House Standing Committee on Finance

Aloha. We are convening the House Committee on Finance for our 10am Tuesday, March 32026 agenda here in Conference Room 308. Before we get started, if you are on Zoom, please stay muted unless called upon.

We do stick to a two minute time limit for individual testimony so that we can allow everyone to participate in a somewhat equal man. A few of these bills on the agenda will be pushing decision making to tomorrow.

So as the Bill comes up on the agenda, I'll give you a heads up just in case you don't want to stick around for the, you know, one hour, probably three. Yeah, you know, we'll go from there. All right, I think that's about it.

Okay, we're gonna open up with HB 2148 relating to the estate and generation skipping transfer tax.

We have the Department of Taxation with comments. Thank you. Tax Foundation of Hawaii with comments on Zoom.

Morning, Chair, Vice chair, Members of the Committee, Tom Yamachika for Tax Foundation. We wanted to point out a number of technical concerns. First, we don't know what the 3% is going to apply to. I think deal tax said the same thing. The exemption language of the Bill has a lot of terms that need to be defined.

And the exemption to the exemption when the transferee sells the property within two years, that I think needs further clarification as well. Be happy to answer any questions. Thank you for the opportunity.

Thank you. Hawaii Children's Action Network speaks and support on Zoom.

I'm the chair of vice chair Members of the Committee. I'm Nicole Wu from the Hawaiian Children's Network. We support this Bill. The estate tax is something that we have here in Hawaii.

When super wealthy families pass on their estates, their wealth to their families, you have to have, for a couple, you have to have at least $11 million pay $1 of the state tax. So it is very much targeted at the richest people.

But some people are able to get around this tax because our property, our real estate has gone up so much in the past decades. And so the appreciation of their real estate has escaped taxation. So this Bill would close that loophole.

And for these super large estates which have property that gained at least $2 million in extra value, they purchased it. That would also be subject to the estate tax. Right now it's not. So, you know, we believe we've got a concentration of extreme wealth. We think some people have really benefited from the skyrocketing Real estate prices.

And this really is targeted at the people who can most afford to pay a little extra tax. So especially in the season, a legislative session with a tight budget, we think this is a good idea to move forward. So thank you.

Thank you. Grassroots Institute of Hawaii in opposition.

Aloha. Grassroots will stand on our written testimony. Opposition.

Thank you. That's everybody who indicated they would be joining us today. Additional testimony and opposition from three organizations and three individuals. Is there anybody else in the room wishing to testify? Anybody on zoom?

Thank you. Members, any questions on this measure? Okay, if not, we're going to move on to the next item, HB 2306 relating to income tax.

We have the Office of the Governor in support.

Hello, Chair, Vice Chair, Members of the Committee. Will Kane, Office of the Governor. So this is one of our Administration bills here that we put in. We'll stand on our written testimony, obviously in support.

But I just want to point out a couple items for you folks, that because of changes on the federal level and different areas and our revenues have decreased by over 3 billion to date. This could continue to increase, unfortunately.

And so we took a measured approach to pausing the out years of the tax cut so that what would already be in place would already stay in place and which would be nearly 70% of the tax cuts that were passed by the Legislature a couple years ago.

In addition, so that would bring back approximately $1.8 billion into the state treasury over the next five years. Excuse me. And then we would look to redirect about 600 million of that into funds for our most needy families and our low and middle income.

So with the extension of the EITC, the, the Child Care and tax credit and so on. So. And the Food- Food Credit as well. So I'm here for any questions and mahalo for your concerns.

Thank you. Department of Taxation in Support.

Good morning. Kristin Sakamoto, Deputy Director of Taxation. The Department supports this Administration measure which allows the state to recover unlimited revenue while continuing to target and benefit low income, moderate income and working families. I'm available if you have any questions. Thank you.

Thank you. Catholic Charities Hawaii in support on zoom.

Aloha, Chair, Vice Chair and Members of the Committee. I'm Betty Lou Larson with Catholic Church Hawaii.

We know and we understand that your Committee has a really tough job this year and next year to look at all the great financial pressures that are on the state, not only our current ones of trying to have affordable housing, rebuilding of Lahaina, education. Lots of things are on your plate already.

And now we have the federal cuts and the threats to SNAP and to Medicaid and other programs that really impact on thousands of people in our state. And so we appreciate that you're looking at this measure and really trying to take a proactive action to address those future needs that you will need money for.

