House Standing Committee on Finance

Aloha. Welcome to the House Committee on Finance. We're convening at 9am on January 13, 2026 for the purposes of budget briefings from our various state departments. We're going to open up today with the Department of Agriculture and Biosecurity. Whenever you're ready, you may proceed.

Good morning, Chair, Vice Chair, members of the committee. Sharon Hurd, Department of Agriculture Chairperson, here with Deputy Director Dean Matsukawa. Wondering if we can start with the introductions?

Oh, yeah, do your thing.

Okay, so in the manner that it was written on the page, we have staff here that are administrators, managers, and subject matter experts. Starting with the ASO Claire Ordeal; if you could just raise your hand as you're called. Management Analysis, Warren Takenaka. We have Cedric Gates, who is our Legislative coordinator. Andrew Robinson, he's the Agricultural Loan Administrator.

Brian Kau, Ag Resource Management Division Administrator. Kevin Moore, the Ag Lands Branch Manager. Brendan Akamu, Market Development Program Manager. Yalei Zhao, Research Statistician. Dr. Isaac Maeda, Animal Industry Administrator. Todd Low, Aquaculture and Livestock Support Services Manager. We have Dr. Leo Obaldo, who is the Quality Assurance Division Administrator. We have Keith Otsuka, who is our Commodities Branch Manager.

Richard Cohen, also here from Quality Assurance, he is the Measurement Standards Branch Manager, and Dr. Han Lau, who is the Plant Pest Control Branch Manager, part of the Plant Industry Division. Esther Riechert, Pesticides Branch Manager. Jonathan Ho just walked in the room, Plant Quarantine Branch Manager. And Carol Okada, Administrative Executive Specialist.

We have - is Craig in the room? Craig is not in the room, but we have a new, very significant new hire: Craig Clouet. He is the GIS Program manager. He's coordinating the dashboard that is brand new to our website. Okay. And we have also our hemp specialist, June Tuliao.

And that's in addition to anyone that might be online and zoom right now, which that is so. And that's everyone that's here.

Go for it.

Go for it. Okay, we're going to start with our prepared a budget testimony that I suppose is on - people can see it online?

Okay, so this is the Department of Agriculture and Biosecurity testimony that start with the major highlights of 2025. Starting with the Act 90 transfers that we're tasked to take care of; when we began in 2023, very significant improvements on this. During the calendar year 2025, we had 22 transfers of parcels, totaling 1,531 acres.

As of December 31st of 2025, our Act 90 transfers totaled 276, totaling 26,488 acres. In addition, DLNR and DAB have approved another 42,934 acres pending the executive orders and surveys and county subdivisions. Got to give a shout out to our Ag Resource Management Division and also the cooperation we've had from Chair Dawn Chang at DLNR.

It's been a real collaborative movement of these TFK's. Okay. Act 69 was the AG Loan Refresh. We had not had changes on the Ag Loan Program forever, since Dean was the administrator 30 years ago. So that was significant. So successful that we have - we'll be asking during this session for a raise on our ceiling.

It's been so successful. The farmers are responding. Thank you to our Ag Loan division. The biosecurity dashboard, of course; hopefully you've had a chance to take a look.

It was stood up ahead of schedule and the intent was to give the public the information that they can be reassured that their tax dollars are going in a way that supports them, that we are in their neighborhoods. We're removing the dead coconut trees, which are of course breeding sites for CRB. So that was a significant.

And thank you very much to the legislators and the Governor for giving us the funding to finally stand up a dashboard that is this helpful. It's a work in progress, by the way. We have a lot more to do on this also. Akamai Arrivals.

Akamai Arrivals is a program that is replacing the paper, hopefully eventually totally replacing the paper documents. I think being part of the airline industry in the past, it is a significant improvement to the way that we collect the information helps them as well. We're at 70% right now and the goal of course is 100%.

So we're working on it. Thank you for that. Oh, yeah. I should mention that on January 1, a couple days ago, the link to the DBEDT tourism survey went live. So we're finally matching up the two, trying to support each other on the collection of data. Pesticide Disposal Program: this was revolutionary in terms of the current staff coming up with.

It has environmental benefits, it's voluntary, and thank you again for providing us the funding to implement a program like this. We're working on commercial applicators now because they really have the bulk of pesticides that we need to collect.

It had not been done for 15 years and we had seven events last year and collected 39,846 pounds of unwanted pesticides, making the environment and the citizenry safer.

Okay, then we have the development of the biosecurity plan that thanks to collaboration and learning and information that we picked up on travels that we've done to New Zealand and other countries. We have a lot to learn from other countries as well, like Taiwan: that's right on the same latitude, longitude that well, actually, that we are.

So the biosecurity plan that we came up with is going to help and it's going to bring together the community, you know, draw them in and get them to help us with our efforts to control. We have boots on the ground, the invasives have HYSC on the ground, DLNR has boots on the ground.

But it's nothing like what we can do if we engage the commodity groups and the citizenry to help us with our blitzes. Okay, we, we sit, we're sitting here and we're aware of the budget constraints that we all face as a state.

You know, we understand that, but at the same time we, we realize that there are vacancies. This morning we heard that they're out of the 4,000 positions. There's 25% vacancies statewide. We're going to work on that. We're going to work to together to fill positions. I hope this is considered good news.

But out of the 149 vacancies we started the year with, we're down to 160. So we're working on our vacancies and the vacancies that still remain. We have people in the pipeline. We have 89 day hires. We have people that are being on the interview list.

We're working on bringing that 116 down even further, which we have to do. Oh, career fairs, we've done, thanks to DHRD, we've done rapid hire events in Ojai. We're getting there. We do know that the workforce development path is where we're working on that.

But when you get them finally through all these efforts into the interview process and you make an offer, we're finding that the real one hurdle we need to address is the, the pay. Right. What we hear is benefits don't pay my rent.

So we'll be coming back to this body and asking for some consideration on those, those issues to help us do our business. Okay. The next slide that was prepared is the trends for 2026. Federal government cuts, heavy duty, the tariffs: we're working on programs that were just given to us.

I was just last week in Santa Fe, New Mexico, meeting with the western states, talking about how we're going to use the $285 million that was given to us by the Federal Government to the Western States. Basically, it's called the America First Trade Promotion Program, AFTPP, and that's to combat some of the impacts by the tariffs.

There's inflation, labor, climate change. Now climate change is - sometimes we forget what it really means. But what it means to agriculture is drought and fires. It's resulting in a condition where one of the number one commodities sought by the world is forage. They want alfalfa, they want hay because of the effects of climate change.

So it has its impacts. Global pressures we all know about. There's wars everywhere, competition everywhere, supply chain disruptions, there's economic slowdown. It's called de-globalization and slowbalization. We're having to meet the demands that the rest of the world.

We used to look to the world for that, but even the world; India is not exporting rice, Ukraine's not producing wheat. The suppliers that used to rely on other global partners, they're declining. The big number for Hawaii, the Census of Agriculture measures every five years in the years of 7 and 2.

So the difference between 2017 and 2022, Hawaii lost 10% of our farms. Nationally, 6.9% of the farms went down. So, our conclusion for this slide is for the state to double food production and achieve the 30 by 30 and 50 by 50 mandates that the state government has given to as challenges.

We really need more support for ag farmers and ranchers. That's going to have to be the strategy going forward. It is no longer a good strategy to rely on imports. The imports just aren't coming. Everyone's struggling. Farms are in decline and under pressure everywhere. So I'm going to turn it over now to Deputy.

So with the budget constraints and everything going forward, the Department is going to be focusing on two different areas. One area would be the biosecurity area and the second area is in order to reach the goal of doubling local food production, we need to increase support for farmers.

So what we've done is kind of take a look at our development functions and try to - our intent is to put them into one division so it creates a one stop shop for the farmers. It would integrate three functions that we do have in the Department right now: financial assistance, marketing research, analysis and statistics.

Our plan is to kind of separate the functions out, make them more aligned with what they do and then create synergy between these, these various functions.

So if a farmer comes in for a loan, we can check whether they need marketing assistance or maybe data on what crop to grow or you know, where the markets are and that type of things. So what we also been doing a lot of is we're getting federal grants.

We have a grant writer now; that has been very successful. And despite the cuts in the federal program, we have gotten some of those grants. So we were thinking to put that all into the financial assistance section. And our marketing section has been also assisting with grant management.

So our plan going forward is to create a special grant section which could take that burden off of marketing and marketing, focus more on marketing and increase their local marketing efforts in the state. Statistics was kind of mixed with research and we had all our statisticians under economists. We're kind of going to separate those functions.

So, research kind of stays on its own and statistics can kind of focus on just doing statistics. So, like in doubling the local food production. If we stay on the track we are right now, we will be two years late. I mean like, by 2032, we will have doubled local food production.

So, despite the decline in farms, I think we're seeing large scale farms, Mahi pono, that type of operations; Waialua eggs that are much larger, large scale ag, and I think that's moving us forward, despite the decline in the number of farms. The actual farm production is increasing and we're seeing the dollar value go up.

Part of that is also attributed to the increase in prices and everything else, but it is, we are kind of on track to doing that. We're also planning to do an aquaculture industry survey to find out what aquaculture needs so we can help a growing fledgling industry.

But at this point, we already contracted the survey; should be done close to the end of leg and we'll use that to develop legislation for the next upcoming session. I'll let Sharon handle the biosecurity portion of our two phase plan.

Okay. Biosecurity is not only public health and welfare and safety and people, but every farm and ranch in the state has an invasive pest.

We would like, everyone would like to see the day when a farmer or rancher can wake up and just farm, start growing food, increasing, you know, the amount of food that they can provide to us, instead of wondering, "I wonder what pest did to my farm last night?"

"I wonder if the pigs got in and ate up all my goods." Right? So biosecurity is so important to farmers and ranchers. And we do have invasive species plan. It's a work in progress. And the reason it's a work in progress is we have priority pests, right? LFA, CRB, Coqui.

And once we get these taken care of, the work in progress is because right behind them: you have the Queensland beetle, you have the potential for other species to be introduced. So once you know we're doing it all together.

But focusing on the species plans for the LFA, Coqui, and CRB filling existing vacancies is top of mind. We have to find a way to. And you know, we reverse engineer the workforce development process and we've gone down. Yesterday, there was a meeting with FFA and we reverse it and we wonder where the holes are.

How can we do it? But you know, no matter what we do, how much we prepare the student, the individual who wants to, who wants to love to work for agriculture. Push comes to shove, we have to pay them. We have to make it a - as the employer, we are being beaten by the other employers that are offering a better package.

Whether or not it's in the field that you want, I ask myself, is this the job I intended to get in college? I don't know. I guess I followed the money like everybody else does. Right. Where can I, where can I?

We want to provide that sort of path. The branch reorganization should be is very exciting. It's going to give - it's pretty much Deputy's idea to give the farmers and ranchers one place to go that they can get," How do I make money? What should I grow? Where's my resources?"

I, you know, "My electric bill is really, really high. How can I fix that?" Now that has nothing really to do with ag, but at least it gives a farmer a place to come and say, "You are the Economic Development Agricultural Loan Division. Help me." And that's going to me that's a very exciting thing.

