The following analysis of SB 2401 SD1 HD1 by a legislative insider raises a number of significant questions. The bill in its final form suspends the high tech tax credits for several years. Given all the controversy over these tax credits over the past two years, it may not be a surprise that legislators are not anxious to put the issue front and center again, but the history of this measure raises real procedural issues. I’m taking the liberty of sharing it in full.
In a few hours, if all goes according to their plan, SB 2401 will become the ultimate case study on how power brokers and insiders manipulate the legislative process to pass bills without public comment and review. I am not aware of the full extent of the collaboration, but I share the facts and let you judge for yourself.
Here are the facts:
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SB2401 is introduced by Senator Kim (click here for the text of the original version). The bill does nothing. There is no reason that it should be introduced, but it is carefully drafted to ensure that the referral is only to the WAM committee that she chairs.
SB2401 is referred to WAM and is scheduled for a public hearing on 2/10/2010. No public testimony is submitted. WAM amends the bill to insert a defective effective date.
SB2401 SD1 is passed on 3rd Reading by the Senate on 3/2/2010 by vote of 24-0, with one excused.
SB2401 is referred to FIN committee only.
SB2401 is scheduled for public hearing on 3/29/2010 on the 6:00 pm agenda. No public testimony is submitted. After hours and hours of testimony on other bills (there were many agendas scheduled for FIN that evening), the FIN committee guts SB2401 in the early morning hours (the hearing went through the night into the early morning hours of 3/30/2010 – I’m not certain when decision making occurred on SB2401, but the hearing was reported to have concluded after 4am – not certain how many in the public remained for decision making) and inserts new language. The Committee report identifies that the contents is conceptually similar to HB 2962 HD1.
SB2401 HD1 passes 3rd reading in the House on 4/6/2010.
SB2401 is scheduled for Conference Committee meeting on 4/10/2010.
Senate Conference Managers recommend that the Senate agree to the House amendments on 4/10/2010.
SB2401 HD1 is scheduled for Final Reading on 4/13/2010 (the vote was deferred to 4/14/2010).
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Some rambling thoughts as I reviewed the history of this bill.
This vote may be historic…it will be the first time that a bill is passed and the public record is completely empty. No public testimony was offered at the public hearings. Somebody may add something to the public record later to cover-up the action.
Someone, or many people, very familiar with the inner workings of the legislature and the process, planned and executed this action. I don’t have any specific evidence, but every action needed to occur to get this specific result.
The EDT committee had a hearing on HB2962 HD1 (the House identifies it at conceptually similar to SB2401 HD1), and deleted it to insert new contents. HB2962 is in conference and could be passed. I doubt the Senate EDT committee would pass the contents of this measure, so the process to pass SB2401 was designed to circumvent that committee.
I recall that Senator Hanabusa was a party in a lawsuit that was successful in overturning a law because it did not have the Constitutionally required 3 readings, I don’t remember the details of the lawsuit. Maybe she learned something that drove this process on SB2401. Is there an advantage for the legislative history on a measure to be empty?
I don’t see any reason to fast track this action, but House leadership and Senate President/WAM Chair is pushing the vote…
I was not able to do a detailed review of HB2692HD1 and SB2401HD1, but I noticed that one is 4 pages, and the other is 13 pages long.
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Your legislative insider writes, “I don’t have any specific evidence, but every action needed to occur to get this specific result.”
Wha? The point being?… A tautology needs no evidence to be true. Heh.
However, the public record is “empty” only if you ignore the testimony submitted on the bill that FIN acknowledges is being substituted for SB 2401, i.e. there was testimony for HB 2692 in both the House and Senate.
Meanwhile, on the same Act 221 credits topic, check out the post by Jeff Au at the Hawaii Reporter. I am not a lawyer, but I’d love to see the arguments for and against Mr. Au’s clients prevailing in a lawsuit.
This comment is duplicative of one I typed in a few minutes ago, but I’m not sure if that one went AWOL, or if you’re using an approval queue.
Oops, make that HB 2962, vice 2692.
Technically, the only constitutional requirement (aart from the requirement that each bills shall embrace but one subject) is that the bill pass three readings in each house. Art III, sec. 15.