We feel this is an appropriate way to do it. It really would help to maintain those critical supports that our clients all need. But so many others, our Ellis families that we work with need affordable housing. Of course we mentioned Lahaina. So, so many pressures are on you. I understand.

So we understand that this is a long term effort and we appreciate that this would be a proactive effort for that long term safety and welfare of the state. Thank you so much for hearing our testimony.

Thank you, Chamber of Sustainable Commerce in support.

Aloha. I'm Tanya Yamanaka Aynessazian and I'm with the Chamber of Sustainable Commerce, and we are in support of this measure. Largely, I have all the details in our written testimony. But it's really important to recover the lost revenue that we're seeing. Obviously this is not going to change. It's going to keep getting worse probably.

And because the taxpayers, all taxpayers, saw some relief with Act 46, but it was a little bit shortsighted when passed in 2024 because the structure of the cuts results in disproportionately larger financial gains for the higher earners. So this is a great place where we're not raising taxes by repealing Act 46.

It's pausing the future automatic deductions and reductions and it's preserving our ability to, to reassess the financial conditions before this revenue is reduced. We really can't afford to reduce anything right now.

And this is a way of actually more leveling the playing field between the lower income and, and the high earners who are paying not their tax, fair tax here. The Chamber of Sustainable Commerce truly believes in creating a regenerative economy which requires a steady circulation of resources and not structural deficits that force reactive cuts later.

Because that's what we're worried about. We're worried about what happens when we don't have enough money. We're going to be cutting services, we're going to be putting it on our credit card, our general obligation bonds, which is taxing our future and our keiki. Anyway. We need to raise the money now.

So this is a way that it doesn't really affect anyone that these haven't gone into effect right yet. So it's going to just reduce those future ones. So Just reducing the cuts. So. So thank you very much.

Thank you, Hawaii Appleseed Center for Law and Economic justice in Support.

Chair, Members of the Committee, thank you for the opportunity to testify in support of HB 2306. I also want to thank you guys for considering this Bill today because this is going to set the stage for the state's fiscal outlook, really for years to come.

This Bill also recognizes that halting the implementation of the tax cuts passed in 2024 is really the most prudent and smart decision that the state can make at this point.

Right now, federal funding cuts are poised to strip hundreds of millions of dollars out of our local economy and directly target our social safety net, particularly the SNAP and the Medicaid programs. As written, these cuts overwhelmingly favor the wealthiest households.

And this Bill allows us to reset and rethink what a truly fair tax code looks like for Hawaii. Also preserving our ability to keep our programs running when communities are going to need them most. You know, our tax dollars are so necessary for funding the things that we all benefit from.

Things like schools, roads, public infrastructure, and our Keiki and Kupuna Care. These are the building blocks of a thriving community and the people of Hawaii deserve to have the very best.

Another benefit of this Bill is it puts us on a pathway to get there by expanding the Child Independent Care tax credit to help subsidize the cost of Keiki and Kapuna care for Hawaii's working families.

That's exactly the kind of investment that we need to preserve our revenue for so that we can help our working families thrive here in Hawaii. So Hawaii Appleseed stands in strong support of HB 2306. We're also a Member of the Hawaii Tax Fairness Coalition and the Fund Our Future Campaign standing in support today.

We ask this community to pass this Bill so that Hawaii has the resources it needs to fund our future. Thank you.

Thank you. Indivisible Hawaii in support.

Good morning Chair, Vice Chair and Members of Committee. My name is Yonghee Overly from Indivisible Hawaii. Thank you for this opportunity.

In addition to the testimony we submitted, I do want to point out again like I did yesterday, that not only do we need the money for our safety net programs with the federal funding cuts and cost of living rising, if we do this, we are going to be set up toward a progressive tax system.

And again, the studies have shown that states with progressive tax systems a better place to live, work and raise a family. So do it for now, but also do it for future. Thank you so much. We are also a Member of Hawaii Tax Fairness Coalition.

Thank you. We have Hawaii Public Health Institute in support.

Aloha Chair, Vice Chair, Members of the Committee, Nate Hicks with Hawaii Public Health Institute in support of this Bill. Appreciate you giving us the opportunity to testify on this. We think it's extremely important. Today, nearly half of our households are struggling to make ends meet.

Living and impoverished, making less than the survival budget just to make ends meet here in Hawaii.