We're going to have grants, we're going to have marketing programs, trade shows. We'll be able to give them statistics. It's going to be the dream that we're hoping to provide. Yes, we have to be sure that our bar security contracts are executed.

I'm going to take a moment just to say that every PD that DHRD has created is for a reason. That every PD is filled by an individual that has a job to do. Then it's like serendipity. The Federal Government gives us the micro grants for foods. They give us $3 million. Only Alaska and the Hawaii territories got.

So now we have this opportunity to give individuals $5,000. 600 people a year can get $5,000. The work that that entails is huge. So what do we do? We go to contracts, we enforce contracts. But every individual that's filling a PD is fully eight hours of work. So the contracts are necessary for us to do the work that we're given, you know, the good news.

So you're going to see some contracts coming out with the Act 250 funding that you've given us: CRB, LFA, import replacement. So, we have to make sure that we have the expertise, the capacity to do that and fiscal needs help: DAGS,OFAM, the whole pipeline of the contracts is it needs to be beefed up.

And we're going to start with us, we're going to start with the Department. Risk assessments: we have Carol Okada and her and the PI, the plant industry team, because the pathways that are the bugs are coming in now is just increased.

We have FedEx, we have Amazon, we have - you can even pick up something at your local neighborhood grocery store. You know, the pathways that the bugs come in are increasing. So we're doing risk assessments. Where are these bugs coming from? How can we capture them? How many people do we need?

We're thinking of installing, I call them ring cameras, you know, motion detectors. When we don't have staff at the ports, let's say from 8 o' clock to 8 o' clock or 8 o' clock to 7 o' clock. And these will be manned by security companies.

You know, I don't want to name them, but you know who they are. So when there's a detection they can tell us, "Oh no, no, no, that was just car. Oh, wait a minute, that really looked like a skunk there." So then they would trigger an alarm and then Jonathan's phone would go off.

So we're entering to these types of risk assessment programs that will enhance the work that we do, but maybe not so much by staff. But thank you for the funding for the risk assessment. These are the ideas that are running through the Department right now. The Maui Transitional Inspection Facilities: so, Maui's in a rebuild mode.

We know that it's in a recovery rebuild mode, which means that they're going to bring in construction material, furniture, food, cement. They're going to bring in a lot of stuff. So we're going to start with this pilot program that we pretty much learned from our trips to New Zealand.

They have everything that comes into their country is inspected offshore before it enters. So we don't have that capacity, but we can set up a Maui transitional facility at Kahului Harbor. We've already met with DRE, DOT harbors. Oh yeah, DOT harbors. And we've, we're selecting a spot through the work of Jonathan's team. The plant industry plant quarantine.

They've been working with mainland companies because we have a high number of skunks and possums coming into the state nowadays. It's like four times more than we've experienced in the past. They've pretty much targeted that it's coming in on. You know, not to point fingers, but they seem to be coming in on vehicles.

So with the communication with the mainland, they've confirmed that the car companies store their cars in the open and they see a lot more skunks and possums running around.

So this Maui Transitional Inspection Facility, we've met with DRE and we've identified a location that all the cars and construction materials, farm equipment, heavy gun, you know, can go there for a detailed inspection. The last possible.

The last skunk we found was in the wheel well of a car, and it made it all the way to the dealership before it was detected. So, that we're doing.

I'm reminded that we have by the end of the month, we're hoping to send a mailer to every district, a mailer with how to identify invasive, let's say CRB. What we're doing about it, you can go to our dashboard and check where we are in your neighborhood, and then what the public can do about it.

And these mailers, we're targeting the districts that right now have the issues, such as Waimanalo with CRB, LFA, Coqui frog as well. And so we get - we're going to do these types of things. And again, we're using the funding that you gave us.

It was the invasive species outreach and communication line item that we're using to fund these mailers so that the public can join us in the fight. Join us and join the biosecurity efforts. Yeah, the dashboard is key public education. We are...

I'm getting in my inbox, and I'm sure Dean and the rest of the team, from high schools, "Can you come Can you give us information on this? We want to do a class. We want to - our team wants to do an event." So we're really doing our job. The public wants to join the fight.

The public is being educated through the dashboard as to where we are, and they're saying we want to volunteer. Biosecurity helps agriculture by reducing damage, preventing the spread of diseases, and easing restrictions for exports. I want to take a moment to add that biosecurity is also - we focus on plants, but animal biosecurity these days is huge.

On the mainland, we know of H5N1 concerns, and right now we have something called. And Isaac and his team, Dr. Mehta and his team are participating in weekly calls on the New World screwworm.

Now, the New World screwworm, we don't have and it is like 70 miles off the coast of Mexico right now, off the coast of California. And what it does, it's, it's a fly, it's a fly. It bites humans, it bites animals, warm blooded animals.

It bites cows and it lays their eggs and the eggs form into larvae that eats flesh, flesh eating larvae. And it's scary. It's really, really scary. Secretary Rollins has funded a program that will eventually release 500 million sterile fruit flies - sterile flies a week. It is that threatening to the industry and the livelihood of the hui.

So let's focus on animal diseases as well. The veterinarian team meets flights, ships checks for diseases. And our Akamai Arrivals Program keeps us safe from rabies. Every animal that comes in has microchipped and that has information that is vital to whether or not they're. What's the word I want, immune or resistant to rabies.

They already got the antibodies. What we have to do a physical check of every animal. And that is a delay. And I'm, despite what we would try like to do, we only have two ticks in the state and there's like 400 ticks in the world. The ticks that we have are not really threat to human health.

But in order to be sure that the animals that are coming in don't have ticks, we do have to do a physical inspection. And my question was, so why can't they be checked on that side, you know, wherever they're coming in from?

And I was told by our veterinarians and Dr. Maida's team that, if you read the reports, ticks are found on airlines, they're found on vehicles, they're found on people. So we really do have to be extra, extra cautious. BTS: another threat.

So the point I'm trying to make may be too long winded is that biosecurity is going to be expanding in this coming year, 2026, to include animals. So, we're going to be focusing on the biosecurity of keeping Hawaii safe from pests on animals as well as plants. Okay.

Turning it over to cip. Okay, let me go over our CIP request. The first one is the Royal Kunia Ag Park. It's $15 million. This is to develop 150 acres in Kunia into 24 agricultural lots. This will move the needle much, you know, quite a bit on our doubling local food production goal.

The project is shovel ready, so the timing can be better. This area is located with our best water. It has Waihole ditch water available, so irrigation water is available. The developer is going to be bringing up the utilities to the. The permanent water will be brought up by the end of 2028, so it coincides with this development.

So what that brings up is they're going to be bringing up the potable water. We have the irrigation water from Waihole Ditch. The potable water is necessary for food safety compliance. So all these 24 farms would be able to keep fully food safety compliant. And we're bringing up the electrical systems also, the electrical power also.

So it'll be a very good. It's an excellent project. We've been waiting many years for this. So we're ready to move. It's shovel ready and it's something we really want to get done this year. The second request is 15 million for the Waihawa dam to bring it up. To. Dam safety standards.

This system is very, very important because it provides irrigation water throughout the North Shore area. It's a vital resource even to, you know, fishermen and everything else in the area. But it has to be safe. So number one, we want to bring this, make sure the dam is safe for the public. There's another.

It's a 31 million dollar project, so we need an additional 16 million on this one to get it done. But it's an asset to the state right now. It's kind of a liability and if we get this done, then it could be an asset to the state for many, many, many years going forward.

Our next request is 1,150,000 for the Waimea irrigation system improvements. This is for ditch stabilization and improvements to the flumes and the ditches. The animal quarantine station is $4 million. This is to make needed repairs to the roofing and the electrical system on the current site, the Kahuku Ag park. We're asking for 1,775,000.

This is mainly for water storage tanks and standpipes on the irrigation system within the agricultural park. Our final ask is for the 1.3 million for non agricultural and agricultural parks statewide. These are for roads, bridges and culverts. Is our primary ask in the budget right now. We're happy to answer any questions.

Sure. Thank you. Just a brief kind of catch all question. You folks seeking any emergency appropriations? Have you guys been okay with the existing restrictions from the Administration? Yeah, I think right now we're okay. You're okay. Okay, Members, any questions to start us off? I know you got questions.

I got a couple, but I don't want to like.

No, no, no. Going, going, going, going. Chair's over there. Got a ton. Yeah. We're also joined by chair Sean. Congrats. Chair.

Yeah, yeah, go for it. Thank you. Thanks for coming. Appreciate all the work you folks do. And I know it's. It's everything all the time, all at once, like all. So just a couple areas.

So the CIP, that $16 million for the second half of that improvement, that's going to be next biennium or is that in a few years out.

This is what the Governor gave us.

Zero, okay. So you wanted 31? Yeah, we wanted 31.

Yeah.

Is it. Will that. Will you be able to work with 15 in incremental fashion to get progress going or is that just going to be 15? It sits in bank.

No, I think it's a. It's a. We have to do it all one.

One shot. Okay. Contract. Okay. And then the other easy question is the cameras you were talking about. That's a great idea. And I'm sure Jonathan is aware of the.

Call it AI technology that instead of hiring a security company to look at a video screen, sleep through the night, just have a computer do it for you and it alerts Jonathan or whoever you designate to that technology. I think would be a lot, you know, wherever you can use technology like that. A little harder questions.

The marketing program. Can you guys maybe talk about the size of like the number of personnel, the budget and any like recent successes or any examples of that within the.

Sure. Thank you. We do have our marketing manager here, but I used to be the marketing manager, if you recall. And we've not grown at all in our marketing team. Right now you have the manager, you have two economic development specialists and then you have a intern and an office manager.

There is federally funded position that we're trying to change to a permanent position. What was it? zero yeah, that. Where we were very deficient in our budget and. And I'm. Is the trade shows. There's a lot of. There's an impression not in this room, but elsewhere that trade shows are a fluff.

You know, trade shows are like fun and games, but it's not. Trade shows are where the buyers rely on to meet you. Their buyers come to trade shows all over the world eager to meet American Hawaiian companies because we are food safety certified. You will see in trade shows, the USA pavilion is packed shoulder to shoulder.

And then you go to another country's pavilion. You could throw a roll of bowling ball down the alley. So I asked the Mexico contingent because we're in competition with Mexico for our products. And they say because you guys are food safety certified, we want to be food safety certified. We're trying to be like you guys.

And I said, what about the taste? We don't care about the taste. We'll get there. So trade shows. We have lost our trade shows, folks, because we don't have the funding for it. Food X, our number one top trade show. Japan has been our top trading partner for agriculture exports since the beginning.

Since we've been tracking stats, we no longer are the lead in the Food X show. We've relied on DBET to Fund us because they have funding. So DBET takes the lead. Thank goodness for dbet. Thank you. But we are allowed to participate.

Much to the chagrin, by the way, of the ATO Agriculture Trade office in Japan prefers that agriculture take the lead for agriculture shows. But in order to be a presence and to promote Hawaii products, we partnered and thankfully, so. So, yes, the budget could certainly be beefed up.