SB 2401 is not “retroactive” at all and what’s more tax legislation may legally be retroactive. Congress does it all the time. The bill merely suspends the ability to use the credits for 3 years. After that, the credits may be used until exhasted.
Ian, I haven’t come to a final conclusion about the propriety of this practice but will leave you and others with the following to inform the discussion.
Altho’ you do not mention it here, this bill is the “sister” of SB2402 that you discussed last Friday (because of its then proposal to suspend the GET exemption for condo repair/maintenance transactions). These are de facto “short form” bills that serve as vehicles into which legislators/chairs/the legislature dump other/additional contents that may or may not have been heard in another bill. Typically, before doing so, the committee will publish a proposed draft and hold the hearing on that version rather than putting brownie mix into the oven and pulling out a surprise bundt cake, so to say. That did not happen in the case of either bill. Brownie mix went in, bundt cake came out. I don’t know if it was an intentional act of deceit or just use of a device that recognizes a 60 day session is so short that “vehicle” bills must be kept moving and available to deal with exigencies as they inevitably arise during session.
As for your contributor’s comments about historic, empty record, and cover-up, I have my doubts. I’ve seen many bills with little testimony, although I can’t recall one that drew none at any hearing in either house. As for cover-ups in the form of testimony added later, that also seems like a stretch, in my experience. As I said, I think these bills were introduced to provide vehicles for later use but I doubt it was with the intention to ultimately pass this particular legislation. The money chairs often feel hamstrung by the actions of subject matter committee chairs who can be sort of qualitative pie-in-the-sky policy types whereas the money chairs are the ones who have to be quantitative balance the revenue and expenditure sheet types. With Council on Revenues reports coming in mid-session, it’s hard to predict just what will happen. All of that being said, this technique is anti-democratic, even if not ill-intended.
As for the reference to HB 2962, in its original form it proposed a three year suspension of certain of the high-tech tax credits (contrary to popular notion, it is not a single credit), was later changed to a proposal to implement the multi-state streamlined sales and use tax agreement, and now contains a five year suspension and the multi-state agreement. Not a terribly unusual evolution of a bill and not unusual that more than one measure contains similar proposals.
The case to which your contributor refers is the Hawaii Supreme Court decision Taomae v. Lingle in which legislation proposing a constitutional amendment was found unconstitutional. The constitutional amendment was added to a House bill by the Senate (specifically, by the Judiciary and Hawaiian Affairs Committee chaired by now Senate President Colleen Hanabusa), received third and final readings, and went to the Governor. The Court ruled that the bill was defective because its title did not disclose the fact that it ultimately proposed a constitutional amendment and because that amendment had not received three readings in each house.
The handling of SB 2401 is perhaps qualitatively different than the bill in Taomae. No constitutional amendment is proposed. The subject matter, however different from the start is within the scope of the title. And just how would one design and apply a rule that tries to discern the point at which amendments to a bill make it so different that it then needs three additional readings in each house?
Food for thought. In the meantime, SB 2401 was recommitted to conference committee today (4/14), perhaps because of the concerns raised here, perhaps because of the substantive issue involved (suspension of the tax credit), perhaps because it is needed for other purposes and its substance has been or will be addressed in another bill. SB 2402 has been deferred until 4/27 perhaps because it will be used to make final tweaks to the revenue picture once the budget bill is put to bed. Or not.
ohia,
SB 2402 is the one that was recommitted to conference committee, while SB 2401 was deferred to 4/27.
Fair enuf; must’ve inadvertently flipped ’em. Still, the point is that, contrary to Ian’s contributor’s point (“I don’t see any reason to fast track this action, but House leadership and Senate President/WAM Chair is pushing the vote…”), neither bill is being fast-tracked or pushed by leadership for a vote, at least not any more.
I totally agree on your points, ohia. 🙂
a couple weeks ago, when your blog inspired me to review Native Alaskan issues, I remember finding that MISC provision in a Federal act that paid a Native Alaskan tribe $4 million because there was a controversy between the tribe and the Pearl Harbor shipyard
that is the federal model — if you are powerful — just slip $4 million in for someone to fix something
I believed Obama’s very loud campaign pledge — no more earmarks
well, I got fooled again
no earmak
Speaking of taxes, any word on the bill that proposes to tax purchases made over the Internet? There was a very brief mention in the ‘Tiser two or three weeks ago, but nothing since.