And so I think this Bill is a question on where our priorities are. When the benefits of this Bill highly skewed towards those at the top of the income threshold, where the total cost is $1.4 billion, but 100 million of it every year will go just to the top 1% of income earners.

Just 7,000 families benefiting $12,000 every year from this tax cut. 600 million of which just going to the top fifth of income earners. And so when we talk about people struggling to make end speed, it's absolutely important that we invest in making sure Hawaii is more affordable.

But when $100 million every year is going to the top 1%, $600 million is going to the top fifth of income earners. That means we are not investing in the programs to make Hawaii more affordable to ensure that the half of people who are struggling to survive can make ends meet.

Programs like affordable housing, universal childcare, paid family and medical leave, free school meals, livable wages. These things exist in places around the nation, around the world and are extremely effective, extremely popular. 70% of Democrats support all of these programs. And it is incredibly important that we get these things done.

We have passed these tax cuts to the exclusion of these necessary programs. These programs in total, all of these things I listed cost less than the tax cuts that we've been given away. So it's not like these things are impossible or out of reach. They're definitely in reach.

We can choose to make them happen if we reverse these tax cuts. If we want to make sure that Hawaii is affordable, we want to provide the benefits to make sure people can live here. It starts with this Bill.

We can turn around 10 years from now and say this was the opportunity we took to make sure Hawaii is affordable for everybody. Rather than doubling down on tax cuts like the Trump Administration, we can reverse course and make sure that people have the opportunity to afford to live. Mahalo for your opportunity and please pass this Bill.

Thank you.

Thank you. Hawaii Children's Action Network Speaks in support on Zoom.

Aloha Chair, Vice Chair, Members of the Committee again, I'm Nicole Woo. My testimony starts on page 18 of the PDF, there's charts in it, so you might want to look. Reflecting what Nate just said, the tax cuts that were passed in 2024 give people at the top 1%.

By the time it fully comes into effect, which will be in 2031, those in the top 10% will be receiving over $12,000 per year every year in the tax cut. And those folks make an average of over a million dollars a year. That translates into over $1.4 billion in revenues lost to the state every year by 2031.

And that doesn't even talk about inflation. That's, you know, at the numbers that we have right now. So this Bill pauses the future tax cuts in this Bill because it gets bigger and bigger every year between when it was passed in 2031. But it preserves the tax cuts that have already taken effect.

So nobody's going to get a tax increase and people are going to keep the tax cuts that they already got from Act 46 in 2024. We are also a Member of the Tax Fairness Coalition and the Institute on Taxation and Economic Policy took a look at this Bill, HB 2306.

And so on page 19 of the PDF, I put in a couple of charts just to distill these very migraine inducing spreadsheets from ITEP. The red bars show the five income quintiles from the lowest 20% of income earners to the highest.

By 2031, this Bill would pause future tax breaks worth about $700 million a year. Nearly half of that are tax cuts that would have gone to those at the top 20%, the top fifth making an average of over $350,000 a year.

And less than 9% of those tax cuts would have gone to those in the bottom 40% making less than $57,000 a year. So this Bill really does again, ask those who can afford to give up tax breaks to give up some pretty large ones. Further down on page 19, there's the warranty chart. Okay.

And it shows that families at the top 1% will be paying over $8,000 a year. Right. And then those at the bottom would give up maybe $72 a year. So this is a very promotional aggressive way to bring some more revenue in in the context of federal tax cuts, federal funding cuts. Thank you. Please pass this Bill.

Thank you. Hawaii Food Industry association in opposition on zoom.

Thank you. Can you hear me? Yes. Hi, Lauren Zirbel, on behalf of Hawaii Food Industry Association. We are in opposition to this measure.

Increasing taxes further than they or pausing the tax cuts Makes it more difficult for us to attract and retain talented workers because they can move to other states with no income tax and essentially receive a pretty large income increase.

We are currently ranked the fifth worst in the United States for personal income tax as a percent of income. This was recently came out 2025 Wallet Hub compared 50 states, we are the worst, the number one worst for overall taxation and the fifth worst for personal income taxes. And I provided all of that info.

Part of the reason why we're number one for overall tax burden is the GET pyramiding and being applied to essentials that people need to live. If you're looking for increasing revenue, we would suggest 0.5% wealth tax on individuals with over $2 billion in global net worth, similar to what California is proposing, but much less.