Gulf Food is the number one trade show in the Gulf coast region. It makes so much money. I think in that region, they produce between 1 and 10% of what they eat. So 90% of their food has to come in the United States of America. Our booth there, I'm telling you, is shoulder to shoulder.

I had one guy say he, he had to go home after day one. He sold, you know, like 40 containers of sunflower seeds on the first day. He's from California.

So let me cut you off real quick. Yeah, thank you.

I can talk.

Obviously, very proud and that surpassed zone. So as I understand, you have about six people and you guys go to trade shows and present a select product mix from Hawaii and try to secure contracts that way. Or do you go with the vendors, the farmers, or the processors themselves?

I mean, just try and orient for the rest of us. So we understand how that money's allocated and how it's. How it moves our sales export of Hawaii products forward.

We use our federal partners to help us with the international trade shows, but we have to pay for the booth, we have to pay for staff travel. Okay, so we have that. But we also do local trade shows. We do the Maidanoi festival, we do the lodging show.

You know there's different ways that we can promote the landscape show. The hitch the lich landscape industry for way has a treat show so we need funding for that. But we also need funding for the Seal of Quality program that promotes genuine Hawaii made Hawaii grown products.

We need campaigns for that to inform the tourists and local people that if you buy this seal, if you recognize the seal, you are getting a genuine product. The macadamia nuts that you're buying are not from Australia, they're not from Africa, they're from Hawaii with the seal.

We also have the Made in Hawaii with Aloha Pot produce program. So we need the funding that you give us is well spent for promoting local products locally, nationally and internationally.

So and. Okay, I can go more on that later. So the virusecurity focus switching gears.

I know we have talked a little bit about this but like on Hawaii island qlb which is a Queensland longhorn beetle was like an emerging thread for like 15 years in Puna and finally it just jumped across Hilo into Hamakua and it's really wrecking the Cacao industry.

But it's also Hulu industry which is really starting to lift and grow on Hawaii Island. That cooperative has been a big part of that. And I know like we're still fighting coqui frogs and lfa, but I feel like that ship has sailed.

I know here on Oahu maybe there's some options but I ask that you guys consider and work in your. When you were talking about your strategic plan how to allocate those resources where we can actually stop stuff like CRB is a good example, right? Molokai, it's not there. Maui, it's pretty quiet. West Hawaii.

Hawaii island is possibility of getting it under control or eradicating it. Those are like efforts that are monies are swell. Spent a million dollars on Terminix for LFA and Hilo just throwing it into the way. I mean I don't know that's. That's. You have to pay for that forever if you're going to do LFA as an ongoing.

We talked about that. So I just. As you come with your. As you try to fill that biosecurity focus that we try to look at our imminent or you know early pest detection and putting a lot of effort at that versus stuff that's. That's like a biocontrol. That's what we should put biocontrol money into, not pesticides.

It's that's just really tough. And we've had these conversations and then the last one is the integration of ISC into. Been reading some emails. ISC is the Invasive Species Council that's going to be transferred from DLNR as an attached agency to Department of Ag and Biosecurity.

And I just was wondering if you could provide an update on that.

That happens in 2030. That's the deadline for it. The preparation to that moment is that we are, I guess we're. I don't want to say we're waiting, but there is the Deputy of Biosecurity that's in place January 12027.

So up until that time I believe the funding stays with DLNR this year and next year the funding comes to. Next fiscal year the funding comes to Department of Ag and Biosecurity. So it's kind of like we were working with isk Jonathan and his team. They have a schedule for. I think ISCs have.

They're canvassing the area in Hawaii and then when they find a detection, positive detection, they send our team out and then we. So we're working together.

You read in the paper about how crb, they have the detection dogs at the county level and then they, I think Kauai got six dogs and so they do the detection, they call us. So we are working with the integration of the two together.

The real impetus is going to happen when the Deputy of Biosecurity is in place January 12027. At that moment, hopefully we have enough of the financial side set up the positions.

In fact, I believe as far as the positions, Dylan R&DAB has agreed that no positions from Deb, they want to keep all their positions and this is understandable. So we're going to have to establish positions within our Department within DAP to accommodate or to make ready or to be effective when we merge with hisc.

So that is the details that we're working on now, kind of like housekeeping stuff. DLR is going to keep this, we're going to do that. But we're really in heavy recruitment mode right now to look for the Deputy of Biosecurity. Somebody that can is familiar with both the HI and the research side, animal side, the plant side.

You know, it's going to be an all encompassing thing that take in crb, take in lfa, take in, you know, how is this going to look? How many people do we need? How much money do we need? 2030 is like right here.

I know, that's why I ask. It's 2026 already.

Ding, ding.

Okay, well, thank you. I'm sure we'll learn more when Chair Time has his biosecurity meeting next week.

And thank you, Chair.

Thanks.

Zero, yeah, I mean, if you ever need help training your guys. I have Koki frogs, I have fire ants, my Ohio trot, my ohia tree died from rod. And I also have Queensland longhorn beetle all in my yard on like a quarter acre. So. Yeah, he lives in town, right next to the wall.

We need to inspect you every time you get off the plane.

It's okay. It was all there before your Director. No stress. Okay. Who else has some questions? Cherry, you got any questions? We'll go repruso. Rep. Kitagawa. Rep. Morikawa. Go ahead.

Thank you so much for being here. So you mentioned in your materials that you know there are multiple functions or multiple sources of revenue that have been coming from the Federal Government to address the middle of the supply chain infrastructure. I'm thinking about the USDA resilient food systems infrastructure and so on.

And you caution that those federal funding streams are threatened. And then you also mentioned that the positions that support Farm to School and Farm to State Purchasing, you only have two federally funded positions. If I read that correctly.

I don't think we have any federally funded positions for school.

Okay. Okay. So maybe that's not a concern. But I am wondering, given the context of, you know, the federal threats to funding, do you have an analysis, a plan to develop permanent state capacity should those sources of funding dry up to address the middle of the supply chain functions? Thank you.

And it's with this reorg, but I want to address the RFSI question. RFSI has been wildly successful nationally. Right. Providing we have 10 companies locally that are making a success with that funding. But it's going away. They've told us that it's gone.

So next month at the NASDAQ meeting, the National Association of State Departments of Agriculture, we have an action item to add equipment piece that we're not interested in. The movement of the earth piece. You know, the big infrastructure piece. What we're looking for is funding adding a piece for equipment into the specialty crop block grab program.

Because that funding is an M. It's a mandatory funding federal funding program. It's in the farm Bill. 50 states territories support it. Let's. Let's add an equipment piece under the specialty crop so that our middle of the supply chain enhancing specialty crops. Guess what? All we have is specialty crops here.

The only downside to that would be that animal proteins are not supported through the specialty Crop block grant program. So we might be standing in front of you in the future asking for RFSI money for the animal protein sector. But right now that's a plan to, you know, rfsi.

We also have a climate change Bill going through, Cedric. And I think what we've decided on, and I know we're in a budget shortfall. We let's stipulate that 1% of our farm gate would be $7 million. We're saying, could you give us $7 million for the RFSI program locally? And it would just be for equipment.

CIP projects, tough to get through, but just equipment. You know, if a coffee mill just needs a new roaster or a food hub needs a freezer, a large freezing capacity or a cut wrap chill. Wow, that'll make such a difference to the agriculture. Doubling food production, allowing DOE to procure more locally produced products.

Because the DOE is on, it's, what is it called? Indefinite time, indefinite quantity. And so when you want indefinite time, indefinite quantity, the farmers have a hard time providing 4,000 pounds of tomatoes at a moment's notice.

So what they want is the food hubs, the infrastructure, the equipment can be there to provide that indefinite time, indefinite quantity for the institutions, but they don't have it. You know, so this, it was a brilliant idea. Seven million, Climate change, food sustainability.

So there's a Bill that's being introduced in the governor's package.

We only have one Bill and it. No, we're introducing. The legislators are helping us with that Bill.

I look forward to learning more about that. Thank you.

Thank you, thank you.

Thank you for being here. To all of you, I have a few questions. Hopefully they're short answers. I noticed when you went over the cip, there is one that's in your document that you provided that you didn't go over, which was for the Molokai irrigation system improvement.

So I just wanted to check if you are still requesting that or if you no longer need that. And the PowerPoint is the updated.

Yeah, the PowerPoint is updated. I think was inadvertent. It's in error in the chart.

Okay, so that Moloka irrigation system is not needed. Okay, great. And then I just wanted to. I read through the little section you had about little fire ants and the update.

And I guess my question is just, I know you're doing work on it, you're working with other agencies as well to address it, but do you think that with all the work that has been done in the last year or so that Oahu is still.

That we're still able to potentially eliminate LFA on Oahu, or are we beyond the point where it's sort of like now we're just managing? Because in previous years when we talked right, that was what we were trying to do, is eliminate LFA from Oahu. Now it seems that it's grown. There's more sites.

So I'm wondering what the department's perspective is on LFA on Oahu.

We do have Jonathan here who can respond to it, but the word eradicate is a tough one, right? It's like Jonathan goes crazy every time I use the word eradicate. But Mililani was successful in eradication, so LFA can be eradicated. It needs a lot of community support. There are tools and resources to do.

There are chemicals out there. There are agencies out there that can eliminate eradicate. And maybe it's trifling, but I use the cockroaches and rats example. If community and homeowners individually didn't try to take care of roaches and rats, we would be overrun. So, yes, the Department is doing what we can.

I'm told by my entomologists that the only cure for ant is a worse ant, and we don't want that. Right. So we need to take the lead and do what we do with keeping our area safe. So don't give up.

We're not giving up, but we're contracting with the team that has the cars, the personnel and the equipment. We're providing chemicals. You are giving us funding to provide chemicals to homeowners. And we're all in it together. But the reason that we're using contract pco, the certified pesticide operators is LFA is a structural pest.

According to the rule, you attack structural pests with a certified pesticide operator. So we're working with HAL and saying, you know what? Maybe, you know, we understand that you train, you teach them the procedures, but because you are not a. Until you become a certified pesticide operator, the state's liability, you know, we would like to protect everyone.

So we're working with the certified pesticide operators. Like I said, have the staff, have the equipment, have the cars, and we'll get there. We're not giving up.

We can still get to the E word, but we're going to need the community and the homeowner, the Parks and Rec, you know, everyone that's involved to kind of get in the fight with us.

Okay? So it's still possible, which is great. And it has been done. Okay, that's great. And last question. If people. Because I've heard In Kaneohe, right. That there are trees that look like they're crb, they're completely gone to coconut trees.

If community Members see a tree either on the main road or at their home or wherever it may be that looks like it may have crb, is there a number that they're supposed to call? Is there someone that they can reach out to to say help, is this crb? What can I do to stop the spread?

Yes, it's the pest line, but it's not working real well. So the dashboard is. In the dashboard, there's that link that you can report it. The, the different. The chasm is public and private. So as the Department of Agriculture biosecurity, we can do public lands. A lot of the reports we're getting in are for private property.

And we can help them. We can even go. Go so far as to help them with providing chemicals. But we have to be there, right, to apply it. So there is that. On the dab Wish dashboard, there's that number. But it's not as effective as we're. Trying to find a better way.

