Senate Standing Committee on Education

Foreign.

This meeting, including the audio and video of remote participants, is being streamed live on YouTube. You will find links to viewing options for all Senate meetings on the Live and on Demand video page of our website.

In the unlikely event that we have to abruptly end this hearing due to major technical difficulties, the Committee will reconvene to discuss any outstanding business on Tuesday, April 1, 10:03am in this room. This is decision making oral, oral testimony no oral testimony will be taken for these measures.

If you're interested in reviewing the written testimony, please go to our website.

You will find the link on the status page of okay, this Calling to order the 10am Committee on Ways and Means and Education this is House Bill 422-222-2222, so I'll defer to the Education Chair on the recommendation.

Thank you Chair. So House Bill 422 relating to school facilities.

The recommendation of the Committee on Education will be to pass with amendments adopting an amendment from the School Facilities Authority to clarify that any existing written agreement Executives executed under HRS 302A, part 6, subpart B, prior to its repeal will remain effective unless all parties mutually agree to the agreement.

Also, we will be amending section one of the bill to conform with proposed amendments. Repeal the construction fee component of the School impact fee but retain the land contribution requirement and the in new fee. Remove all references to the construction cost component, impact fee and related language in HRS 302A, Part 6, Subpart B.

Repeal HRS 302A, 1607 and 302A, 1611 exempt the following new and existing developments from school impact fees Government projects developments by the Department of Hawaiian Homelands for use by beneficiaries, single room dwellings and developments pursuant to HRS 46. 15 and 201H38 and projects that meet the definition of affordable housing pursuant to HRS 46.15.25 and 201H.

Amend HRS 302A, 1606 to increase the required number of units to satisfy the land component impact fee to 100 in sections 12 3A, 3B, and E. Require the School Facilities Authority to adopt rules and policies governing the collection of school impact fees per the recommendation of the State Auditor's report. Remove the repeal of HRS.

302A, Part 6, Subpart B, and HRS 46.142.5 require the school Facilities Authority to provide a report to the Legislature on the effect of repealing the construction portion of school impact fees no later than December 6th. I'm sorry. No later than December 15th, 2025. And insert a sunset date of June 30th, 2029. I'm sorry.

Let me read that again. Require the School Facilities Authority to provide a report to the Legislature on the effect of repealing the construction portion of school impact fees no later than December 15, 2026. Insert a sunset date of June 30, 2029.

Also, we will let the Committee report reflect the amendments to this measure are necessary to confirm the efficiency, the efficacy of school impact fees, and that the sunset date may be repealed if the report supports making the contents of this measure permanent. Thank you, Chair.

Thank you. So recommendation was to pass with the set amendments. Any discussion?

Yes, Chair.

Go ahead.

Okay, thanks. I understand this measure has to do with the state projects because the school facilities in state. What's the impact on the counties? Because we know that counties make their own arrangement in development fees with regards to developments that occur on their islands, and they already have impact fees. So is there just. Is there an impact?

No. It's okay. All right. Okay.

So the impact fees that we was talking about. The only reason why I say that, because I never get to hear all the things. So we're not. We're not repeating the impact fees.

Not completely. Not completely. Not the land portion.

Okay.

Further question then. Okay. Because when the counties approve development fees, and it has to do with lands, and so the lands are set aside for a school as an example. So does DOE accept that as a facilities property? And then it.

No, that's why there's some changes. The law goes to sfa. Some of this.

Yeah, they negotiated. They want the land. Okay.

Still have to give the land.

All right. Just. Just for discussions how the impacts would be on the county's level. Thank you, Chair.

Okay, Chair. Vote.

[Roll call]

Just with these changes, I'm gonna change my note to a yes.

Thank you, Chair. Yes. Yes. Yes. Recommendation adopted.

Thank you. Thank you. Same recommendation for Education Committee.

[Roll call]

Okay, we're going to adjourn and then we're going to just take a couple minutes for the next agenda.

Okay. Calling to order the Joint Committee.

Okay.

So do.

Aloha, chairs, vice chairs, members. Ed Sniffen with Hawaii DOT. We support the measure and we support the language that's in the measure right now. However, from our perspective, it's overly broad compared to what we're trying to get done here. In general, we don't want to exempt construction.

What we want to do is make sure that we can look forward on innovative approaches to procurement, and one of the big ones that we're trying to push is CMGC, Construction Manager General Contractor, which allows us to hire a contractor up front to work with our designers to innovate to make sure that we can get the best solutions available then have that contractor give us a maximum bid price.

If that bid price is acceptable, we can turn that, that CM into the general contractor. If it's not acceptable, we bid it out to our normal processes. During those processes, we would ensure that the contractor sublisting is still available to ensure that we keep our procurement process the same as possible. However, this allows us a lot more innovations, makes sure that the projects move forward 40% faster at better prices. Thank you, chair.

Thank you. Members, any question? State Procurement Office.