If you did that, it would only apply to three people, the status publicly available on Forbes. These are residents of Hawaii and it would generate $1 billion of revenue for the state annually while while only impacting three taxpayers. We believe it is false to say that increasing the standard deduction does not help low and middle income people.

It absolutely does, as does collapsing the brackets as this would do. And this would eliminate it permanently, it wouldn't be a pause. So thank you very much for the opportunity to testify.

Thank you. Grasser Institute of Hawaii in opposition.

Aloha Chair Vice Chair, Members of the Committee Ted Kefalas with Grassroots Institute and we're in strong opposition to SB 2306. I want to address a common misconception. So yes, in raw dollar terms, higher income taxpayers are going to see larger cuts, but focusing only on the dollar amount actually misses what matters the most and that's the percentage.

So you take a family of four that makes $50,000, they will see their tax bill shrink. If this is fully phased in, they'll see their tax Bill shrink $1,700 or 85%. That same family makes $500,000. Let's say their tax bill will shrink 12 grand or 28%.

So yes, the dollar amount is bigger in the second example, but the proportional relief is greater in the first. That's exactly how progressive income tax rates work. Higher earners see larger dollar savings because they pay more, lower and middle income earners are going to see a larger percentage of reductions in their total liability.

So when the cuts are fully phased in, Hawaii's lower and middle income taxpayers will actually go from one of the highest tax in the country to one of the lowest. And remember, that was the whole goal of, you know, the policy goal when we passed this in 2024, not to stop halfway.

If money is tight, the solution is not necessarily to raise taxes. It's to try to control spending. Pausing the tax cuts would. It would, I guess, raise about $250 million in 2028.

I wasn't able to include this in my written testimony, but I have a list of areas that could help make up the difference through structural reforms rather than taking away money from local people or cutting services.

I'd be happy to provide this list to the Committee afterwards. But it's things like cleaning up special funds, the state auditor has flagged for years. That's $115 million right there. Eliminating long term vacant positions that have been vacant for years that could result in tens or hundreds of millions of dollars. The money is there.

The real question is just the political will. And I want to just leave with this reminder that families tighten their belts during inflation. We believe that the government needs to do the same in certain cases. So we do hope that you defer HB 2306. And Mahalo for the opportunity to testify.

Thank you Hawaii Appleseed in support, Not present Tax foundation of Hawaii with comments on zoom.

Thank you, Chair, Vice Chair, Members of the Committee, Tom Yamachika from Tax Foundation. We've, we've heard a lot of people say that what we want to do is to pause the out years of the tax cuts. I heard Mr. Kane from the Governor's Office say that right, right at this hearing. But that's not what the Bill does.

The Bill doesn't pause the out years, it eliminates them. To fix that, it's very easy. You just go into the Bill and change the, you know, the future schedules to a different year, such as on page nine, line four, change 2026 to 2029.

If you want to pause the out years for, for three years, that's very easy as opposed to just whacking the language entirely because, you know, we, we never know when it's going to come back in. Secondly, we had some technical comments on the, on the debarment language that's being added to the, to the credit.

The concern we have is that the language doesn't really tell us what happens if there's a partial disallowance. I mean, obviously if somebody claimed something that they weren't entitled to at all, that's one thing. But if they, you know, they switched a couple of numbers around and mis added, does that trigger the Department, Department provisions as well?

Like if somebody claimed a $150 credit, they were entitled to $140. Does that mean they can't claim anything in the succeeding two years? Because literally that's what the Bill says. Happy to answer any questions. Thank you for the opportunity.

Thank you. We have testimony from Robert Perkinson in support.

Aloha. I'm Robert Perkinson speaking in favor of HB 2306. Thank you so much for having me. I really mainly want to commend you all for taking this Bill on. It can be, it can feel like tricky politics to consider voting for a recension or suspension or a freezing of tax cuts.

But in this instance, it really is the responsible thing to do. We're facing kind of on top of all of the pressures we normally face as a state. We've got a protracted and severe housing crisis. We've got, you know, a whole series of climate disasters that we want to be prepared for instead of just react to.

And now the federal cuts as well. And to try to face all of those challenges with our coffers to place depleted, especially in a design that depletes the coffers to the benefit of those who need it least would be irresponsible.

And I think, and I think in the end that's, that's worse politics than, than voting in favor of this Bill. So I hope you will approve it. Thank you.