You know, maybe just this hotline that deputy is coming up with is the One Stop Shop. You just call this one place, send us a picture, and we can take care of it. So it's. It's. Nobody wants to see a dead tree. But the worst part about it is it's a source of breeding.

It's a host for breeding additional crb. So.

So is there a number or a. Something to call now so that, you know, like that we can share? Right.

643.

Pass 808. Okay, but you just said that doesn't work so well.

You. We'll take a message, right?

Zero, I think, yes.

You don't get a lot, but if you, if we get this One Stop Shop set up, then you'll have a live person take it down like a dispatcher.

So the dashboard is working though. The dashboard is working. So is there like. I don't. I. I'm not sure if it's in your presentation or not, but can you email like all of us with the link and information? I mean, the mailer is great, but it's only going to certain areas. Right.

But I think even to other representatives who may not get the mailer, being able for all of us to disseminate that would, I think, be helpful.

Okay, we can get that to you. Great. Okay, thank you so much. Thank you.

Thank you. Thank you. My question is up on CRB because every week I see the golf course at Waialua And I just realized that in 2023 is when it was first, I guess, treated and it's 2026 now. Is there. Are the trees survivable after they've been treated or are they like completely.

Once the beetle is there, they treat it. Is it gonna make it or is it not gonna make it?

It's a good question. They're all stages of survival. We, our focus now, using the funding that was given to us, is removing the dead trees. But what we do is we go out and we inspect. Exactly to your point. Does this tree have, does this coconut tree have potential for survival?

And if it does, we will save that tree. But we will save that tree. We'll tag it. It's been treated. Don't eat the coconut. But yeah, the focus is on, is on a removal of the dead trees because of the threat as a breeding site and the danger to the public should it fall over.

Now, you know, coconut is very popular. They're being sold to drink. And will those trees that have been treated ever produce fruit? And how long will it be before. You can actually, Jonathan, is it one year?

zero, maybe it's Esther's question.

Yeah. Hello, I'm Esther Ruckert, the branch manager for pesticides. So for if they are using a pesticide product that is for food use, right, in this case coconut, first the product label itself has to state that you can use it on coconut.

And if that is the case, there is going to be additional requirements as far as how long you need to wait before you can actually pick the fruit and consume it. Usually it's a year, but it's product dependent because different products have different kinds of chemicals with different percentages.

So that's what I'm worried about. If a tree has been treated, but a person doesn't know that it's been treated and might just go and pick the fruit, or is there a way that people will know that a tree has been treated? Is it just a tag?

So, yeah, so I guess there's two different types of treatments. So there's like crown sprays with residuals, and then there are systemic injectables. So the crown sprays, they wear off after a specific amount of time. They're not within the tree. And then injectables, they. They do wear off over time. And. The trees are labeled.

So if we're doing treatments, we use that. I think folks have seen that crb, that plastic tape, but we're also like putting on a physical metal tag for each individual tree. That's indicating when the tree was treated. And then we have data to make sure that we know when the tree was treated, what it was treated with.

So that essentially a lot of its acid protection, we ensure that we can continue the treatments to make sure that the trees survive. To answer that prior question, that if the trees are damaged, depending on the level of damage, if you start treating them, the trees can recover.

If they're not, you know, they're just sticks, you know, obviously there's not enough energy. But if there's not a lot of damage, the treatments and you prevent additional feeding damage, the trees can recover from crp. So it's not one, once they get hit, they're gonna die.

But you got to be quite selective about what you're, how you're using the chemicals and then obviously where you're using the chemicals. Generally speaking, we're not treating trees that are being used for food. They're primarily all landscaping.

Okay. And then if, if a tree has the beetle and it has fruit and people go and eat the fruit there, it's okay?

Yes. I believe there's only one chemical that can be used on fruiting coconuts and I don't think really anyone's using it. All the rest of the chemicals the trees need to have no fruits or flowers to be treated.

I guess it's just we have to let the public know how to identify trees that have the beetle. And I know it's because the leaf is kind of weird deformed and that's, that's usually a sign that the beetle is in there.

Yeah, the V shaped cuts.

I don't know if they have enough information out to the public about that.

Yeah, I guess to get back to like the website, so it's biosecurity.hawaii.gov so.

That's the dashboard that was kind of like breezing through. Yeah.

And then you know, obviously that, that's a work in progress where we're adding additional information there and then I guess as to the reporting the six, the, the pass outline. 808-643-7378. It does come to plant quarantine. Depending on where you're calling from, it will, it'll kind of auto route.

It will be picked up if it's during normal working hours. Obviously it kind of varies depending on the island, but after hours there is a, there is a answering machine and then we respond to everybody that calls.

Because I know a lot of people, especially like private homeowners, we don't really have the capability of treating you know, every single person's home for crp.

But a lot of times, again, we provide them with information on things that they can do about, you know, obviously multi management, how to, you know, protect their trees, give them knowledge about if they want to do chemical treatments, you know, things that they can do. And then again, a lot of things about kind of guess debunking.

A lot of times, I think. Stuff. That they see online, like, you know, they're buying, you know, potting mix from Yoko Grow and it has CRB larva in it and, you know, it's coming in infested and that's not the case. It's getting infested in the state, making.

Sure that folks, when you buy them, don't buy them with holes in them because the beetles are just flying into it and stuff like that. So it's just a lot of. It is a lot of education.

My last question would be, I know you guys are going into more drone treatment because of the height of the tree. Are you guys sufficiently funded for something like that?

Currently, yes, because we're treating right now really only public areas. And again, it's pretty limited into. Into the types of trees that we're treating with with that particular technology.

So you're okay? Fine, thank you.

Okay, we'll chair Chun and then we'll. Move to Committee Members. Thanks.

Thanks for being here. Yeah. I have a question about the Act 90 land transfers and the 4.5 million dollar contract for that. And basically it's kind of a two part question. So the first part is what kind of expenses are incurred for the transfers. And secondly, there's still a large outside.

Are you folks anticipating using all of that funding by the end of the contract date, which is nine months.

Could you say the contract amount that was?

4.5 million. So it's on table 10 of the active contracts on page 24 and it's the first one, AGR 141.

I'm pretty sure that the funding that was given, the costs that are incurred for Act 9, the number one cost is the surveying. Sometimes the whole parcel doesn't come over. At times there's a very important environmental piece that deal in our needs to maintain, whether it's a watershed or something.

So when they parcel it out that way the subdividing, the serving and that activity can be really expensive. I mean this, there was one parcel that needed to come over, very high visibility parcel. It was a Cop Apollo Ranch. The surveying on that was 400, over $400,000.

So for that expense I would have to go to Data Mart and check that contract number. Brian, do you know how much is Left?

Just over 4 million.

Is the formula still left?

Yeah, where like the bigger parcels are starting to come over.

Okay, so what he's saying is that a majority of the funding, if you went to Data Mart would make us look bad because a lot of the funding is still there. But Act 90 parcels are just started to move over and the larger parcels are the ones that are.

DLNR is keeping certain parts of it and that takes the survey and the other thing that Act 90, another cost of Act 90 is when they come over to Department of Agriculture we have to redo their lease.

And we, there's homework, there's paperwork and within the AG research, I'm sorry, Agriculture Research Management Team, we have Kevin Moore here who's in charge of the land division. It's mandated that we do two inspections per year on each lease that we have.

So when that transaction occurs, if all these parcels come over, we have two land managers right now I think we're in the process of hiring a third but we'll probably be back in here asking for personnel to continue that pace of.

Additionally, we want to add in, we want to add language into our leases that helps the landowner control and base with species on their property.

Right now we are calculating Brian is doing his best to decide how to help the lessee maintain, you know, help them with the invasive species that might be there now or might come later, whatever.

So those are the kinds of costs that Act 90 is going to create is the surveying, the maintaining of the lease, things like that. But we still have a bulk of that money that we can tap into. I think right now, as we're speaking, there's only one parcel that was on the original transfer list.

Original transfer list, not the do not transfer list. That is still pending.

I just want to ask because I think it's kind of stalled right now. The other thing I wanted to ask, and I know it's not in your presentation, but there's been. I think biocontrols are the key to pest management once we're past the eradication point. There's been discussions about a biocontrol laboratory. I know.

I've heard DAB talk about it and also CTAHR. So I just want to clarify, is it. Are you folks talking about separate facilities or a joint facility, something that folks can share?

Good question. It is a separate facility. The facility that we are working on was part of Act 231. And you. The funding that was given to us. Thank you. Is for the planning of the biosecurity, where this facility would be. We'll be back in when we determine. When our contractors determine the cost of it.

But we're making real good progress. Thank you for that. We have determined with the help of DLNR and ADC, mostly it's ADC actually, has indicated a TMK for us in Wahiawa, where this biocontrol Biofacility level three. We can start bringing biocontrol agents in, doing the testing we need to do.

Carol testified the other day that we kind of scaled it down from a mobile modular type facility. We can take a Matson container and retrofit a lot faster and a lot cheaper. So we have the biocontrol agents stacked up, you know, ready to come in to do fireweed and hollow scale and different types of pests.

The permitting is a problem. We don't want to bring in another mongoose, of course, but the biosecurity money that we have now will lead to actual bio facility construction. And then we can really focus on biocontrol, as I think anybody who does biosecurity pesticide study can agree that biocontrol really is the only answer. It's. It's really the answer.

Okay, let me know if anything else comes up. Chair Templo.

Thank you, Chair. Director and Department. Thank you for being here today. My question is on biosecurity effectiveness. First I'd like to say thank you very much for the outreach. You guys actually came to Kalihi and gave us CRB presentation. So I appreciate it very much.

But in trying to understand how do you guys determine like effectiveness, like I'm glad that LFAs are gone in Mililani, but like in different communities, how do you know what works and what doesn't? And how do you go about doing that kind of measurement of progress?

It's pretty much scientifically determined how we use our terminology. The reason that our plant quarantine team shudders every time I use the word eradication is because there is a definition for it. Jonathan, the definition of eradication.

Yeah, it's gone.

I mean, but it has to be.

A tweed that did sound scientific. So for example, with Koki you can't have any frogs for eight months because. That's the life cycle. Right. So there's a lot of time and. Effort that's placed into getting to eradication.

I guess the long, the short winded answer is there is a definition for when a particular treatment is effective. It varies by pest. And in order to use the eradication word, we would use the scientific definition for LFA is what, eight months, eight years or what? There's a really. It's a long time. Three years. Three years.

So we can say that Mililani is now eradicated because it's been three years since detection. So you know, the effectiveness is based on that.

Do you guys like have a map like seeing like hot spots for fire ads and corkies and all that? We do.

It's a dashboard.

Oh, dashboard. Oh, nice. Okay, so that's online that we can check it out.

Yes, with the proviso. The caveat is that Oahu data is we have Oahu data. We're inputting Oahu. We're working on agreements. I think that there's a big argument globally about public information sharing of data, the privatization of data.

And so we're working to make sure that we're squeaky clean on the data that we're going to be collecting from the counties and the ISCs for Hawaii data because the state, you know, the DAB collected it. Oahu information is up there.

