Senate Standing Committee on Ways and Means

Okay, calling the 10am Ways and Means Agenda to order. This meeting, including the audio and video of remote participants is being streamed live on YouTube. You will find links to reviewing options for all Senate meetings on the live and on demand video page of our website.

In the unlikely event we have to abruptly end this hearing, the Committee will reconvene to discuss any outstanding business on Tuesday, February 18, 10am in this room. A public notice will be posted on our website for those participating remotely. All testifier audio will be muted and video disabled until shortly before it's your turn to testify.

In an effort to accommodate as many testifiers as possible, we will be enforcing a one minute limit on verbal testimony. A timer will be visible for testifiers. If there are temporary technical glitches during your turn to testify, we may have to move on to the next person due to time constraints.

We appreciate your understanding and remind you that the Committee has your written testimony. If you're interested in reviewing the written testimony, please go to our website. You will find a link on the status page of each measure. Okay, first item is Senate Bill 3 to 5. We have dotex. Thank you, Tax Foundation.

Morning. Chair of Vice Chair, Members of the Committee, Tom Yamachika from Tax Foundation. We send a written testimony. Be available for questions.

Thank you. Anyone else wishing to testify? Next item, Senate Bill 326. BNF. Tax Foundation.

Thank you, chair, vice chair, members of the committee. Tom Yamachika from Tax Foundation. We will stand underwritten testimony. The bill adds specifics to one of the existing criteria, but there's a questionable as to whether it's going to promote compliance with the terms of the of the law. I'd be happy to answer any questions.

Thank you for the opportunity to testify.

Thank you. Anyone else wishing to testify? Next item, Senate Bill 430. Still text. Thank you, Tax Foundation.

Thank you, chair, vice chair, members of the Committee, Tom Yamachika from Tax Foundation will stand in a written testimony. Be available for questions.

Thank you. Grassroots Institute? Anyone else proceed to testify. Next item, Senate Bill 721: bill text. Thank you. Hawaii's Children's Action Network? Tax Foundation - oh, go ahead, Nicole.

Sorry, hard to get my microphone on. Good morning, chair, vice chair, members of the committee. This bill has to do with the estate tax, which is a really well targeted tax on the wealthiest people.

The best estimates are that you have to be in the top two out of 1,000 wealthiest people in Hawaii to even be affected by the estate tax. And there is some space for us to make this tax even stronger. So, our testimony is in support. Thank you.

Thank you, Tax Foundation.

Thank you. Chair, Vice Chair, Members of the Committee, Tom Yamachika for Tax Foundation. We wanted to point out that the amendments to Chapter 236D probably won't have much effect because that chapter hasn't been used since 2012.

Just so we would recommend getting rid of the entire chapter instead so that there's no doubt as to which law is in effect, which is 236E as to the exclusion amount. That amount is probably going to be in flux this year, even in D.C. because of the expiration of the Tax Cuts and Jobs Act.

Happy to answer any questions. Thank you for the opportunity.

Thank you. Anyone else wishing to testify? Next item, Senate Bill 1278: still text. Thank you. Tax Foundation.

Morning, chair, vice chair, members of the committee: Tom Yamachika from Tax Foundation of Hawaii. As to the merits, I will kind of leave that to the restaurateurs who are going to be testifying after me. I did want to ask or suggest some technical changes. One is to the effective date.

I'm sure that some restaurants had received benefits during 2021, and they might be excluded under the current wording. So, we would want the effective date to say applicable on March 11, 2020, instead of taxable years beginning after that.

Secondly, we note that the Department of Taxation had asked that refund claims be filed by April 20th of 2025, but the legislature won't be adjourned by then. So, we would hope that there would be at least a method to do some kind of protective refund claim. I'd be happy to answer any questions. Thank you for the opportunity.

Thank you. Okay. Hawaii Restaurant Association. Highway Inn.

This is Russel Ryan with Highway Inn. Thank you for letting me talk today. Thank you -

You got to go up here.