Thank you. That's everybody who indicated they would be joining us today. Members, please also note testimony in support from Council Member Tamara Paulton from the Maui County Council, one other organization and 22 individuals, as well as about 140 individuals in opposition. Is there anybody.

Could you just state your name for the record and your stance before you begin?

My name is Carlos Osuna. Good to go? All right. Aloha again, my name is Carlos Osuna. I'm a senior at UH Monoa and a proud beneficiary of the education provided by our university.

Today I'd like to do my part in supporting my university and the place which I'm so lucky to be in this state right back by testifying in favor of HB 2306. HB 2306 allows for a fair tax code to foster the common good.

It is crucial for the state to have the ability to provide both the services we depend on. But why stop there when there can be so much more done? The Legislature is in a prime position to aid the state in bolstering its investments into our communities through the passage of HB 2306.

Schools, Kupuna Care, food security and so much more. Can be bolstered and all it takes is a fair tax cut. According to Civil Beat, the state has already cut over $100 million from its normal spending, most of that being taken away from the Department of education.

That's over $100 million being taken away from the youth of Hawaii and put right back into the pockets of corporations and the wealthiest among us. By passing HB 2306 and therefore bypassing potentially disastrous loss of billions in tax revenue, the state's financial situation becomes far less perilous.

And Hawaii's students, its youth and future can be put on a better path towards success. With the passage at the federal level of the One Big Beautiful Bill and all the other tax cuts that have transpired, the ultra wealthy are already benefiting from one of the biggest tax cuts they've ever received.

Regardless of that, they would still remain ultra wealthy if HB 2306 passes. Despite any changes in tax policy through the adjustments that are provided through the Bill, the increased taxes that they will pay will help create a better place for all of us to live in.

So now the ball is in your court and you can help prevent the state losing billions by passing this Bill. Billions of dollars that can go towards education, disaster recovery and struggling families. I know you all want what's best for this state and for our communities. So please act by supporting the passage of HB 2306. Mahalo.

Thank you. Please just state your name for the record before you begin.

My name is Ian. Good morning. Chair, Vice Chair, Members of the Committee, I'm a student at UH Manoa and I'm here to express my strong support for HB 2306. As a current student, I've seen firsthand how incredible the opportunities at UH are,

but I'm deeply concerned about the future. Under the current tax cuts from Act 46, the fate, the state faces an annual shortfall of up to $1.4 billion lack of funding. Because our university relies on state subsidies, these cuts will almost certainly result in a loss of funding for UH. We are currently already seeing federal research grants diminish.

And when the state budget shrinks, those costs are pushed directly onto students like me through increased tuition, food and housing. I personally am already considering not living on campus next year due to the cost. Another large increase would likely force many other students to have to make long commutes from across the island.

Furthermore, state funded scholarships are vital. Half of our undergraduates have financial need and of those, 1 in 10 get their scholarships from the state. We cannot afford to put state aid on the chopping block to Fund tax cuts that don't serve the student body. I urge you to pass HB 2306 and protect our education. Thank you very much.

Thank you.

Aloha, my name is Isabella Peavy. I'm a college freshman at UH Manoa, voting in favor of HB 2306. When the state prioritizes policies that increase access to financial support systems, such as House Bill 2306, it creates a more stable environment for the economy. That stability creates more access for students to scholarships and financial assistance.

This in turn pushes students to want to pursue a higher education. I, as a freshman at the University of Hawaii, am intending to attend medical school in hopes to become an anesthesiologist. With the passing of this Bill, it will make it easier for me and

my fellow students to have less of financial burden and thus focus more on our studies instead of working long hours, late in the night and skipping school due to being tired or drowsy. Which is why I vote in favor. In favor to build the future of our medicine. Mahalo for your time.

Thank you.

Aloha. My name is Ano Mitina. I was a freshman at UH Manoa. I stand in support of Bill HB 2306 because I believe it will help so many people in the long run.

Because I've seen many kids with special needs, but sometimes the government doesn't have enough to help due to taxes, and some families have to figure things out for their children all because. But all this can change because of this Bill, because it will increase their capacity to help these families out.

I've had some of my own cousins and nephews who have special needs who are children who weren't able to receive the help they needed and they would get bullied out of school and they would just have a horrible time in school and their life would just crash down. And because of their financial situation, and yet they press on with smiles on their faces and they stay calm, stay true to themselves.

I urge you to pass this Bill so we can help out many more families in the future. And for the people of Hawaii, thank you and mahalo.