We will be uploading the other data when we have a nice agreement that allows us to do that.

Okay, thank you. Yeah. Can I ask one more question about. I have a question on Food security. Is there any talks with increasing local productions in urban areas? And like do you guys have talks with like vertical farming. That kind of thing? Micro grants for food.

Thank you for that question. Because on Monday 19th January, Brendan and his team are opening up the Micro Grants for Food Security application. It provides $5,000 for each individual homeowner to increase the quantity and quality of locally produced food.

So if you want it, if you live in a condo and you want to do a vertical, you've got $5,000 you can apply for. But I can, I can sense Brendan shuddering now because it has to do with the story.

You have to provide the amount of food you're going to grow, how many people you're going to feed and what you're going to do with the money. And that's the three things the feds want.

They want to know what, how many people are you going to feed, what are you going to grow and how are you spending your money? But that opens Monday.

Yes it is. This is open to non profits as well.

Open to you.

Oh, everyone.

Just identify yourself as representative. Make sure you put your title on there.

How do schools and organizations get apply as well? But they would be eligible for $10,000 with the one with the 10% cash match. But it's amazing things have been done with $5,000.

Thank you.

Thank you, Chair.

Thanks. I have a quick one. So I kind of randomly dropped in on what I thought was a really cool thing.

DBEDT puts together these reverse trade missions and I was, I kind of tagged along in East Hawaii, where they had people from like Taiwan, other parts of China, social media influencers, buyers for large, you know, retail operations there.

It was mostly focused around coffee kind of what's the department's current role in that or like some of these other programs. Are you kind of, kind of reliant on DBEDT for financing and what they choose to include you in?

Chair, you're breaking my heart. The Department of Agriculture Biosecurity has been having what other agencies call reverse in reverse. They've been known within the agriculture community as inbound missions. And what that does is generally they've been federally funded through the MAP Market Access Program, Foreign Ag Service.

And it is the best activity to link buyers and suppliers because the Hawaii supplier just sits here, shows them what they got, take them to their beautifully, you know, white puffy cloud farm, beautiful sun and the buyers buy. The coffee industry has done it. Papaya industry when they were there, they need seed now, but they did it.

It is a wonderful way to have a mission. And then when the buyers buy, then you have your outbound mission. You actually go to that country and the buyers come and it's like speed dating. And then the next step is a trade show.

You actually have a booth and you start expanding your sale to all buyers, not just specific buyers. So the inbound mission is great. SHAC, who is the Synergistic Hawaii Agriculture Council with coffee, papayas, Mac nuts, Cacao and floriculture, is led by Suzanne Schreiner.

They have about $108,000 during this fiscal year to bring in to focus on inbound missions, outbound missions, trade shows, whatever they want to do. The I want everybody pretty much, sorry to be this way, but the Federal Government is focusing on emerging markets.

They don't want their federal dollars right now, like for SHAC to focus on mature markets. So while Japan has been our number one trade partner, we have nonstop flights to Korea and Australia. The federal money wants us to focus on the Philippines, you know, markets that are not so mature. We want to go to Canada.

Canada's, you know, they call it a mature market. So all that to say you're going to see inbound missions and outbound missions and trade show participation with additional funding. So let me take another moment. Sorry, one more moment. When you work with the Federal Government, you're working with the regulations that'll blow your mind.

It's really, really tough to participate. It's easy to make a mistake. So water and salt are not considered federally supported agricultural products. Okay, so when marketing team, when Brendan Pat plans a trip, no water, no salt. And what do we sell? We have wonderful water, we have wonderful salt.

So if you give us money to do trade missions that are Hawaii specific, we can take everybody. We're not limited to the federal rules on what we can and cannot do. And that's why the state dollars are so important to support our Hawaii products.

Do you have anything to add?

Yes, I just wanted to add another topic of the biosecurity dashboard that we created. I know Rep. Templo had a question about the maps. So on Zoom, I did pull up the biosecurity.hawaii.gov and as you can see, there is maps that you can also see here.

And then to Rep. Kitagawa's question about reporting, I did pull up that as well so you guys can see what that reporting looks like.

So for example, if you go to our home page and you're, you want to report little fire ants, you can click on that and go down a little bit to the page and it says click to report.

When you click to report that, there is another option right here where you can see, you can report the name where you seen it and drop any files that you have into the 643 pest. Also, it has the number right here, 643. So reporting it to us, that's your best route to do that.

Sorry, go ahead. We have more questions, I assume. Okay. Before we turn it over, I just wanted to thank you. I ended up at this event in Papua like a year and a half ago. It's about half an hour south of Hilo.

It was a Saturday afternoon, and you were there manning a Department of Agriculture booth by yourself. And I was completely stunned. I've never seen anyone do that, given the travel and everything. So super impressed and super accessible for everyone. And you out there, we took a picture and you looked very small. You know, did a great job.

Director. Deputy Director, thank you so much for being here. Last week we did a talk story session panel discussion in my district. You were there. We had more than twice the expected turnout that we normally have. So it's obviously a very important issue. Main topic was food sustainable. Food sustainability and agriculture.

One of the main topics that kept coming up was shortage of land for farmers. So I've got two questions for you. First, one, with the. With land values rising and housing pressure increasing statewide, what tools does the State Department believe are most effective to protect agricultural lands long term and keep them in active production?

But I think the zoning is important and protecting important ag lands. Ag was typically a bucket that they threw when they didn't have any place to put it. They threw it into ag conservation lands and all other types of lands.

I think for the state to be serious, we've got to identify these key production areas and ideally suited for agricultural production with affordable water and those type of assets also involved. I think we can look at protecting those lands through our zoning processes and keep them protected from development.

I think that pressure to turn it over to development in time would. Would be very key to that.

All right, my second question ties right into that. How do we stop ag land from becoming a loop, a loophole for non farming use while still supporting real farmers?

That's a. That's a big. You're talking genuine farmers.

Yes, yes.

That's a tough one. And basically we have to maybe establish some laws that says you have. This is mostly on smaller parcels. Right. Because General farmers. Okay. So nationally, a farm is defined as $1,000 in annual revenue, even potential revenue and you're eligible to be called, you can call yourself a farm.

Now in Hawaii County, they tried to Change that to $2,000 in annual revenue to be, to be eligible as a farmer. Big, big issues. It was so bad that they pulled it okay. And the reason is subsistence farmers, people that actually feed their neighborhood, feed their family, feed their generational livelihoods.

They're not in the interest in their business of growing food for you and me, they're in the business of growing food just to be sustainable and live. So when that metric went from 1,000 to 2,000, they were going to lose their ag tax status. So how do we prevent what you're talking about?

I think in the United States it's really tough. The other problem we have is not only for gentlemen farmers, but for well intentioned rich people who want to buy the land to preserve it. So they preserve it. They have cattle on it, they have buffalo. They have. But they're not really producing food.

But they can claim that they are an egg because they have animals on their property. So it's a multifaceted, multi pronged problem. And I don't know how the solution would be except to you don't want to legislate it because when you legislate it then you got to enforce it and it's a tough thing.

So I don't know, does anybody have our arm guys, our Ag Resource Management guys, they, I think if you do more ag parks, if you do more ag parks, I think the maintenance of the ag park, our guys go out twice a year to make sure you ruin what you say you're going to grow.

That might be a solution. But if you allow these parcels to go to private entities on egg land, it's a private, it's a private entity, but you're on egg land. It's unenforceable. It's really unenforceable because all they have to do is prove that they have the potential to generate $1,000 in revenue and their ag.

So just showing the potential doesn't actually. Show the revenue, just show the potential. Thank you for clarifying.

And EDC also has lands available for foreign.

That's right.

Thank you.

Thank you, Rep. Lee. And then Rep. It's been Liu my entire life.

Thank you, Chair. Happy New Year. Glad your team is here. Quick question for. Thank you for being here, Esther. You know when, when we are going back to Representative Morikawa's question, we are using pesticides, especially with drones near or adjacent to residential areas. What is the typical communication process with communities prior to spring and.

Or what is that? What is the. What does the Department do in terms of resources and information available to them if they feel sick afterwards or, you know, what does that process look like?

So as far as notification between the applicator, whomever is using the product, and wherever they're using it, that's up to the applicator. Unless the label has stipulations that they need to notify, and even then, most of those are for notifications for their employees and staff on their property.

Correct. And applicators are the folks who are using the pesticides. No, I understand that, but I mean, is it the Department of Ag or their third parties who apply?

So let's go back a little bit. So pesticides branch, even though we are situated in Department of Agriculture and Biosecurity, our jurisdiction covers anyone who uses pesticides. So not just Department of Ag, it could be a private entity, an individual, different organizations, the pest control operators.

And so maybe the questions are maybe for a different Department. But the reason I bring it up is recently where I live on Kalaheo Hillside, and you just emailed me back in a really timely fashion. So thank you.

People who were not dressed in, you know, attire in any way were knocking doors and we're going to spray pesticides. And I'm just interested in what the conversation should be like because when they were asking what types of pesticides, for how long and just General questions, they were not given any answers.

And it was during a windy day. And I just want to be clear that this is just what was reported to me. This was not my experience. And I want to also say that my community is very grateful that we're trying to hit up LFA on the hillside.

But this incident kind of brought up some questions about, you know, what resources are given to the public to communicate what's about to happen and should something happen other than just calling you guys to see if it was done correctly or not?

How does someone who is seriously feeling ill supposed to reach out and say it may have been because of this that they didn't know that pesticide was in the air? Maybe I'm young and naive. I just don't know where that information comes from or how we're supposed to know what we're supposed to.

So on the latter half of the question, right. Who do you contact if you suspect your issue is regarding pesticides? It would be our branch. The number is 808-973-9402.

Right now we have inspectors on all the islands to respond if the case is linked or confirmed to be because of pesticides in our branch would be the regulatory agency that would take over. As far going back to your previous question about communication. Right.

Unless it is enacted by law or if it's stated on the label itself on the product, then we cannot enforce that. We have no authority. So that's the good nature on whomever is applying the product.

I appreciate that. Thank you for educating me. So I guess my question is maybe in your opinion, if I'm just a resident on the hillside and I'm not feeling well, I have no ability. If there's no prior communication about this issue, how am I supposed to guess that maybe it's pesticide?

I may just go to my practitioner and say, hey, I don't feel good and we're ruling out all these possibilities and maybe eventually find out it is a pesticide. I mean, in your opinion, what could the state of the departments be doing to communicate a little bit better in these situations?

So right now there is a dashboard on treatments where our Department is handling them for those who do not publicly announce their treatments. Right. It would be hard to say whether the symptom you are experiencing is from pesticide because pesticide symptoms are similar to heat stroke, other things of that nature.

Like I said, if there is even a hint or a possibility our inspectors will go out, they'll inspect to help determine whether an incident has occurred.

I appreciate it. I think it brings a good question about how we're supposed to know as presidents and, you know, public safety and public health. But I appreciate your time and response and your honest opinion.

Thank you.

Members Additional. I forgot. There we go. There we go.

Go for the Director. Deputy Director, I wanted to walk back to the comment my [unintelligible] asked about zoning and protection of agricultural lands in that space. Our ALISH maps and our soil maps really have driven the zoning right for so many years. They haven't been updated.

