Category Archives: Legislature

Conflict of interest issues worth debating

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The Center for Public Integrity and AP cooperated in an investigation into conflict of interest in state legislatures that resulted in a series of stories published earlier this month.

My own view is that the effort failed to make clear that certain conflicts are unavoidable, that there are different kinds of apparent conflicts, and that not all conflicts need to be avoided. By failing to make this distinctions, the series unfortunately contributed to cynicism among voters by holding out an unrealistic standard of an entirely conflict-free, and by implication interest-free, political process.

A story published on December 6, 2017 presented an overview (“Conflicted Interests: State lawmakers often blur the line between the public’s business and their own“).

State lawmakers around the country have introduced and supported policies that directly and indirectly help their own businesses, their employers and sometimes their personal finances, according to an analysis of disclosure forms and legislative votes by the Center for Public Integrity and The Associated Press.

The news organizations found numerous examples in which lawmakers’ votes had the effect of promoting their private interests. Even then, the votes did not necessarily represent a conflict of interest as defined by the state. That’s because legislatures set their own rules for when lawmakers should recuse themselves. In some states, lawmakers are required to vote despite any ethical dilemmas.

The also provided a briefer overview via a Q&A (“Q&A: What we learned from digging into state legislators’ disclosure forms“).

And, finally, there’s a series of state-level stories, including one from Hawaii (“Hawaii lawmakers used to hearing about potential conflicts“).

If you’re interested in the conflict of interest issue, you might want to at least skim through some of these stories.

I’ll come back to the issue later and explain my problem with this approach in more detail.

Follow the money: It was about development

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Judging from the money reportedly spent on lobbying, the special legislative session on rail was really all about development.

Organizations that paid for lobbying during the brief special session reported their expenditures last week. Their reports were filed with the State Ethics Commission and are posted on the commission’s website.

The first column of numbers are the cost of lobbyists during the session. The second column represents the total amounts spent by each organization.

It’s probably no surprise that the Committee for Balanced Transportation, known variously as “Go Rail Go” and “Friends of Rail,” was the primary conduit for pro-rail lobbying. Most of the other organizations that reported spending (but paid no lobbyist fees) simply reported contributing to “Friends of Rail” or one of the alternate names for the same group.

These details are contained in the actual reports filed with the commission. There are links to the documents in the commission’s summary display of lobbying reports.

In fact, with the various names in use, it’s difficult to know whether “Go Rail Go”, “Friends of Rail”, and Committee for Balanced Transportation are legally one and the same, or whether they are parallel organizations with overlapping donors and participants.

But the large majority of reported expenditures were either contributions to this entity, or expenditures by the group. And almost all of the money spent by Committee for Balanced Transportation and its alter egos went to Anthology Marketing Group for its pro-rail media blitz.

Move Oahu Forward was the only other group to spend significantly on their own activities. The group is registered by Jennifer Sabas, formerly top aide to the late Sen. Daniel Inouye. Nearly half of of the group’s reported $45,000 was paid to Sabas. About $12,000 went to advertising, and more than $11,000 was paid out for unidentified consultants.

Click on either table below to view a slightly larger version.

Lobbying expenses during the 2017 Special Legislative Session reported to the State Ethics Commission.

Committee for Balanced Transportation provided a simple table showing its major expenditures and its sources of funding, which was attached to their report to the ethics commission. It’s included below.

It’s a pretty narrow range of interest groups that put up the money for pro-rail lobbying, isn’t it?

[note: I’ve been blogging this week using only my iPad, and it’s less straightforward than a laptop as a blogging platform (although I’ve managed so far). But things like resizing images isn’t straightforward, which has been an issue. I’m managing, but I wouldn’t call this a total laptop replacement yet. However, I did make use of split screen and drag & drop for this post. Although there’s a learning curve, these should help.]

Rail bill permanently shifts hotel tax $$ away from neighbor islands

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If you wonder why neighbor island legislators are angered by the using the hotel room tax to pay for Honolulu’s rail system, check out Nancy Cook Lauer’s story in Sunday’s Hawaii Tribune Herald (“Who pays the price? Many on Big Island not on board to fund rail for Honolulu“). It’s an excellent story, pinning down Big Island legislators, but it also caught a key part of the rail tax story of special relevance to the neighbor islands that hasn’t gotten much attention.

She writes that the proposed changes to the state’s hotel room tax will take a “temporary” reduction in the neighbor islands’ share of the tax and make it permanent, costing each of the counties close to half of what they were receiving prior to the recession.

And to twist the knife a bit more, setting a permanent cap requires walking past the recommendation of group appointed by the legislature itself, which advised that the share of the tax allocated to the neighbor islands should grow as the total amount collected grows.

Lauer explains:

Lawmakers favoring the measure say the bill increases the $93 million TAT cap for counties to $103 million and makes it permanent. That raises Hawaii County’s share from $17.3 million to $19.2 million.

That still falls far short of the amount the counties used to share before the amount was “temporarily” capped during the Great Recession. The Legislature’s intent at the time was to return to the original formula once the economy stabilized.

The purpose of the cap was to “temporarily increase and preserve the amount of state revenues derived from the transient accommodations tax and is a necessary component of the package of legislation aimed at addressing the state’s current economic crisis,” according to a 2011 conference committee report signed by former money committee chairmen Rep. Marcus Oshiro and Sen. Donna Mercado Kim.

Under the old formula, Hawaii County would have received $37.2 million for the 2015-16 fiscal year, according to calculations based on the state Department of Taxation’s 2016 annual report.

In response to a $20 million budget shortfall, the Hawaii County Council and Mayor Harry Kim raised property taxes and gas taxes this year.

“We’re going to have to tax the public even more, and that’s something we don’t want to do,” Okabe said. “It’s not fair.”

A 13-member State-County Functions Working Group established in 2014 by the Legislature recommended a formula allowing county TAT revenues to grow as the visitor industry grows, rather than being capped at a set amount. The Legislature set up the working group after conceding that the TAT allows the counties to better provide for public safety, parks, road maintenance and visitor-related services.

“The increase and permanent cap on Hawaii Island’s share of the TAT is an insult to our island families and is a pittance from the state,” Kahele said.

You have to wonder whether this is going to do longer term political damage to Honolulu-Neighbor Island relations.

House reorganization continues

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First came the word that two members of the House Finance Committee–Isaac Choy and James Tokioka–had been removed, to be replaced by two votes considered more loyal to House Speaker Scott Saiki.

The move meant that Choy, an accountant who was in a position to raise informed questions about the proposed rail financing, will be shut out of the committee-level questioning and debate, definitely muting his voice.

That’s unfortunate. Although I sometimes differed with Choy’s take on specific issues, his professional background as an accountant provided insights that would otherwise be absent.

Choy and Tokioka’s removal from Finance was part of the committee reorganization spelled out in House Resolution No. 3. According to the status report, HR3 has yet to be offered. I have yet to go through it carefully to see if other changes are also included.

In other leadership changes, House Resolution 2, adopted yesterday, dumped Marcus Oshiro as Majority Policy Leader, and removed Ken Ito as Majority Whip. Check the link to see the new House leadership lineup.

But this is really background noise to the contentious rail debate.

Don’t forget that you can read the first day’s rail testimony here, with late testimony added here.