Thank you.

Aloha. My name is Ella Higgs. I'm currently a freshman at the University of Hawaii, Manoa. I'm here today in support of HB 2306 and why we should go through with the freezing of these taxes. Not going through with the freezing of HB 2306 would negatively affect my and other students chances to get affordable off campus housing.

As of early 2026 Hawaii is known as the most expensive place in the United States to live. And I'm working a part time job in order to pay rent for an apartment while being a full time student, it's almost impossible to achieve.

Although I wouldn't be living off campus for another two years, bills take a long time to be put in place. Therefore, the minimum price of an apartment will increase by the time I would be paying it. To add on to this, college students aren't the only ones who would be affected by the passing of this Bill.

Working people and struggling families are affected as well. Most people aren't able to afford rent, healthcare and groceries now. If we freeze the state income taxes, Hawaii would be able to save money and raise funds towards helping our future thrive. Thank you for your time.

Thank you.

Aloha Chair, Vice Chair and Members of the Committee. My name is Landon Love and I am writing this or I'm speaking in support of HB 2306 to freeze the tax cuts under Act 46.

Today I speak not only as a student, but someone who has seen firsthand through my own friends and family how difficult it is for local families to afford housing, health care, groceries and even childcare.

With many of these people being the hardest workers I know, sometimes holding multiple jobs at once just to be able to remain here in Hawaii. At the same time, these people are also being asked to accept cuts to essential services because there's just not enough money. However, this is unacceptable.

As housing has begun to feel increasingly out of reach for many, my peers and I have begun to question whether or not we can even afford to build our own futures and families here in Hawaii. Taxes fund important services for many people across the islands, whether they're amongst the wealthiest or a hard working family.

Services such as housing programs, MedQuest, public education, food services such as SNAP, road maintenance, and even care for a keiki and Kupuna. These investments are not just luxury, they're essential. If Hawaii is to remain a place where people can, or where people and working families can live and thrive, we must ensure that our tax system is fair.

This is why I asked you to pass HB 2306. Thank you.

Please.

Hi, my name is Donovan Zachary Silva Benitez and I'm currently an undergraduate student of University of Hawaii at Manoa. I respectfully submit this testimony in support of HB 2306. As someone who grew up in a household with limited income and solely relied on scholarships and government financial aid,

I understand how important programs such as SNAP and public education are for families like mine. I urge you to take my thoughts into careful consideration when deciding whether or not to pass this Bill so that families like mine and continue to access program and services like these. Thank you.

Thank you. Next.

Aloha. My name is Amelia Taylor. I'm a freshman at the University of Hawaii at Manoa and I'm testifying in support of this Bill for the freezing of Act 46's tax bracket changes. And I believe that increasing the tax rates for higher income tax brackets can provide funding for essential public services such as education.

During my time here, I've had the privilege of working in a public school system for about like seven months and I have seen the impacts of the state's funding discrepancies towards public education in this state.

I have seen it in the shockingly low test scores of sixth and eighth graders in fundamental subjects such as math and reading and in expanding the contents of my job description to assist underpaid and overworked teachers that I work with and medial tasks that are unrelated to improving test scores. I have.

These children do not deserve the lack of funding that they receive in public education. And I really do believe that this Bill can help bridge that gap. Thank you.

Thank you. Please.

Aloha. My name is Ali Jimenez. I support HB 2306. I believe this measure is a big step toward creating a stronger and more equitable Hawaii. This Bill reflects the kind of thoughtful leadership our communities deserve. A leadership that listens, responds and takes action on issues that truly matter.

As someone who cares about the well being of families, Kanaka Maoli and Keiki, I support policies that promote families accountability and long term stability. Passing HB 2306 would demonstrate a clear commitment to protecting and uplifting our communities. Mahalo for your time and dedication to our state.

Thank you.

Hello Chair and Vice Chair of the Committee. I am Sophie Kristofferson from UH and I am in support of House Bill 2306. As years goes by, the struggles of the low and middle class become more and more evident. My opting for tax cuts now, which are disproportional between income groupings. We are depriving our future of amenities that should be the forefront of the government and Hawaii's mind.

Thank you. Anybody else in the room wishing to testify? Just start with your name and stand for the record.

Hello everyone, my name is Will Caron. Testifying as an individual, just briefly wanted to push back on something that was said earlier that what's most important about the cuts that were passed is the percentage and not the dollar. As someone who's struggled to afford food and other necessities in my life.