I'm just curious, from a departmental long range planning perspective, when would be an ideal time to introduce the modernization and updating of our ALESH maps and our soils maps, which then inform decision makers within the state land use boundary amendment process so that we can actually realize potential growth and development in areas that actually fit while still protecting prime agricultural facts?

I think now is a really good time because GIS is coming out. We're using GIS to map where existing crops are being grown also. So I think that's another important factor, not only like the soil type or you know, being excellent. Like when I went out to Hawaii Kai Kumilo Nui Valley people are farming there.

I wouldn't say that that's exactly like excellent agricultural lands, but the fact that it's in agricultural production is something place we don't want to lose. I think those are other factors we should be taking into. But I think with gis now we're able to map where crops are.

And I think if they could be a more integrated mapping system, I think we'd get a better result. And we can, as you say, help the planning process.

Yeah, it's informed decision makers. Because Hawaii island we know, right. 90% of our island is within that agricultural zoning layered on with our alesh maps for prime or unique and then our soils type. Type. And you gave me the answer. Now is the time. Thank you for that.

That was my question. Thanks, Jeff.

Thank you.

Okay, anyone else with questions for the Department? Maybe just some parting comments.

I actually have a bill this year for the counties to have the option to roll smaller, unproductive, you know, at their option to roll smaller, unproductive ag lands into the rural district, which will kind of untap that housing component and kind of separate out what's been maybe subdivided more as a residential area, but still is ag land.

We have lots of those on Hawaii and I imagine Kauai is probably another plant candidate for that. And to your point, there's been a lot of successes just in the last year being involved. I think I use Costco as a litmus test.

Like if you make it to Costco, you have that volume and you know, even here at Evely, I saw the other day they have the box lettuce from Hawaii island.

And so that's a good to me a great step forward and plays a little bit into that vertical farming, that enclosed farming where you isolate basically out and do high intensity farming. So. So good job. There is some gains out there despite all the Debbie Downer comments about pests. So thank you.

Okay, we are going to recess to allow for the transition and then we'll be opening back up with the Department of Taxation recess.

Aloha. We are reconvening the Committee on Finance for the purposes of a budget briefing from the State Department of Taxation here on January 132026. Whenever you're ready, please proceed.

Good morning. My name is Gary Sugunuma. I'm the Director of the Department of Taxation. Good morning. Chair Todd, Vice Chair Takenouchi and Committee Members. Thank you for allowing us an opportunity to present our supplemental budget request for the current fiscal biennial. And would you like me to introduce my team? Yeah, go ahead.

Next to me is Deputy Director Kristen Sakamoto. Behind me, Special Assistant Gary Yamashiroya, Administrative Services Officer Min Ming, IT Services Office Chief Corey Higa, Taxation Services Administrator Nikki Thompson, Acting Taxation Compliance Administrator Madeleine Alai, Tax Compliance Coordinator Susan Adamson, Tax Collector Dongyun Min, and Tax Research and Planning Officer Baibars Kav Valley. All right, go for it.

The only really budget request we have, which is just a shifting of money from for the Tax Review commission from fiscal 26 to fiscal 27. And that's if you look at table for its Department priority number four.

So we're not asking for any new money, it's just that the Tax Review Commission was only recently appointed and so they didn't spend the money. They're not going to spend the money in the current fiscal year, they're going to spend it next year. And so we're just asking for the money to be shifted.

Everything else we're asking for on Table 4 is revenue neutral. It's just shifting money or positions within our own.

Okay, you good? Yeah. Okay. Rep. Yashira, you want to start us off?

So since you brought up the Tax. Review Commission, so the money moved over, but there was also a resolution that directed them on what to look at because resolutions are traditionally one year. Do we have to redo it or would that be guidance enough?

My understanding is that the the commission will be following they're being notified about the resolution. I'm not sure technically do you know the result?

So they will be commencing their first meeting this week, January 15th, and I believe it is on the agenda that. The resolutions will be presented to them at that time.

Okay, thank you. Next question. And I asked this question earlier that I to BNF is that, you know, if the five year sunset Bill last year about the economic credits passed, it would have essentially impacted six years in the financial plan and might have changed the whole situation that we're in today.

And again, just to reiterate, the intention of that five year sunset was not necessarily to repeal, but it was to Give the Legislature the opportunity five years to review it and decide if we're going to extend, repeal or modify. Right.

And but again that I thought that was at that point in time the responsible thing that we do to have that periodic review to look at monies that basically should be evaluated as far as the impact of how well that credit is working for the state and things like that.

But Anyway, in General, CD1, when you gave us like impact of those bills, we never got an impact of CD1. Is it possible to send that to us?

Yes. So I think at the time the revenue impact for that would have been no material revenue impact because we were in the five year period before it would have sunset. But now that we're a year out, I think yeah, we can take a. Look and provide that revenue to you.

Thank you.

Okay. To expedite time for the Committee chair, I sent the questions to doltax and there were several. So in General, I think the idea is that, right, we're going to be looking at potentially, right. The Governor, what we understand is the Governor is going to delay the tax plan that we put forth earlier.

And it is my belief that we should be looking at every single thing before we start adjusting our promised tax relief. And so. Right. Part of it is looking at all the department's requests, what we actually need and versus what is nice to have and go through that exercise. But the other is your area, which is.

Taxes that are as old to the state. Right. So aging is my understanding is that 1.0 in time, it's like $1.2 billion in back taxes that is old. It may it probably closing in on 1.4 now. And that's why that series of questions, as far as that I said to you was to address that concern.

So without asking every single question that I sent, can you just maybe go through it and let the Committee know what's going on?

So the, I guess the current error balance as of the end of fiscal 25th is 1.58 billion. That includes though amounts that have already been determined that ought to be written off because they're uncollectible, but they have not been. They had not been written off by the end of the fiscal year.

So they still appear in the figure. It also includes double counting of tax liability, for example, those with joint tax liability, spouses, business partners.

It also includes personal liability assessments for business owners officers when we determined that they were responsible for filing tax returns and paying taxes on behalf of the entities that they were with, but purposely or knowingly failed to Do. So the number is somewhat. It is a little bit inflated.

I think the other thing we need to consider is the fact that January 12027 they're going to be a number. They're going to be a. I would. I would. We're still trying to figure out the magnitude, but that's from Act 68. From last year, it was House Bill 1173.

So that's the one that requires us to issue Lien releases for anything that hit the statute of limitations, which is 15 years. So if it's been on the books and the statute of limitations of 15 years has. Has already will run or has run as of January 12027 then those will be.

Will be taking steps to write those off as well. So that, I guess that's the big picture. Now. What's happening specifically with collections, I think, that you're interested in. So we had a. When I entered. When we entered the Department at the end of 2022, we did have a tax collector.

That collector left at the end of 2023. So from roughly the end of November 2023 until. March of this year, so 15 or so months, the position was vacant. We were unable to find a permanent body for that position. Fortunately, we did find Min back here. She is our new collective.

But she just started back in March of this year. Just a little bit about Min. I mean, I feel that we're really fortunate to have found someone like her willing to come in and do this job for us. She. I think, rehab. Ramashid. I think you had some questions about her qualifications. So just briefly.

And she has a finance and accounting degree from. From, uh. She's also a CPA and she has. She came with more than 20 years of tax accounting compliance, audit, strategic planning experience in both working in regulated industry and also in public accounting.

So she started her career at Deloitte Tax as a tax, and then she was a tax manager there when she left, joined Hawaiian Airlines, their corporate audit Department. And she worked there for a time, and then we hired her. We were able to get her when she was working at Hawaiian Electricity, Hawaiian Electric Industries. So Hei.

And she was a manager of corporate taxes. So I think what's special about her is she came with a lot of management experience, which is what we really needed for that particular section. In addition to that, she has a tax background, which is really hard to find.

And so she might not have to use it for the ordinary tax collection case because liability is already established and we're not fighting about, you know, whether or not they owe the tax, taxes or not.

But she is a very important Member of our team because oftentimes when we meet and tax issues come up, she's a great resource. She has a lot of knowledge. So she's. She just started in March because. And then unfortunately to within a very short time.

I think within the last year we lost four tax collection manager, two of them left, two of them retired, and two have moved into different areas of the Tax Department. So that's been a challenge for her. So she has a total of, I see 41 positions. Out of that, she has only 27 filled like 14 vacancies.

So right now she basically has the 2724 are actual tax collection personnel with three staff. Each of them handle between 2,000 to 2,500 cases each. Collection cases. And then last year, Last year, their last fiscal year, they brought in $284 million.

So just to put everything into perspective, so in fiscal year on 25, the Department collected a total of $10.8 billion. Of that amount, roughly about 96% of that by my calculation came in through voluntary compliance. So that means everyone doing what they're expected to do, which is record and pay their taxes.

About 400 million of this or the other 4% or 5% came into our enforcement and collection efforts. So it's what collections brought in, plus our compliance section which does audit and assessments. They also have criminal investigators and also the special enforcement section.

So whatever they brought in and whatever the attorney general's office brought in for us amounted to about 400 million. So kind of a small percentage of the total haul that we get. Right now. I guess the priority for collections is to get more bodies. With 14 vacancies, you know, everyone's running pretty lean in there.

It's just really challenging. These are all civil service positions and collector positions. I think like every other state position. I think pay is a big challenge in getting these filled. But you know, we're trying to do whatever we can right now through attending job fairs and you know, just trying to think of different ways to bring people.

It's challenging. So I think one question you had was, you know, what, what you folks can do to help us with that. I mean, I mean, I mean, I understand that it's not within your folks authority to, you know, because these are civil service positions to be able to raise the pay and all that stuff.

And so, you know, for collections, what we did was last year we finally were able to launch. So what we're trying to do is we're Trying to figure out how to be more efficient and how to touch more cases. Right. We have so many collection cases and not enough personnel.

So we do have an outside collection attorney law firm that helps us with out of state collections right now. So we just started making referrals to them last January 2025 is when we started. And so we. It took us a while to be able to build within to our system there.

You know, the way that we're going to refer cases, the exchange of information, how we get the information over to this law firm on the mainland that's helping us and how they communicate information back to us. If you guys want to know more, it chief back there, that can explain what we had to go through.

But I think it's an additional way for us to collect taxes that we may not have been pursuing as much just because we have to rely on the Attorney General's office to do it.

And a lot of these cases, the amount of controversy is not enough probably to make it worthwhile for the Attorney General, who might have to go and enlist special deputies on the mainland and hire them and pay them to recover money for us.

So if the amount is not that much, then it's, you know, oftentimes they won't pursue it. So this way we pay a contingency fee. It's about 18. I think it's 18.9% of whatever they collect. But I think a lot of these amounts are maybe amounts that wouldn't have collected but for this firm. So we're excited about that.

So we made, I think as of now, we made about 1600 referrals. So these are all taxpayers that have a mainland address, so they're not in the state. And therefore, when we send them letters, they don't respond. There's not much we can do about it.

I mean, we don't have the time and resources to try and choose them on a mainland. And even if we did find them, we don't have authority to levy them or do anything with their assets there. Right. So this law firm, I think, opens up a lot of opportunities for us.