Do I get five seconds back? Thank you for letting me talk today. Thank you for bringing this. This is a tremendously important bill for the restaurant industry in Hawaii.

This bill was this, this fund, the Restaurant Relief Fund, was a federal grant put in place by the Biden Administration to target restaurants that missed out on the initial PPP, EIDL and PUA grants. It was aimed at women owned businesses, minority owned businesses, veteran owned businesses and economically disadvantaged businesses.

The tax department itself said in its own words it's providing an exclusion to the get on the EIDL, the PPP and the PUA because of the severity of the COVID pandemic. One year later, the pandemic was still raging on.

In fact, more people died in 2021 than they did in 2020 when this bill, when this tax release was issued. So, the pandemic, we were all just getting our first COVID shots. As you can remember, at the time, this fund was later than we were told what did not qualify for exclusion under that tax information release.

The purpose of us all being here today is to say that it should have been included in that initial tax release, even though it was a year earlier. The tax department should have looked at it and said, "Yes, this fund should also be in that group of funds which are excluded because it served the exact same purpose."

And sorry for taking extra time.

Thank you. Members, any questions? Thank you. Maui Brewing Company. Okay. Lava Java Coffee Roasters on Maui. I'm not sure who he's not on yet. Oh, HRA.

Yeah, this was Tom Jones phone from sunny California. Oh, hang on a second. And just - chair, vice chair, committee members, Tom Jones from the Hawaii Restaurant Association. We stand on our written testimony.

We believe it's a issue of fairness and consistency that the restaurants are treated consistently with the previous treatment of the earlier funds that we received and then subsequently the the RRF, which was actually came into play after the initial ruling. So, I'm available for questions if there are any. Thank you.

Thank you. Maui Wine. Grassroot Institute. These are all in support. Pamela. Tom Pop, Maui Chamber of Commerce, Maui Brewing Company: in support. Tiki's Grill: in support. Bev Gannon Restaurants. Island Catering. Roy Yamaguchi group of restaurants. Merman's Restaurant. Hawaii Bar Owners Association. Yeah, you can come forward and present.

Morning, folks. I'm Bill Comerford. Been operating in bars in Honolulu and Waikiki since 1979. I owned a whole bunch of bars under the company of E&J Lounge Operating Company. I had four bars. Kelly O'Neill's, Irish Rose Saloon and O'Brien's and O'Toole's downtown. I had a very big business in this town.

I was very successful, was doing about $6.5 million a year with zero debt. In March of 2020, I've sold two of my bars that were doing $4.5 million in sales for a total of $300,000. That's pretty much what I could end up paying for just on this get.

I hope you all had a chance to read my letter if you do, because it documents so much of the things that happened during this where people thought you were getting money and you were getting nothing. And I really want to say that it's been so hard. I had a group called the Hawaii Bar Owners Association.

They represented about 100 bar owners. And the government never talked to us. Never, never, never talked to us. Not the mayor, not the governor, not any of the senators and anybody through whole government. GEBDT, everything. I was blackballed because I spoke. I'm really sad to say that, but that's real. It's very real.

I had to sell two bars for virtually nothing. This is my retirement. I'm 72 years old. This happened when I was 68. I was been in town. I've done all the things that people wanted me to do. I brought, I run the St. Patrick's Day parade, the Friendly Sons of St. Patrick. I had Irish dance classes.

I had things on my properties where I brought Irish music here. I brought acts from around the world. I did all the things that people expected me to do. I worked with HTA and I talked with all those people how I do these things. And what did I get out of government? Nothing. We were fully, fully ignored.

Health Department, not a word. Nobody. We're going through all this. And as I go through it, I'm talking. I had, I could talk to Ms. Blangiardi, I could talk to Mr. - but these are 67 months after all this, because in 2020, if I applied for the Shuttered Venues Grant, which would be for anybody that had live music, I was denied. But if you're applying for it, you couldn't receive any more PPP money.

Okay, so you're testifying in support?

I'm fully supported this bill.

Okay, thank you.

