowed on the bond market, the cash deployed at the end of March 2017, according to GEMS’ most recent quarterly report, was $2.8 million, meaning that less than 2% of the cash the State borrowed has been deployed. There are also staggering administrative costs, $2.2 million since program inception, that were necessary to set up the program and maintain it to date. GEMS, as a program, has been a miserable failure, resulting primarily in a large wad of cash that is just sitting in the bank. That’s why our legislature got the bright idea to “use” it to prop up another miserable failure – the “Cool the Schools” initiative. Under the latter initiative, our legislature appropriated $100 million in 2015 for heat abatement measures to help kids in our sweltering public schools. But between normal procurement efficiency (or lack thereof) and a myriad of special requirements that were tacked on to the bill authorizing the program, contractors were bidding more than $80,000 per classroom. With 7,000 classrooms in need of heat abatement improvements, the $100 million didn’t go very far to solve the problem. So this year our legislature passed a bill, HB 957, authorizing the DOE to borrow $46.4 million from the GEMS program at an interest rate of Z-E-R-O. Because there are real costs to borrowing money, including the debt service that is now being paid on the $150 million in bonds, it is obvious that the bill forces the GEMS program, and its stakeholders the utility rate payers, to subsidize the DOE. This raises constitutional issues because it is taking a public expense and making it fall exclusively upon utility rate payers, who derive no special benefit from having cooler classrooms. There may not even be a need to pass the bill. The PUC has already authorized the DOE to borrow up to $60 million for energy efficiency and heat abatement projects in PUC Order 34421. The interest rate approved by the PUC was a fixed rate of 3.50% -- probably better than any loan obtainable commercially, but still arguably fair to GEMS and the utility rate payers. This is just one of several bills now awaiting action from the fifth floor of the Capitol. We’ll be writing about more of them in the weeks ahead. WMTA Shares these commentaries, without taking a position unless otherwise noted, to bring information to our readers
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