So we're continuing to make referrals to them, and then hopefully we can get more. Right now, You guys remember what that amount was right now? Okay? So the. We've collected about 1.5 million from those reports, referrals to the outside collection attorneys from taxpayers residing on the mainland. So we're hoping with more referrals that Hamallo will increase.

It's still a learning curve. I mean, every day, I think or every week they have questions for us, how to do things and whatnot. So we're still trying to work through that, but it looks promising.

Anything else just to add on to that because, you know, our long term goal is to fill these vacancies, but in the short time we are trying to improve efficiencies with the personnel we have available. So OCA, the outside collection agency, is one.

We also continue to work directly with our deputy Attorney Generals for in state collections and try to figure out ways to best utilize them as a resource for more complicated cases. And really just also trying to figure out how to leverage technology and automate more processes.

So these are things that we're looking at because you know, filling all of these vacancies is going to take some time and we are working with our HR office and DHRD, but in the meantime, really just focusing on how we can maximize the personnel that we do have available.

And it is going to take time, but we do see improvements in the initiatives that we have been implementing over the last year.

Just following up on what Deputy Director said. So we are working right now with Attorney General's office. I went to a workshop on the mainland this past or last year and there was a vendor there.

And what I learned was there is a service out there, a subscript subscription service that would allow us to be notified of probate cases that are opened across the nation. So not just in Hawaii.

So as these taxpayer debtors pass away, if they open a probate on the mainland, we don't know about them, we can't make a claim for the unpaid taxes. And so we're working with the Attorney General's office right now to figure out if this is something worthwhile pursuing.

Currently, right now they do pursue collections in probates open here locally because they get notice of that. But the window to make a claim in a probate case can be really short. I think in some cases as short as 30 days.

And so as you can imagine, just the number of taxpayers that reside out of state that owe us money. There are probably a lot of these tax taxpayer debtors that are passing away on the mainland too. And probates are being opened up every day that we don't know about and we're unable to file our claim.

And so that's something that we're pursuing to the AG. The Attorney General's office is going to. Help us with that.

Do you work with the IRS to try and figure out you both have people that you're after?

Yeah, we do have information exchanges with them. How does that work?

So we have a couple of data sharing arrangements with them. They share information with us, we share information with them on the State and Federal level. And then occasionally, you know, our criminal investigators also work with the IRS for criminal cases. But yes, there is a two way sharing of information there.

Mickey headway as far as improving that relationship. I'm just wondering how much urgency there is to like you know into collections.

I don't see any problems we have right now with the information we're getting with the IRS. There haven't been any disruptions or anything like that with information.

So do you prioritize as far you know you talked about at some point it's some is like maybe difficult or not worth the effort in going after certain people that are that owe us money. So do you prioritize by the ones that owe us a lot?

I think there's some effort. So for now for the

how do you prioritize that

for the out of state collections?

No, the in state.

The in state.

Yeah. Yeah maybe. Maybe when who's a tax collector can explain. But there are. She can go over the different strategies. That they use.

Asking about what team collection, vice versa.

So like obviously there's people that owe us very little and then there's people that owe us millions. So I would assume that you would go after the ones that was a lot and then you got to weigh in right the effort to go after them and all those kind of things. But is there a strategy?

So money is one thing. We do look at the high dollar amount. We do send notice. There's notice that we send out every two months. But we also trying to call. We also be want to be prioritize those that actually responds to us. So taxpayer it doesn't matter what the delinquent amount is but it responds to us.

They want to work with us. They want to be on a payment plan. We want to focus on that because that's immediate money. And at the same time wanted to also improve our process to say we receive a lot of like miscellaneous mails tasks. We want to focus on that something that we can start bringing in money.

We want to prioritize those first. Of course dollar amount is various. You know we have a lot of million up. If you compare to a million down. I think the volume of that is more composed of a million dollars of delinquency. So we want a price high taxpayer to be more responsive.

Wanted to work with us on payment plan sending us emails or you know call us to ask why I owe. So a lot of them don't realize that they owe. They will understand why.

Okay. Those are like true traditional ways that you go after Are there ways that, you know, you coming in to the Department, innovative ways that you are seeking out these people that owe us money and maybe even training programs that would improve our effectiveness?

Yeah, so when I came in, you know, trying to understand by myself, trying to understand what is collecting internal process is like what, what instructions we have.

So when employees start, the supervisor sits down with them and we do provide one on one trainings, you know, to go over policy and procedure internal, of course we meet every week with the supervisor to take a look at. Is there something we need to be update? Can we make it more efficient? You know, always process improvement.

How we can understand our current system, how can we rely on that more? Is there a way to be more manual? I mean more automation versus manual. And like I said, every case is a little bit different but supervisors are always there to provide training on hand training complicated case.

You know, there's always feedback to say how you're doing or anything complicated can just go up to the supervisor for review or you can come up to me and we review that case.

But we can use it as a benchmark, as an example to say, oh maybe our current internal policy is not working, maybe we can improve a better or maybe we need to strategize a different way.

So you know, I would assume that when we use out of state people that there's some kind of fee that they pay and it probably is I guess more expensive than our in house people. So are you coming up and you know you talked about paid. That's sometimes a collective bargaining. All of them are.

No matter what we do. It's a collective bargaining issue. But are you coming up with like creative ways to like create incentives for them to collect?

Unfortunately, incentive is not. I believe that in a bureau we can't provide any bonus or incentive or any monitoring.

So that is limited by who. That. You cannot do that. Who limits you from doing that?

My understanding is these are civil service positions and I'm not aware.

Okay. Under that I'm just wondering what the obstacle may be and if there's ways that we can maybe look at.

It's pretty strict. I mean we don't have a lot of flexibility with that.

Yeah. Okay. Have you ever looked or consulted with other states if they have something like that?

Not other states?

No, nobody has.

I haven't. I mean I have reached out to DHRD and our own HR Department just to figure out.

But I'm not saying that that is the solution. I'm just saying that we looked into other.

Okay, yeah, I would be all for it if that could be bargained into the next contract.

We'll follow up with some other things that I had. I actually had a number of questions that I had for you, but I think we kind of I put them into general questions and then just sent them to you, but I'll follow up on some of them later. We can go into more detail. Thank you, Jim.

So thank you. Okay. Rep. Perruso and then Rep. Kusch.

So I am also interested in collections because, you know, you're not like other departments. You're a revenue generating Department. And from my perspective, that's a really powerful position to be in at this moment in time. And I was looking at your table five and in all of your divisions you have restrictions between 10 and 13%.

And you I mean, I think that's largely attributable to the vacancies, the fact that you can absorb those restrictions. And you know, I appreciate the lengthy conversation about your efforts to do that.

And I'm wondering if this body was to provide additional funding, would you want it just directed to that particular division of collections or because I think that, you know, removing those restrictions might be important for your capacity to fill those vacancies.

I don't know that that's going to make a difference because it's not still not going to allow us to pay any more than what.

I hear you saying that. So you're saying that even if those estrictions were not imposed because of the salary differential between public and private sector, you still would not be able to fill those positions.

My understanding is we have more than enough funding just because of the number of vacancies that we have. So it's not. Yeah, I guess that's not the issue.

Yeah, I would agree. I don't think the funding is an issue. It's more of an obstacle of getting qualified people willing to accept those SR levels.

I mean, but ultimately actually the funding is the issue because the Legislature does Fund those positions. I mean they might be bargained but at the table when you're, you know, bargaining a cba, the state is party to the bargain and the Legislature does then fund those agreements. So I mean we are responsible for funding the CBAs.

And you know, I think that it's. Yeah. So we're cut, thank you.

Maybe to tag along that before we move to Rep. Kusch, excuse my ignorance on this. To your knowledge, does the Attorney General have like a specialized branch where you're referring these cases to and maybe is that an opportunity since those are higher paying positions, to beef up their capacity. And you guys are more on the referral end.

So we, I had this discussion. So it is a civil recoveries division of the Attorney General's office. They do collections for all the different agencies and departments. So we do have an MOU with them. So we are paying them for, I think one deputy EG and one paralegal right now.

So, so through DTAX, through do.

Taxes, budget fund a couple positions there. And they do help us with difficult collection cases. And so yesterday, in fact I was talking with the deputy attorney General that the supervisor who handles, who helps us. So I was asking him, I mean, how much excess capacity are we sending them? Too many referrals, not enough.

So it sounds like there's still room. And so what we're doing now, working internally is trying to figure out maybe lowering the threshold of our attempts before we figure out it's difficult and send it over and just, and just start sending more cases over to them.

I figure that's an idea, especially if we're looking at folks who have the resources to defend themselves in court. Right. Which is an additional layer of barriers.

And it's one of the reasons at the federal level you haven't seen a lot of these high profile tax actions is because it's much easier to go after someone who doesn't have those resources. But it makes sense to me and maybe an opportunity to, you know, kind of get around some of our restrictions around the CBA.

It's like, hey, just lower that threshold, send more their way, you know, and we have them later this afternoon and we can kind of pose the same question to them, like, are there additional resources that would expand our capacity?

Because in terms of, you know, if you're looking at one and a half billion, but then I know that includes some things you waived off, but it would seem like that's a pretty cost effective use of resources if you're talking about a few 100,000 or something like that.

Okay, Rep Kusch.

Thank you for coming today and good questions. One of the things that was prompted on that conversation was, you know, in the private sector or even when you sign up for Netflix and you scroll through, I agree. All your biometrics and electronic hunting of you for your 1395 forever goes into play. Right.

Like it's, they've done a really good job. As a landlord, I make sure that at the front end I lock in any possible issues that arise years from now.

And as in DTAX, do you have you guys look at strategically, you know, through laws most likely or through Administrative rules to really strengthen your position at the front end as the state's primary revenue generator, to lock people in so that there isn't, you know, unnecessary steps and laterals for people to take or skirt the law or make it difficult for you where, you know, it's more of a default two, you've got to pay.

And then there's lots of electronic collection hunters that are very low cost who will just hound you forever wherever you are electronically without anybody. Has there been any strategic planning on the front end like that at all? Or is there something that you see the Legislature playing a role in that?

I mean, it's not something that we discuss. I think there are. So there are requirements for taxpayers to disclose that we know who they are. And. We know how to contact them. There's an obligation for taxpayers to keep us informed if they move and all those things.

I'm not aware of any sort of anything we can really do to force them and make sure they do it, other than, you know, making taxpayers aware that there are consequences to not following the law. So we have a criminal investigation section, too, that we can refer, that makes referrals over to the Attorney General's office.

And I think last fiscal year, they had a really good year, honestly. 12 referrals over to the AG. So from time to time, you'll see the, the press releases regarding criminal tax cases. And so we've been actively doing that. We, you know, it's. It's. That's super important, right, to keeping everyone complete.

Okay, so, but to answer your question, no, not nothing, nothing.

Nothing on the front end has come to mind. And that. Would that be more of a AG question to see, like, where you could strengthen that, the front end? Because like I said, that's, you know, in the private sector, that's where it's usually locked in. And if there's never a problem, it's great.