Good morning, chairs, vice chairs, and members of the committee. Matthew Chow, testifying on behalf of the State Procurement Office of Bonnie Kahakui. The State Procurement Office stands on its written testimony in support of the language of HB 1155 HD 1. We do understand that the DOT has offered alternate language to HRS 103D-405 instead of 103D-102, and we would like the opportunity to work with the DOT and members of the industry to come to agreeable language. Thank you.

Thank you. Dwayne Bautista.

Morning, chair, vice chair, members of the committee. Morning. First of all, I want to clarify, on my written testimony on the digital side, there was a mix up, so I stand on my written testimony in opposition. Okay, thank you.

Thank you. That's the current language, though, yeah? Okay. Subcontractors Association.

Morning, Chairman Dela Cruz, Chair McKelvey, members of the Joint Committees. I'm Tim Lyons with the Subcontractors Association. We are strongly opposed to this bill. We're often perplexed by the fact that the Legislature adopted the Procurement Code as a fair way of doing business.

I was around when it was last rewritten and I remember all the agencies and departments coming in, adding amendments, making changes, and then lo and behold, I think it was the second year after that the first agency asked for an exemption from the Procurement Code and we pretty much had somebody ask for an exemption ever since.

I think the bottom line of that ought to be if there's something wrong with the Procurement Code, we should fix it and not do exemptions. In our prior--in prior testimony, it was indicated that this was needed in order to do emergency situations. 103D-307 deals with emergency procurements, and if there are emergencies that arise that don't fit into that statute, it is likely that this statute ought to be amended as opposed to a wholesale exemption. Again, the Procurement Code was invented in order to be a fair dealing.

It not only protects the state against the contractors, but the contractors against the state for that matter, and vendors to vendors. Perhaps our biggest objection to all of this is when you take that exemption out, you also remove a number of protections, including retainage equality, including prompt payment.

Those are all provisions of the Procurement Code and we think that they're very important to keep, and again, if the situation needs to be addressed, we should be amending 307. Thank you.

Ironworkers.

Aloha, chairs, vice chairs, members of the committee. My name is Cody Sula with the Ironworker Stabilization Fund. We are strongly opposed to this measure. We strongly support the Procurement Code. We believe that it promotes fairness and we believe in the exemptions that's proposed here. It's not clearly defined.

It's going to open it up to--could open it up to corruption and picking and choosing who they want rather than the most responsible bidders out there, so we stand on our written testimony. Thank you.

Thank you. IBEW 1260. Elevator Constructors. Building Trades Council. Oh.

Good morning, Senators. Thank you for having me this morning. Just want to convey that the Elevator Constructors is in strong opposition to this bill and I, we stand by our written testimony. Thank you.

Thank you. Building Trades Council.

Good morning, chair, vice chairs, members of the committee. My name is Gino Soquena, the Executive Director of the Hawaii Building Construction Trades Council, which represents 18 construction trade unions here in the State of Hawaii.

We are opposed to HB 1155. Currently, when in its form, I do understand that there is the intent of what they wanted to do, but as--what we normally do is we always--we're going to be opposed to any exemptions to procurement.

Those are--those, that law, that code is there to protect the taxpayers and prevent any type of fraud or anything, so as a rule of thumb, that's what we always do. You heard a lot of our affiliates already in testimony in opposition, but I'm, I'm available to answer any questions if you guys need. Thank you.

Thank you. District Council 50. General Contractors. IBEW 1186. Electrical Contractors. General Contracting and Construction. Plumbing and Mechanical Contractors. Sheet Metal Contractors. Suehiro Electric. Anyone else is wishing to testify?

Good morning, Mr. Chair, vice chair, and members of the committee. My name is Cliff Laboy, Ironworkers Union Stabilization Fund. I believe all those contractors that you just called out are opposed to this bill. We are strongly in opposition of this bill. We have one question we want to ask.

You know, the state's thinking about doing stuff like that; why don't they get a hold of the Building Trade Council? Let's sit down, talk about this instead of being here wasting everybody's time. We got a procurement process set in place that's been in there for over 30 years to prevent fraud and a whole lot of other things. They understand that. I'm pretty sure we can sit down and work things out if they come to the table. Thank you for your time.

Thank you. Anyone else wishing to testify?

Question?

I have a question, chair. DOT and Mr. Soquena. So for DOT, first, is there a type of issue that DOT is attempting to address with this and then did--has DOT reviewed some of the testimony in opposition and does your testimony address some of the concerns from those in opposition?

One more.

Yes. So overall, DOT doesn't support the overall exemption to procurement. From our perspective, it's over-broad in its approach. For us, what we're trying to do is make sure that we can move forward on different types of procurement and these procurements that minimize the impact to the Procurement Code.

When we're looking at CMGC, we select the contractor and the engineer in the same way we do right now. The only difference is this legislation would allow with 10D3-405--that's the adjustment that we're looking at--would allow a contractor who works on the design to also win the project. That's the change.