I have to say that that doesn't make any sense to me. And again, I want to direct you guys to what Nicole Woo was saying. If I'm in the bottom 20% quintile, the maximum tax cut I'm going to get from the tax cuts that were already passed is like around $400. That's the top level by 2031.

$400 of tax relief, that's, that's great. Of course, nobody's gonna say no to that, but let's put that into perspective, right? That's like a month of SNAP benefits. If I'm struggling to afford food and my SNAP benefits get cut, that $400 is not going to cover the lack of SNAP.

So I think what's really important is the dollar amount, not the percentage amount. I can't buy food with percentage points. I need dollars to buy food. And the $400 that I'm going to get that 85% tax cut if I'm at the bottom quintile.

Again, it sounds great, but it's not going to be anywhere near enough to cover the gap that's going to be in my household budget if my SNAP benefits get cut because of the Federal Government. So really, it's the dollar amount that matters, not the percentage.

Thank you. Anybody else in the room, anybody on Zoom wishing to testify?

Okay. Members, any questions on this measure? Rep. Hartsfield, Rep. Kitagawa, go ahead.

Thank you, Chair. For Governor's Office. Aloha. And thank you to the Governor's Office for this Bill to try and address decrease federal funding to maintain services for working families in Hawaii, as well as to provide tax for low and moderate households.

We heard testimony from the Tax Foundation about instead of removing portions of the existing statute to just change the dates and that would truly be a pause to what this Bill proposes to do. So, my question is what are the Governor's Office thoughts on that and is that something that we should consider?

So, I think, you know, it's one thing that we did consider. I think with the uncertainty that will continue potentially for many years, it's hard, at this point, I think, to put a date on something to say this is exactly when this should all kick back in.

Now, we're not opposed if the, if the Legislature would like to look at that. But right now, I think that uncertainty extends so far out that because things that are happening now will have this ripple effect for many, many years beyond, you know, the current administrator or whatever is happening up on the federal level. Right?

So, if the Legislature wants to, you know, deem that appropriate, that's fine. But I think we would want to work with the Department of Taxation about how that would be implemented as well, because these tax changes need time to go into effect and then also be, you know, communicated to the taxpayers as well.

All right. Thank you. No other questions for me, Chair.

Thank you for being here. I don't know if the question would be for you or maybe for the Department of Taxation.

And I'm trying to get a better understanding of this Bill in the sense that the conversation has kind of been around maintaining tax relief for low income working families while removing the tax relief for higher income earners.

But when I look at the Bill, it seems like all the brackets are crossed out, all the tax amounts are crossed out. So, I'm wondering what is the income threshold that we're looking at, like removing the tax relief from? So, is it like, for example, if you're a single income earner, right.

You make, I don't know, 150,000 or something, then you no longer, the tax relief no longer applies to you because that's not how I'm kind of reading it. Right? And so, I'm wondering how are lower income working families still getting tax relief from this Bill? And, you know, how does that kind of work?

Sure. So, yeah, I think that's a good question to provide clarity on. So, the Bill, you know, what's in place again and what's already occurred, and what will occur through 2026, will remain in place. So, everyone, every tax bracket has received cuts to their taxes.

Now, if you're looking at percentiles, you know, and we have a kind of a chart here of the lowest 10% all the way, you know, by tens, all the way up. If you're in the lowest, your percentiles there, you're looking at potentially 81%, 177%. So, you'll get back some credits. Those families will receive the lion's share.

To be clear, the upper tax credits will receive tax breaks. For this case, the highest 10% of earners under this proposal will have still received a 10% tax relief. The 81 to 90% will still have received a 20%. These are things that have already gone into place.

Now, the ones that were pausing or stopping or whatever we like to use is all, for everyone, going forward after this, there's no more. And then, we would bring in the tax credits to address the lower income and the moderate-income folks.

And that's—okay. So, the tax relief here, sharing about, is based off of what's currently already in the tax system. So, it's, that's what we're saying, you're getting tax relief on the things that have already happened.

Correct.

Okay. And then, the way we're going to be supporting lower income working families is through like the child and dependent tax credit, the e, I don't know.

Earned income tax credit.

Okay, so what happens if someone, say, you know, and I don't know what the threshold amounts are, but let's say you don't have like child and tax credit, you don't have children, you're joint filer, you're single filer, your working family, I mean, whatever, but you don't have kids, so that wouldn't apply to you. Right?