Thank you very much. Okay.

Chamber of Commerce of Hawaii: in support. And Takiguchi in support. Anyone else wishing to testify? Okay, next item. SB13. No, go ahead.

Good morning. Kristin Sakamoto for DOTax.

Testimony says that this will cost the state 16.8 million.

Yes.

And is that including interest or is it just going to be straight?

I believe that calculation does not include interest.

Is that the intent to include interest if in fact it passes?

No, the - ideally, if this legislation could be fast tracked and passed as soon as possible, and if we could get the claims filed by April 21 to avoid the statute of limitations issue, we would try to be expedient in issuing the refunds.

Thank you.

Thank you. Okay, next item says SB 1362. B&F. Department of Corrections.

Chair, Vice Chair, Members of the Committee. Melanie Martin, Deputy Director for Administration, testifying on behalf of Director Johnson. Stand on our written testimony in support.

Thank you. Anyone else wishing to testify? Next item, SB 1363. B&F in support. Corrections? Thank you. Anyone else wishing to testify? Next item, SB 1464. DOTAX.

Kristen Sakamoto for DOTAX. We are in support of this measure, which is our annual conformity bill. And we did note one piece of legislation that was enacted in 2024 by the US Congress, which was the Federal Disaster Tax Relief Act of 2023. And I'm available if you have any questions.

Thank you, DOTAX. Tax Foundation.

Good morning, Chair, Vice Chair, Members of the Committee. Tom Yamachika for Tax Foundation. We are not DOTAX. We'll stand on our testimony. Be available for questions.

Thank you. Anyone else wishing to testify? Next item, SB 1465. DOTAX.

Kristen Sakamoto for DOTAX. We are in support of this administration measure regarding the PTE law. I did want to update our revenue estimate, and I apologize that it's incorrect in the testimony. As new claims are coming in, we're updating the numbers for the PTE filings. So as of right now, we estimate for FY26 that the revenue impact would be a 29.3 million gain, and for FY27, 30.8 million. And I'm available if you have any questions.

Thank you. Tax Foundation.

Good morning, Chair, Vice Chair, Members of the Committee. Tom Yamachika from Tax Foundation. As detailed in our testimony, we don't think this bill is necessary. I think the Department of, the Department of Taxation's calculation assumed that individuals would not be able to take the deduction for state taxes, which is what would be true at the federal level. But we don't conform to that part of the federal code. So we think the bill is, we think the law is fine as is and the correction is not needed. I'm happy to answer any questions. Thank you for the opportunity.

Thank you. Anyone else wishing to Testify? Next item, SB 1466.

No tax guidance support.

Thank you, Tax Foundation.

Morning, Chair, Vice Chair. Members of the Committee, Tom Yamachika from Tax Foundation. We will stand in our written testimony and be available for questions.

Thank you. Anyone else wishing to testify? Next item, SB 1467. Dotex.

Dotex stands in support.

Thank you, Tax Foundation.

Tax Foundation stands in its written comments.

Thank you. Next Item must be 1470. Dotex. Thank you, Tax Foundation.

Tax Foundation stands on its written comments.

Thank you. Anyone else wish me to testify? Okay.

We're going to resist calling the meeting.

Back to order. Moving to decision making. First item, SB325. Recommendation is to pass with amendments affecting the date to 2050. Any discussion? Not sure.

[Roll call]

Thank you. Next item. SB326. Recommendation is to pass with amendments effecting the date to 2050. Any discussion? Not sure what side.

All Members present and voting no with reservation, measure adopted.

Next item, SB430. Recommendation is to pass with amendments. We'll adopt amendments from DOTECS to propose new language in Section 3.23123D1B and 231 23D2 so the rate is set on an annual basis and will defect the date to 2050. Any discussion? Not sure. Both sides.

SB 430 passed with amendments. All Members present. Anyone voting no with reservation recommendation adopted.

Thank you. Next item. SB721. Recommendation is to pass with amendments effecting the date to 2050. Any discussion? Not sure.