So we, they still got to go through the selection process. They still got to make sure that they, they give us a price, a maximum guaranteed price that we can accept, and if not, we'll just bid it out. So we have controls in there to ensure that we minimize the potential for the state to, to pay more than it should and make sure that we can move a lot faster.

The biggest thing for, with CMGC, there's--that's being used in the five other states that are running it now and the federal government who's accepted it as an accelerated procurement process that they're, they're asking all the states to consider is they see a lot more innovation in the process.

Right now when we go through our normal processes, we get a designer that works on it as the designer. We bid it out to construction where we find a whole bunch of issues that we got to go through in our normal design bid--build process.

During that process, if the contractor helps us revise that design and make it better, we pay half of that cost. So we don't get to benefit on that from the beginning. If we go through design build processes, it's a better process because we can start working with the contractor at that time.

But in general, in that process, the designer works for the contractor. So I cannot tell the designer, this is what we want, this is what we need. As long as it fulfills the requirement of the RFP that we put out, a contractor can do it. And I'll give you a case in point.

When we did our Waimalu Viaduct project and we did our precast concrete panels out there--I mean, the contract did a great job out there--when we started looking at the gap width on, on those portions, we wanted it to be at a half an inch.

Because of the specifications, the contractor could tell their engineer to just give me a justification that two inches works in here, and they could do it and still fulfill a contract. In general, we would have to pay more to make sure that we get it built in the way that we see from a maintenance perspective.

So those are the adjustments that are being made. In addition to that, most are looking at the new bridges that we're trying to do on the Big island, especially on the Hamakua Coast. They're big, they're tall, they're long. When we bid out those projects, innovation upfront during the design process will save a whole bunch of money.

We just built a project on the Big Island, was supposed to be $85 million. When the contractors bid on it, it came out to about 170 million because they saw things that our designers--because they're not contractors, because they don't have the means, the same means and methods as the contractors out there--didn't see.

But when it came in, and because the contractors were all pretty close in price, I mean, they're right. So if we had that up front to make sure that we could capture that in the design and hopefully make it better from the beginning, we could have captured not only the, a shortage of timeframe in bidding it out, but also a better product. That's what we're trying to get to.

And then for Mr. Soquena, have you looked at DOT's testimony and does that address some of the concerns that you have?

We did, and so we had concerns with the exemption to construction, and I think they addressed that, but then I have a board I have to report to and at the 11th hour, I am not able to convene in the board and, and--

But it is better than the previous draft?

Well, yeah. It's, it's better than we, you know--I know there's an intent and we, I, we're waiting to work with Mr. Sniffen and the DOT and to--but I wouldn't be able to agree to anything until I seen it. And get the approval.

Chair, thank you.

So, Ed, shouldn't then you be doing a better job at the RFP level in making sure that you cover everything that you want instead of leaving it so broad?

The better job that we're trying to do is get a contractor on board. Overall, there's no engineer in the state that has the construction capacity that a contractor does, even if they had construction experience--and there's several structural engineers who have contractors in their staff--but those contractors no longer have the means and methods to do the work.

So if we have a contractor on board during the design process, they can tell us exactly what is constructible, what's not, what areas we need an access road, what areas we need falsework to be put in, rather than assuming things from the beginning.

When the designers reach out to contractors during the design period, the contractors will not share information, and then rightfully so, because that's going to be their bidding advantage.

Well, you have a consultant contractor during the design phase.

That's what we'd like, but if we pay the consultant contractor during the design phase, they cannot bid on the construction work. That's what we're trying to--that's what we're trying to get through with this, with this 103D-405 change. If they can bid on the construction work, then we get more available. Right now, those that, that would be willing to work with us would be the smaller contractors because they cannot win the work anyway.

There's so many contractors, I would think there would be others. I mean, if they want the job to do the initial, then there's other contractors out there that could bid. Does this lead to favoritism, though?

I don't see it because we've got to go through the same selection process. When we select that contractor up front for the design period, we got to go through the selection process.

Okay, thank you.

Thanks. Ed, is there any impact to PLA agreements that's already in statutes?

No impacts.

No impacts. Okay. I have a question for Procurement Board or Procurement Office. Thank you. Okay, question for Procurement Board. What's the--yeah, Procurement Office. Can you explain what the Procurement Policy Board and the makeup?

No, wait. What does that have to do with the bill, though?

Well, I think rule-making is the authority of the board.

No. So the way how the testimony is now, before the DOT director can even do any of this, he still needs explicit approval in writing from the SPO. So if the SPO finds that, hey, you know what, I think that this is too flexible or too out of the box, she can then--she's going to probably deny it. She, she has to be proactively in writing approve the specific process that the DOT director would take.

Well, the question is, have the policy--have the Procurement Policy Board got a hold of this bill?

I can't answer that question right now. I'm sorry.

Thank you.

Yeah. Because they have meetings. Well, how often do they meet?

They're actually meeting right now.

No, but how often do they meet?