But if there is, you have all the language, the defaults towards your position of strength versus the taxpayer.

So I think, I mean, I would agree one obstacle sometimes is that, you know, these taxpayers are hiding from us. We can't find them. I don't. I'm not sure what we could do to. Other than, like I said, you know, we can impose. There are other means, right? I mean, interest accrues on unpaid amounts.

We can impose penalties and things like that. So there are other incentives built in for them to be compliant or become compliant as quickly as possible. But I don't. Unless somebody else can think of something that we can. Okay.

I mean, I think it's an interesting point that. Yeah, maybe we can discuss back at the Department, figure out how we can maybe use that area to benefit us. Yeah.

Thank you. Thank you, Chair. Okay. I was wondering if you could speak to something quickly. You know, I think it's the administration's indicated that they're going to propose a change to the income tax, kind of suspending further implementation for the bracket changes.

But also at least I'm under the impression for the standard deduction changes and that they'd be proposing, you know, some, some form of targeted credits for low to middle income families in exchange. But maybe if you could speak to the efficacy of those credits versus the standard deduction changes.

Because I'm under the impression that standard deduction changes which are already in the Bill are with, you know, they're reflective you're withholding. So for folks struggling on a month to month basis, it may be kind of more beneficial than a, you know, one time refund. But I don't know, maybe you can speak in General terms about that.

Yes, I think we'll leave the administrative plan up for, for Governor to discuss the details of that. But in General terms, their credits and deductions are just different ways of delivering tax benefits to the population. Right.

The standard deduction for the most part, if you're not itemizing deductions, is a way to address tax liability for the General population who don't have those types of business expenses or other types of expenses that can be itemized. So you're serving that type of population.

Credits are a little bit more targeted at the audience that you want to address. So depending on whether we're talking about like the eitc, which serves lower income and moderate income families, or the child independent care credit, for example, working families, families with caregiving responsibilities.

So I think in General terms they're just, it depends on the effect you want and who you want to benefit, how targeted you want to, what kind of targeted approach you want to take.

Sure, sure.

Okay. There's also a timing the benefit to with a credit is you wait until after the tax year you file and you get the benefit rate as opposed to getting the benefit along the way. You know, we do those wage withholding tables, the updated ones, and so lesser withheld. So I think that is that effective.

Too for certain credits. Right. Because certain credits you can plan in advance to change your withholdings. But certainly other ones.

Yeah, maybe not for that, but then for maybe. I understood the question trying to compare the standard deduction and the brackets Right.

I think we're on the same page because I think the thing is, you know, relying on an individual taxpayer to assess whether to change their withholding based on a credit initiated by the Legislature, like no one's going to do that, you know, just realistically. Right.

So the benefit to the standard deduction, because it's automated, they receive that benefit, it's visible every two weeks, it helps them make rent instead of that benefit. Not really compiling over time and just being a one time assessment where it may or may not be helpful. But just a kind of interesting policy question.

I have one quick one and then I'll turn it over to Members for additional questions. And you have the benefit or the detriment of having to address questions from every branch of government and what may or may not, you know, be your specific area of expertise.

But a lot of the, you know, resort industry has been compiling information and they're under the impression that we are currently dramatically under collecting TAT from vacation rentals. That's not the data that I see when I look through, you know, DBEDS reporting and that sort of thing.

Do you have any sort of kind of guesstimate of where they may be, you know, not paying their fair share or do you think we're, we're approaching an area where we think we're collecting, at least on the state's end.

I mean, it would, it would be purely a guess and so we're not comfortable doing that. What we're doing though is we've heard those concerns, especially last year, but even before then. So what we decided to do is we are focusing on short term rentals again. So we are deploying extra people to look at them.

We have contracted with a couple different vendors that can help us. But that is a focus now because no one really knows what is out there to be collected. So until we try, we're not going to find out.

So that's what we're doing, I think in the next, I mean, we already started, but probably focus on this for the next year or so at least.

Right. Because I do think it would be helpful from the, from the Department. You know, I think some of it's just how you're doing the math and what conclusion you're arriving at.

You know, when I look at DBEDs reporting in HTA specifically around, you know, the average room rate for vacation rental and occupancy rates across counties, to me it looks like we're collecting probably somewhere between 90 and 95% of what's old. But the Industry, in their math, is saying it's more like 60%.

So anyway, you can be helpful either in collecting those additional taxes or at least issuing some sort of memo or piece of information that maybe provides a little bit of clarity in your assessment of what we're collecting and what's still on the table. That would be helpful. And I know that information can be difficult to come by.

Yeah, yeah, yeah, we're already working on that.

Okay, thank you, Members. Additional questions for the Department.

So the, you know, this issue that the chair just brought up is. Has brought up, been brought up in the past. And at 1.0 I remember the discussion was, you know, even the illegal ones were paying their taxes because they would just.

Yeah, go ahead.

They can stay in business, at least they cannot come after them because tax evasion or whatever. Right. So, you know, when you're looking into it, I think that's something to consider that. Because that discussion did happen before in the past.

So I don't know if that's why There's a discrepancy of 95 and 60 that the chair brought up. But also, I have another question. As far as, you know, when. When we looked at the standard deduction, it was information from you that came that eitc, the Child Independent Credit, Food credit, and the renters credit.

When we asked you what was the. Who was taking the credit, you told us that you cannot tell us who, but you could give it to us by area. And so that information, I think that was from Seth at that time.

That information was that if you lived in, you know, certain areas, and I'll just use the West Oak Wood as the example that hardly anybody, the ones that we're trying to help, hardly anybody was taking those credits. But if you lived in Kahala Wailae, everybody that could was taking it.

So my conclusion was that we're helping the wrong people and that's why we went with the standard deduction, is that you're still true.

I would have to take a look at the information that we gave to you previously and then check to see, like, if any of that's changed or whatnot. So let us take a look at that.

Thank you. And then the last question that I have is, so earlier you said that there were four people that left college and either to work someplace else or daft. Is there any reason why? Because, you know, in the past we went. When we went through, you know, the Lehman brothers downturn in 91011. Right.

The discussion with Dotacs at that time was to shift positions from you know, the ones you pay out money and the ones you collect. Right. And because we needed to collect money, so. And it seems like we're going in the other direction. Is there any reason why they chose to leave?

Two retired. Okay, so the other two, both of them moved into our compliance section. I don't know specifically. I mean I'm guessing both of them. Move because I know it's a personal issue, but the exact reason. But the pay was better I think in both cases.

So just to give you an idea, So under when who is a tax collector, There is a program specialist, four positions. So that program specialist oversees the tax collection managers, the senior tax collectors. Basically the senior tax collectors are supervisors.

Delinquent tax collection assistance 3 level SR20, 63,960 versus the program specialist who basically manages all the supervisors makes $64,428. So what is that? $1,500 more for that much more responsibility. But that, you know, so we don't agree with the way the pay is scaled too. There's no incentive to step up and do that job.

I mean, at least not for money. Are you working on things like to redescribe positions to be able to pay more?

We are redescribing positions to meet our needs for sure.

Strategically, I mean that you could be one option or you plan to for collectors.

Kind of hard though, right? I mean we still need to do the collection work. So.

So we do look at things like whether there's ability to upgrade the position, a level to provide more pay. But then a lot of times what happens with that is the minimum qualifications also have to increase. And then we don't have anyone eligible within the Department who qualifies for that heightened education requirement or work level experience.

So we are constantly looking at options, but it is difficult.

But even redescribing could be. Could take into, you know, you could reconsider minimum qualifications, things like that also.

Well, I think we're still somewhat constrained by the classification for that level, but yeah, definitely where there is opportunity we are looking. And Deherd did take on an initiative to ask us to look at MQs across the board. I believe we are doing that or not.

You know, one of the things that, you know, I don't know, I forget if I brought it up here, but is one of the things that happened in our past is we in 96 we changed our benefit package where we went from.

You know, you could work for the state for 10 years in you and your spouse could get medical. And in 2012 we changed it again.

You know, prior to 96, the difficulty to hire and DHRD was created to be the filter because prior to 96 everybody wanted to work for the state because it was well, I can work for the feds for 50. 11, 50 and then I'll go work for the state for the last 10 years and I'll get additional benefits.

Right? So they used to come and work for the state. Today that's not true because when we reduce benefits, we didn't increase pay and we didn't offset with that. Right.

So I think in General I know that and I bring this up because I'm bringing this up as much as I can because I think that's part of the solution is we we should have.

With our workforce aid population leaving the state, we have to come up with a better strategy to retain our workers and pay them more and have some kind of plan as far as a smaller workforce. Because that's the reality is that baby boomers are retiring, people are leaving.

And other point I bring up all the time is that, you know, the Fed start hiring again, you know, we'll lose people. Tourism comes back, we'll lose people. So we got to come up with another plan. I don't know if you're working on one, but I suggest you. Thank you.

Thank you Members.

Additional Questions Rep Kusch.

Maybe it's for your IT person or maybe you guys can answer it, but the financial field is probably seeing, you know, probably the front end disruption by artificial intelligence softwares and the inexpensive costs of a lot of those programs. Are you guys leveraging any of that? Like we were talking about the Airbnb thing.

Like there's Airbnb error DNA that utilizes a lot of tools where you can really drill down and find out like answer those questions, but requires, you know, subscriptions and a lot of the menial processes I imagine would be could probably be delegated to software that now is know really increase because of the nature of financial sector work is is math.

And so has any steps been taken towards that or can you maybe detail that?

Mark yeah, we are starting to look at AI just trying to figure out how it could make some of our processes and tasks more so. Corey.

Come on down.

CORA IT Chief so this past year we've been doing a lot of proof of concepts to seeing the, the cost and complexities of using AI within, within the Department. We're taking data sensitivity really serious. We have a lot of sensitive data that we have to be cautious how. We're now managing it.

So we've been using small sets of data where we know what's going in, what's coming out and seeing where it can be beneficial. So a lot of our initial efforts have been kind of going away from not using tax data due to sensitivity purposes.

So we've acquired a AI training video to help us, you know, use prompts to develop training. So we've put one of those up on our website. So you don't need to know how to make videos, how to do animations. It does it for us. We've done some Microsoft copilot uses.

So taking meeting minutes, summarizing transcripts, things like that. We've done some sampling of trying to find non compliance through public data, running Airbnb data, trying to see where the outliers are. Those have been a little more difficult to match for our public data with our tax data.

So we're slowly, you know, kind of seeing where that makes sense. And then we do, for the Airbnb side, we do have a data contract where we're working with a vendor to help do screen scraping, provide some of that saving off public data and identifying where we believe there is underpayment or non payment.

So we are slowly going into it using kind of custom off the shelf products, not building, not doing a lot of heavy investment yet. And then we're kind of seeing where that was that will make sense for future investments.

And then follow up on that, you kind of mentioned it, that video training, is that for the consumer side, like how to do your get or tat. Or personal or taxpayer education to encourage voluntary compliance. Great. Last question, Chair.

So when you guys transferred to an electronic ETax that was like really literally the best thing since sliced bread, making that so much faster. Do you guys still see a substantial volume of paper submissions and manual submissions or is it.