Vote side SB 721 all Members present. Anyone voting no with with reservation recommendation adapted.

Thank you. Next. Next item. SB 1362 Recommendations 1278. SB 1278. Recommendation is to pass with amendments. Will adopt Tax foundation of Hawaii's amendment to make effective date as March 112021 and effective date effect the effective date to 2050. Any discussion? Not chair.

SB 1278, all Members present. Anyone voting no reservation. Recommendation adopted.

Thank you. Next item, SB12 1362. We're going to defer the next two items. Part of this was to ask the Administration to look at an emergency proc. To move monies around with the existing budget versus doing the emergency appropriations. So we'll defer SB 1362 and 1363. Next item. SB 1464. Recommendation is to pass unamended. Any discussion?

Not sure what's I said.

Senate Bill 1464 passed, unamended. All Members present. Anyone voting no reservation. Recommendation adopted.

Next item. SB 1465. Recommendation is to pass with amendments defecting the date to 2050. Any discussion? Not triple time.

SB 1465, all Members present. Anyone voting no with reservation recommendation adopted.

Thank you. Next item, SB 1466. Recommendation is to pass, unamended. Any discussion? Not triple.

Senate Bill 1466 passed, unamended. Anyone voting no with reservation, recommendation adopted.

Thank you. Next item, SB 1467. Recommendation is to pass unamended. Any discussion?

Not SB 1467 to pass, unamended. All Members present. Anyone voting no reservation recommendation adopted.

Thank you. And last item. SB 1470 recommendation is to pass an amended. Any discussion? Not chair bookside.

SB 1470 passed and amended. All Members present. Anyone voting no, with reservation. Recommendation adopted.

Thank you.

Calling the 1001 agenda to order. First item, SB222. Recommendation is to pass with amendments effectively to 2050. Any discussion?

Not SB222, pass with amendments. All Members present. Anyone voting no. Recommendation adopted.

Thank you. Next item. SB327. Recommendation is to pass with amendments adopting LRB tech amendments, removing the appropriations and effecting the date upon approval. Any discussion?

Not SB327, pass with amendments. Anyone letting know? Anyone's willing. With reservation. Adopted.

Thank you. Next item, SB 1044. Recommendation is to pass through amendments adopting LRB tech amendments. And we also have, working with subject matter Chair, we're going to establish a condominium loan program within the authority, which will fund essential repairs, address deferred maintenance and structural issues, and improve the overall insurability of condominium properties organized under Chapter 514B.

Create a condominium loan special fund in Section 196B to receive and manage legislative appropriations for the program. Loans issued under this new program to be repaid within a period of 20 years from the effective date of their insurance. This program and the special fund will be repealed in 20 years. Insert a blank appropriation section for fiscal years 2026 and 2027 from General Fund into the condominium loan special fund.

And insert a blank appropriation section out of the special fund for fiscal years 2026 and 2027 to establish the program. And require that the special fund shall sunset in 20 years from the effective date of their last issuance, clarifying that all unused special funds at the sunset date will lapse back into the General Fund. And we'll also include in the Committee report that the next Committee consider that DCCA handle the program versus the green infrastructure. Yeah. Any discussion? If not, Chair votes aye.

SB 1044, pass with amendments. All Members present. Anyone voting no? With reservation? Recommendation adopted.

Thank you. Next item. SB440. Recommendation is to pass with amendments, adopt LRB tech amendments and remove all references to the special Fund language within the measure. Any discussion? Not sure. Vote sight.

SB440, all Members. Passed with amendments. All Members present. Anyone voting no with reservation. Recommendation adopted.

Next item, SB529. Recommendation is to pass, unamended. Any discussion? Not sure. I'm sorry.

SB529, pass unamended. All Members present. Anyone voting no, with reservation. Recommendation adopted.

Thank you. Next item, SB533.