Oh--

Okay, listen to the question and answer the question. How often do they meet?

They meet, I think, by--I'm not exactly sure, but the previous meeting was two weeks ago.

Okay, thank you. Okay. Any further discussion?

I got quick, quick--Procurement Office, please. So can you provide examples of when you have a construction project for which procurement by competitive means is either not practical or not advantageous to the state?

Currently, construction is not exempt from the Procurement Code, so I don't have any examples but I can take this back to check with the Chief Procurement Officer and get back to the committee, sir.

Yeah. And DOT is saying that they're not including construction in this either. So this, you can think about design.

Bless you, bless you.

Okay. Any further discussion? Okay, if not, chair's going to recommend to pass with amendments, we're going to remove the current contents of the HD 1, and adopt the language from the DOT testimony to limit the types of contracts that qualify for this exemption.

We're going to limit this to only DOT, we're going to add a two-year sunset to this section, and we're going to require a written report to the ledge 30 days after the first year of implementation. And then we're going to add a new--we're going to insert language to amend 103D-102A so that project management may not be procured under this section and insert a definition for project management to 103D-104 for the purposes of this section. Any other discussion? If not, chair votes aye.

For HB 1155, chair votes aye, vice chair votes aye. [Roll Call]. Okay. Recommendation adopted.

Okay. Committee on Intergovernmental Operations, before we get a recommendation, I have a lot of concerns with this bill. However, I think the changes of this bill, particularly limiting it only to DOT only for a couple of years will allow the DOT to embark on this new type of procurement that may help with the federal government, so--but given that, given all of these changes, I feel good about recommending that we have further discussions on this. So with that, Senate Draft One, I vote yes.

Voting on HB 1155 HD 1. Senator's--chair's recommendation is do pass with amendments. [Roll Call]. Chair, recommendation has been adopted.

Thank you.

Okay. Calling to order the 10:00 AM agenda. First item, House Bill 476, recommendation is to pass with amendments, adopt LRB tech amendments, and increasing the rate from 7.25 to 8%. Any discussion?

Chair. I have a concern with this capital gains tax increase pertaining to individuals and no different than those seniors who want.

Can you hold on? It's a hearing. Yeah, this is a hearing. I thought it was DM. Okay, don't tap us. Thank you. Realtors, oppose. Appleseed.

My name is Devin Thomas. Good morning. Speaking on behalf of Hawaii Appleseed, in support of this measure. Capital gains overwhelmingly go to the wealthiest taxpayers in Hawaii. Close to 80% of the long-term capital gains are accrued to those earning over $400,000 a year. So, the capital gains rate, the current maximum, is a, is a giveaway to wealthier taxpayers a lower rate on capital gains compared to their regular income.

In addition, with the income tax cuts, or the income tax adjustments that were passed last year, it's only appropriate that the capital gains rate be adjusted as well to match those changes.

For those reasons in, as well as the fact that the alternative capital gains rate is another giveaway to corporations, we believe that the capital gains rate should be—then in the future, we would strongly encourage the Legislature to consider taxing capital gains at the same rate as ordinary income to close the loophole entirely and make sure that the tax system is fairly considered.

And what rate is that?

Ideally for us, it would just be...

Your basic statement. What percentage, that?

For example, if you were in the 11% tax bracket, you would be taxed at 11% for your capital gains. That's what we believe is fair.

Any further questions? Thank you.

Thank you.

Hawaii Food Industry Association. Tax Foundation. Children's Action Network.

Oh, sorry about that. Had a, had a, a button problem there. Tom Yamachika for Tax Foundation. Good morning. Chair, Vice Chair, Members of the Committee.

Can't hear you.

How about now?

A little better.

Okay, thank you very much, Chair, Vice Chair, Members of the Committee. Tom Yamachika for Tax Foundation. We'd be happy to stand on our written testimony and be available for questions.

Members, questions? Okay, thank you. Hawaii Action—Hawaii Children's Action Network.

Aloha, Chair, Vice Chair, Members of the Committee. My testimony starts on page 17 of your packet that's online. Hawaii is one of only nine states that has a capital gains tax loophole. This tax loophole is one that benefits the wealthiest people in Hawaii.

It allows income from things like selling your stocks, your bonds, your art, your antiques to be taxed at a lower rate than the income tax that we all pay on regular work. So, we're just trying to close that loophole.

According to the Department of Taxation's annual report on income tax statistics, capital gains are heavily concentrated in the high end of the income distribution, especially for non-residents. They say that more than half of the income of non-residents who pay taxes here in Hawaii, more than half of their income is in capital gains.

So, this is a way to get more money from high income tax non-residents. Warren Buffett has said over the years that for the federal capital gains tax loophole, he's never seen a relationship between the capital gains tax rate and business investment.

And there's a chart in my testimony that goes back all the way to the Great Depression almost 100 years ago with capital gains tax rates and real investment, and you can see there's no effect of the capital gains tax rate because we're really just trying to tax all income at the same rate.

We also suggest that instead of picking a flat rate to tax capital gains, we simply just tax that the same rate as regular income. We have a Bill, SB 349, that has that language. And also, during a prior session, Department of Taxation also recommended that, and I put that in my testimony.

Finally, there was a Bill that would have put capital gains tax rates at the same as income a few years ago, an analysis from the Institute on Taxation and Economic Policy found that that Bill would draw 97% of its income of its revenue from people in the top 5% of the income scale.

So, especially with some budget concerns coming, this seems like a very targeted way to get some more revenues in. Thank you. Please support this.

Thank you. League of Women Voters. Democratic Party. Chamber of Commerce. AFL CIO. Grassroots Institute. Activities and Attractions, Hawaii Alliance for Progressive Action. Chamber of Commerce for Maui. Okay. We have many individuals testifying, 22 in support and 254 individuals opposed. Anyone else wishing to testify?

Chair?

Yeah, go ahead.

Michael Golojuch, pronouns he/him, President of Private Work Hawaii. We stand in strong support of this measure. We support all—everything—that Nicole Wu had to say, that it is time for us to close these loopholes. We need to make—we need to level the playing ground.

And so, we encourage you to pass this Bill with the amendments, as laid out by Nicole Wu. Mahalo.

Thank you. Okay, next item.

I have a question, Chair.

For who?

Well, my question...

No, for who, first.

Well, tax office.

Okay. DOTAX.

This Bill does not exempt local people, individuals, as Kupuna who wants to downsize their properties and move into assisted living. So, it affects everybody. Am I wrong?

The Bill does not contain an exemption for that.

Okay. So, the question is, and I can see why there's so many oppositions because we're talking about earlier, I heard people saying for higher net—higher income brackets—we love, you know, it's a good deal. But what about the local guys who wants to sell properties, start downsizing? The capital gains will increase, you know, their, their proceeds.

So, that's just a concern that I have. So, it will impact everybody.

So, there is an exemption for the sale of a primary residence under the capital gains tax. I believe, currently, it's 250,000 per individual, 500,000 for joint.

Presently?

Yes, we conform to the federal law on that. Yes.

Okay.

So, there is that to take into consideration.

There is an increase though, going forward, for everybody.

For the capital gains rate, but the exemption amounts will stay intact. But yes, this Bill would change the capital gains rate.

Can I just ask? So, on the capital gains on investments or stocks, I mean middle income people, although maybe there's a lot of buy in, but a lot of middle income people are trying to make—invest—their monies. Right? They're getting smarter at doing that. So, doesn't this—going to affect all the small guys as well?

Yes. So, for investments that are not primary resident properties, the capital gains rate would apply to all of those types of taxpayers.

Like on the stock market where we're trying to teach our young people about investments and fiscal and financial literacy about the stock market and so forth.

And those that are embarking on it, the small guys, the, the, because I've got, I've gotten calls from constituents that saying, you know, they're not rich but they're trying to, they're trying to make investments and, and keep afloat, so this is going to impact them.

Yes, it would impact them.

Thank you.

So, just to follow up, I, I heard them testify. This is about corporate.

It would—this Bill would apply to individuals and corporate.

Okay, thank you. Thank you, Chair.

So, what Senator Kim then was saying, what bothers me is that nowadays, we have family members that is passing away, giving them to their children or their grandchildren going forward. This is going to affect them too, right?

So, for inherited property, if it's their primary residence, there is a separate law that would apply because a property that's passed on does get a stepped up basis. So, the value at the time of death is usually what your cost basis is going to be if, for example, the kids later sell the house.

So, there is that to take into consideration. But if the capital gains amount is enough and it's not subject to the exemption, yes, these would affect those people potentially as well.

So, so, I mean, I, I can't really understand what, I mean, yes, again, we would try to tax the rich, we want corporate. Who really going to pay? Who really going to pay if we go after these rich people and you guys all been saying here in corporate like that, who really gonna pay? Us.

I mean this does potentially affect...

The poor people. Corporate will never pay any fair share. I don't care how you want to do the loophole.

Can you just stick to the question?

That we go into pain for what we try to do with the rich. That's not fair to the poor people experience and that's sad. Okay.

But it's not, it's not a solution. Not a solution, Chair.

Okay. Any other questions? If not, we're going to go to next item.

People can again...

Hospital 796 Dotex. Thank you. Debt.

Good morning Chair Members of the Committee. Thank you very much. Georgia Skinner representing the Department of Business Economic Development and Tourism. We did send in comments and we stand on those comments.

Our main concerns are the message that this does send to our film industry who has taken advantage of the film tax credit to say that we're going to sunset something when currently we're at a deficit because of the production industry being down sends the wrong message.

We are looking to build Hawaii first as a Department mission that has pillars including the tax credit infrastructure and new ways to look at managing this industry. It is one of the bright spots for Hawaii. So we are here for any other additional questions but do raise concerns especially the jobs that are currently people are not working.