Recommendation is to remove the appropriation section in Section 2, require a local investor owned electric utility to support schools impacted by the planned public safety power shutoff program outlined in this measure and require a local investor owned in electric utility responsible for the planned public safety power shutoff program to Fund the support of Hawaii public schools impacted by the shutoff program.

Any discussion? Not Chair Mozai.

SB533 passed with amendments. Anyone voting no with reservation. Recommendation adopted.

Thank you. Next item, SB522. Recommendation is to pass, unamended. Any discussion? Not sure. What's next?

SB552 pass unamended and when voting no with a reservation, recommendation adopted.

Thank you. Next item, SB693. Recommendation is to pass unamended. Any discussion? Not sure. Both sides.

SB693 to pass, unamended. All Members present. Anyone voting no with reservation measure adopted.

Thank you. Next item, SB855 recommendation is to pass unamended. Any discussion? Not chair hi.

SB855 to pass, unamended. All Members present. Anyone voting no with reservation measure adopted.

Thank you.

Next item, SB 1117, recommendation is to pass with amendments, adopt LRB tech amendments and her testimony adopted an amendment from unupono to change the definition of electric motorcycle to align with the definition of motorcycle defined by the ability of the motor to exceed 28 miles per hour or a motor with power of 751 Watts or greater, excluding mopeds and motor scooters and prohibit individuals under the age of 18 from operating electrical motorcycles.

Any discussion? Not chair. Vote.

SB 1117 pass with amendments. All Members present. Anyone voting no with reservation measure adopted.

Thank you.

Next item, SB 1186. Recommendation's to pass with amendments, adopt LRB tech amendments, remove the current makeup of the following working group in Section 2B, and establish the working group in the Agribusiness Development Corporation, as it already it is already doing the work to double local food production and exports. Remove the appropriation in Section 3, and provide an effective date. Any discussion? If not, Chair votes aye.

SB 1186 to pass with amendments. All Members present. Anyone voting no? With reservation?

Thank you. Next item, SB 1300. Recommendation is to pass unamended. And we'll let the Committee report reflect at the initial public hearing of on this measure in Education that the Department requested an appropriation of 11.7 million. Any discussion? If not, Chair votes aye.

SB 1300, passed with unamended. All Members present. Anyone voting no? With reservation? Recommendation adopted.

Thank you. Next item, SB 1391. Recommendation is to pass with amendments, adopt LRB tech amendments, and adopt an amendment to require a one to one match of state funds with private donations. Any discussion? If not, Chair votes aye.

SB 1391, pass with amendments. All Members present. Anyone voting no? With reservation? Measure adopted.

Thank you. Next item, SB 1567. Recommendation is to pass unamended. Any discussion? If not, Chair votes aye.

SB 1567 to pass unamended. All Members present. Anyone voting no? With reservation? Measure adopted.

Thank you. Next item, SB 1588. Recommendation is to pass unamended. Any discussion? If not, Chair votes aye.

Senate Bill 1588, pass unamended. All Members present. Anyone voting no? With reservation? Recommendation adopted.

Next item, SB 1669. Recommendation is to pass with amendments adopting LRB tech amendments. And we'll let the Committee report reflect B&F's concerns regarding a definition of the area that will be included in the partnership's jurisdiction and that the American Institute of Architects amendment to require a member of the board of directors to also have significant understanding of building design in addition to urban planning. Any discussion? If not, Chair votes aye.

SB 1669 to pass with amendments. All Members present. Anyone voting no? Reservation? Recommendation adopted.

Thank you. Okay. Calm down.

Calling to order the 10:02 agenda for Ways and Means. First item, SB 933. Recommendation is to adopt the proposed SD 1 and recommit back to Ways and Means. Any discussion? If not, Chair votes aye.

SB 933 to recommit. All Members present. Anyone voting no? With reservation? Recommendation adopted.

Thank you. Next item, SB 938. Recommendation is to adopt the proposed SD 1 and recommit back to Ways and Means. Any discussion? If not, Chair votes aye.

SB 938 to recommit. All Members present. Anyone voting no? With reservation? Measure adopted.

Thank you.