So we don't want to send the wrong message. Thank you.

Except I don't think this bill says that it ends indefinite. So the Legislature could always reenact another five years.

Yes, that's true.

And an audit Legislature to review all tax credits and the effectiveness, the efficiency. Yes.

That is something that I think is valid and should be a regular process. Yes.

Yeah because that's the problem now where a lot of concerns specifically about your guys tax credit and how it wasn't being handled correctly so that this allows the Legislature every five years to review how the departments are actually implementing and.

I think that's a good it's a good process and an excellent idea.

Okay. Yahtzee. Democratic Party Island Film Group SAG.

With SAG AFTRA and we stand on our testimony and opposition.

Thank you Hawaii Children's Action Network.

Aloha Chair, Vice Chair, Members of the Committee. Again Nicole from Hawaii Children's Action Network Speaks we know that Hawaii, our state local taxes burden low income families much more than higher income families. We have the third heaviest state and local tax burden in the nation.

And tax credits for working families, especially low income families, really are one of the few things bright spots that we have that helps families or to live here. And we are concerned. We have the renters credit, we have the Earned Income Tax Credit, Food Excise Tax Credit and some others.

We're concerned that if these kinds of tax credits are having to be renewed every five years, it's not only more work for you, but it also might threaten some of these tax credits if they lapse.

We already have Department of Taxation doing an annual report on all the tax credits in this state and some other ways to check that these are working and that they're being run efficiently. So we ask you respectfully to defer this bill. Thank you.

The Democratic Party Education Caucus, SAG Home Office, Catholic Charities. We have a number of individuals in few in support, 55 opposed. Anybody else wishing to testify?

Chair yes.

Yeah, go ahead.

Michael Golojuch Jr., President of Pride at Work Hawaii. He/him pronouns We stand in strong opposition to this bill. This is using a sledgehammer when a scalpel is needed. We are seeing in real time at the federal level when a sledgehammer is being used to solve our problems and it is having a devastating effect to our economy.

This, this bill, if it moves forward, will have the same effect here locally as we're trying to shore up. We have an economic tsunami coming at us and this bill does not help us at any way, shape or form.

As already has been stated, we have really good tax credits out there that should be nurtured and move forward without worrying. And that is what happens with the film tax credit. If you play games with that, the film industry will go somewhere else and we've seen that time and time again.

Every time you all decide that it' cool to play with this because somebody doesn't like the term tax credit, we the the taxpayers ended up paying that price because we lose that income coming into the state. Do the right thing. Kill this bill. Figure out the find a scalpel. Do not use a sledgehammer. Mahalo.

You Tom, go ahead.

Thank you. Chair, Vice Chair, Members of the Committee, Tom Yamachica from Tax Foundation. We have some concerns about whether this bill is going to be effective at all. If a later Legislature, for example, passes a bill with a credit and without a phase out, it'll be effective without a phase out.

So it may be nice to have on paper, but it's probably not going to do anything. We also note that the State Auditor is required to review existing income tax credits on a five year rolling basis and maybe that's kind of the way to go instead. Happy to answer any questions. Thank you very much.

Anyone else wishing to testify? Yeah. Come forward. Stay tuning.

Good morning. My name is Kat Chong. I'm a Member of the 665 Local Union and I'm a local set decorator. I wanted to say that I strongly oppose that bill and I hope it's not going forward. I usually work with a crew from 10 to 30 people, which includes set dressers, shoppers, painters, carvers, artists.

We have a really great crew in Hawaii that's been working for many, many years. And we've done very big shows like Lilo and Stitch. We just worked on Rescue High Surf. We really hope the show comes back.

We have a lot of competition in other territories that are much cheaper, that have a different system of making films, of the permitting process, of the unions, of the tax incentives. And we've seen a lot of films leaving. And we are really afraid that if this bill passes, we're not gonna, we're gonna be out of work.

So I also wanted to emphasize that we give a lot of work to local businesses. So we work with galleries, fabric stores, drapers, hotels, upholsterers, carpet stores. Any stores where there is local product, product being sold, we go and shop a lot. So I think we really welcome attribution to the community. Thank you.

Okay. I'm not sure if everybody read the bill before you started testifying, but it says income tax credit established or renewed after December 312025. So a lot of these things were established much sooner, not after. Okay.

My name is Daniel Hamilton Lowe. I'm, I moved here to help produce Doogie Kamelohoff for Disney. I worked on Monarch, I worked on Redone, Moana and Lilo. I'm the guy, I'm the middleman between the local crew and the studios. I'm talking. This year, I've talked about six projects considering coming here.

And I can tell you that it's my opinion that not one of those projects would come without a tax incentive. And I, I understand you're saying that this is not looking to eliminate that immediately, but it's talking about the, the future. And this isn't a chart about how much money you may have here or not here.

This is a. Without a tax incentive, you do not have a, a film industry. They, they will not come. California right now is talking about a 35% tax incentive and you're barely competitive at the 22%. And any conversation about switching to a grant system is just not going to fly. Thank you. Thank you.

Anyone else wishing to testify? Thank you. Okay, next item, House Bill 1059. Haima.

Morning, chair, vice chair, committee, James Browse, Administrator for Haima. We stand on our written testimony and what we're asking for is a very specific seven positions identified at the EMS. 5 and 6 is what we're asking for.

Thank you. HGEA.

Good morning, chair, vice chair, members. Nui Sebast here with HGEA. We'll send in our testimony in opposition to this measure. Thank you.

Thank you. Who? This is Jen, only first name. Okay, next item, House Bill 1145, no tax. Thank you, Tax Foundation.

Thank you, chair, vice chair, members of the committee, Tom Yamachika from Tax Foundation will stand in our testimony and be available for questions.

Thank you. Next item, House Bill 1146 Go tax.

Kristin Sakamoto, Deputy Director of Taxation thank you for hearing this bill. We- We are in support. And just very briefly, it restores the original intent of the bill which was that it should be revenue neutral for the state by proposing an amendment. I'm available if you have any questions. Thank you.

Thank you. Tax Foundation.

Thank you. Chair, vice chair, members of the committee, Tom Yamachika for Tax Foundation. For the reasons outlined in our bill, we don't think there is a current double benefit. So we question the necessity for this bill. I'd be happy to answer any questions.

Thank you. Natalie Iwasa.

Thank you, chair, committee. Oh gosh, I'm so sorry. I'm so nervous. I did submit written testimony but I wanted to emphasize a couple of points. This bill would disallow the state income tax deduction if it's paid by a pass through entity. And current law actually allows a deduction for individuals if they for the state income tax.

So basically what's happening is instead of the individual paying the tax, the the pass through entity is paying the tax. And you know, we have various laws. I'm sorry, my camera is on the fritz. We have various laws that are different between the Federal Government and state.

And so when those differences occur, an entity, partnership s corporation will file separate returns. But in this case if they do that, you know it's, you can't do that. I mean if you want to take advantage of the state deduction at the federal level, you still have to pay it through this. The Hawaii, it gets reported in.

The Hawaii return is paid through the pass through entity and then the individual can't take the deduction. So it's really an unfair situation that you would be putting individuals in if you pass this. It's just, in my opinion, it's not, it's not right to do that. So thank you.

I'm so nervous, but thank you for allowing me to testify.

Thank you. Anyone else wishing to testify? Next Bill. House Bill 1147 Dotex Tax Foundation.

Thank you, Chair, Vice Chair. Members of the Committee, Tom Yamachika from Tax foundation will send a written testimony, be available for questions.

Thank you. Anyone else wishing to testify? Next item, House Bill 1173 DOE tax. Thank you, Tax Foundation.

Thank you, Chair Meister. Members of the Committee, Tom Yamachika for Tax Foundation. We believe that 15 years ago in the 2009 Legislature that the Legislature enacted a 15 year statute of limitations on tax collection.

I think that means that after the 15 years comes and goes and all of the tooling is accounted for, that means the debt goes away.

What do you mean when you say, when you say I think, does that mean you're unsure?

We believe that's what the Legislature intended, although we recognize that Do Tax is taking a different position.

Okay, but if you're going to offer testimony, I think you don't want to keep saying, I think maybe we could be. We really need the facts.

Yeah, the facts are in our written testimony and, and it's all there. The, the Committee reports and so forth and the federal case law that it's based on. Okay, thank you. You believe that this is warranted to conform Hawaii tax law to the federal laws on which it's based?

Okay, thank you. Chamber of Commerce, Richard McClellan. Next item, House Bill 1439. Ombudsman, Auditor, LRB Ethics Commission. Anyone else wishing to testify? Okay, we're going to defer the decision making because we need to get out the next agenda to this to Tuesday April 1st at 10:00am hey. Calling to order the 1002 Agenda. One hour later.

The first item is House Bill 1 to 6. Recommendation is to pass with amendments on page 10, remove lines 19 and 20 and on page 11, remove lines 1 and 2 and reinsert the distribution percentages for allowable expenses on page 12, reinsert language to allow for the payment of awards for information or assistance.

Supplemental sums to stand to state and county law enforcement agencies. Expenses that are in connection with training and education and expenses related to enforcement and effective date to 2015. Any discussion not trivial, Tsai.

All members present pass with amendments? Yeah, all Members present except for, excuse, Senator Lee and Bella. Any objections? Any reservations?

Thank you. Next Item, House Bill 162. Recommendation is to pass unamended. Any discussion? If not chair, both side present.

Anyone voting no, with reservation.

Thank you. Next Item, House Bill 341. Recommendation is to pass with amendments affecting the date to 2050. Any discussion? Not sure what time.

341Pass with amendments. All Members present. Anyone voting no, with reservation.

Thank you. Next Item, House Bill 396. Recommendation is to pass unamended Any discussion And then triple side.

All Members present. Anyone voting no, with reservations.

Thank you. Next Item, House Bill 398. Recommendation is to pass with amendments defecting the date to 2050. Any discussion? Not sure votes.

I'll pass with amendments. HB398. All Members present. Anyone voting no reservation.

Thank you. Next item, House Bill 428. Recommendation is to pass unamended. Any discussion?

Pass and amended. All Members present. Anyone voting no, with reservation.

Thank you. Next item, Hospital 429. Recommendation is to pass unamended. Any discussion?

Non Cher vote before 29 pass. Unamended. All Members present. Anyone voting no, reservation adopted.

Thank you. Next Item, House built 431. Recommendation is to pass with amendments. Adopt LRV tech amendments. Remove the preamble section and in Section 2, require that Kahales must have connections to public utilities such as water, sewer and electricity and may charge monthly rents no more than 30%.

AMI amend Section 2 and 3 so the funds are expended by the Department of Human Services instead of the office of the Governor. Any discussion? Not cherbotzai Members present.

Anyone voting no? It's passed with amendments. Anyone voting no with reservation. Measure adopted.

Thank you. Next Item, House Bill 432. Recommendation is to pass with amendments. Remove the appropriations for fiscal year 27 and sections 5 and 6. Remove the appropriation section in 7 for Mayor Wright Homes redevelopment. Any discussion? That SH Members President.

Anyone voting no with reservation.

Thank you. Next Item, House Bill 433. Recommendation is to pass unamended. Any discussion? Not sure.

Vot all Members present. Anyone voting no with reservation.

Thank you. Next Item, House Bill 454. Recommendation is to pass with amendments effecting the date to 2050. Any discussion? Not sure what I.

All Members present. Anyone voting no, with reservation.

Thank you. Next item, House Bill 529. Recommendation is to pass unamended. Any discussion?

Not Chair vote. All Members present pass with amendments. All Members pres. With pass unamended. All Members present. Anyone voting no? reservation is your adopted.

Thank you. Next item Hospital 550. Recommendation is to pass unamended. Any discussion? If not TR.

All Members present. Anyone voting no with reservation.

Thank you. Next Item, House Bill 643. Recommendation is to pass with amendments. Adopt LRB tech amendments. Insert language on page 7, line 16, that the appropriated funds shall be expended by the Department of Agriculture provided that the Department of of Agriculture contracts with CTAHR for the purposes of this act. Any discussion?

If not with amendments, all Members present. Anyone voting? No reservation.

Thank you. Next Item, House Bill 714. Recommendation is to pass unamended any discussion? Not triple side.

All Members present. Anyone voting no reservation.

Thank you. Next item, House Bill 736. Recommendation is to pass with amendments effecting the date to 2050. Any discussion? Not sure. Votes I.

Members present. Anyone voting? No reservation.

Thank you. Next item, House Bill 974. Okay, we had quite a bit of testimony with suggested amendment, so we're going to Defer this to April 3rd, 1002, in this room. Next item, House Bill 1007. Same situation. We're going to defer to April 1st, 1103, in this room. Next Item, House Bill 1099.

Recommendation is to pass on any discussion. Not sure. We'll say.

All Members present. Anyone voting no reservation.

Thank you. Next Item, House Bill 1169. Recommendation is to pass with amendments adopting LRV tech amendments. Any discussion? Not sure. Votes I.

All Members present. Anyone voting no with reservation. Update.

Thank you. Next item, House Bill 1187. Recommendation is to pass with amendments removing references to flowers in the measure and inserting language into 103D205 to also phase in the small purchase of local nays under the same timeline. Perfect the effective date upon approval. Any discussion?

All Members present. Anyone voting no with reservation.

Thank you. Next Item, House Bill 1260. Recommendation is to pass with amendments. Adopt elevate tech amendments. Insert language so that plans are submitted directly to the Director of transportation. Any discussion? Not sure. Votai.

All Members present. Anyone voting no with reservation.

Thank you. Next Item, House Bill 1300. Recommendation is to pass unamended. Any discussion? Not share. V.

All Members present. Anyone voting no reservation. Adopted.

Thank you. Next item, House Bill 1406. We're going to take some language from the ironworker's testimony and amend to add an individual having knowledge, experience and expertise in the area of labor. Any discussion? Not share. Both sides.

As for the Members present. Anyone voting no reservations. Okay.

Thank you. Next Item, House Bill 1409. Recommendation is to pass unamended any discussion, not triple side.

This is HB 1409. What is 1409? 1409. 1409. Government procedures.

Any. Any further discussion on 1409? Pass. Unamended.

14 HB 1409. Pass. Unamended. All Members present. Anyone voting? No reservation.

Thank you. Next item. House Bill 1450. Recommendation is to pass. Unamended. Any discussion? Not sure.

Amended. All Members present. Anyone voting? No, with reservation.

Thank you.