But then maybe they don't meet the EITC, so they may not. So, I feel like there's still like a middle group, right, that will still not be provided any tax relief, if we're only focusing on providing the tax credits. Does that make sense?

I'm trying to understand like how the Bill is structured so that, you know, because I think the conversation has always been we're still trying to help lower income working families, you know, all these things. But I'm trying to figure out how that that Bill still does that.

Correct. So, I, I'll let DoTax's Deputy Director here jump in a little bit. But I think, again, the, the lowest, I mean, the—all taxpayers across the state have already received significant tax reductions. Right? If you're in the lowest 10th percentile by the end of 2026, your taxes have reduced 177%.

So, they would not, if, if they do not qualify for those child care tax credits or their EITC or those other things, you're, you're absolutely correct. They won't continue to receive additional tax cuts.

But up to this point, their taxes have been cut, you know, over 100% and then some, and then, again, it goes up there by percentile. So, I, I understand we may not be able to reach all people on the tax credits, but everyone has received significant, especially the lowest.

And then I'll just add that looking at the tax credits, the combination of the child independent care, the EITC, and the Food and Excise Tax Credit, those three combined, we are trying to reach as broad a population as possible with the low and moderate income tax amounts.

So, under the initial income tax changes back in 2023, the Legislature increased the EITC and the Food and Excise Tax Credit. However, those are scheduled to sunset in 2027. So, what this Bill does to ensure that that targeted population continues to get benefits, we are extending for those credits to 2031 or 2032.

So, Food and Excise Tax Credit, which benefits our lowest income taxpayers, the child independent care for working families and the EITC, the taxpayers who work that have that low to moderate income. So, a combination of that, we thought was a pretty comprehensive one way to provide these benefits.

I have a quick follow up to that. What is the income amount that would allow people to still qualify for these three different tax credits? Like, what is the max that you can make to still qualify?

So, with the Food and Excise Tax Credit, if you are a single taxpayer, the income threshold is $40,000. If you are head of household or joint, it's 60,000. The EITC, I believe it is based on the number of persons in your household.

For tax year '25, and it's based on federal amounts, the AGI, the federal AGI, for example, for zero dependents, would be 19,000 for single, 26,000 for joint. If you have three dependents, 61,000 for single, 68,000 for joint, and then, the Child Dependent Care Credit under our proposal, all families would benefit. It's just you get a reduced percentage of your expenses that you're able to recover.

So, there's no amount?

There's no cap on your income, but the highest earners will be limited to 15% of the expenses that they're able to recover.

Okay, great. Thank you.

And then, 50% at the highest, which will benefit. In our testimony, we laid out the different percentages.

So, if your income is not over $150,000, you can recover 50% of your expenses for a joint with a cap. Yes.

Thank you.

Thank you, Members. Additional questions? Rep. Miyake.

Chair, for DoTax. Going off of my colleague's question, so, the Bill eliminates the inflation adjustment. So, if lower or middle to low income person gets a raise, wouldn't it eventually—they pay more taxes over time?

For the income tax brackets, yes. So, by design, if you don't index the tax brackets to inflation, there is income creep that happens.

And I—so, I think a way that you can address that is by staggering the income tax changes over time, which I believe what the approach that was done in the previous bill, Act 46, the Legislature opted instead of the inflation increases to stagger the bracket amounts over time.

Thank you.

So, this would just pause it for the time being.

Additional questions? Okay, go ahead.

Okay, so, I guess for both of you, the—when the Bill was put together, the purpose of the Bill and Chair, if it's okay, I can give context to my question.

The purpose of the Bill was that when minimum wage went from $7.75 to $10.10 an hour in 2015 and then, thereafter, we passed another Bill that raised minimum wage to $12, then to 14, then this year, it went to $16 and then, 2028, it goes up to $28—$18. Right?

So, what the first part of the Bill was trying to address is that when we were increasing minimum wage, we didn't re-index, we didn't adjust the brackets. So, the Bill technically was not a tax cut. It was to re-index what we should have done years ago. That's what the Bill was trying to accomplish.

Number two is when we asked your Department, DoTax, and it was a—Seth Kobe was there at the time, and this was his answer. I asked specifically who was taking EITC, the food credit, the child independent credit, and I think it was the renter's credit. Right? And I said who was taking it?

He said, well that is protected information. We cannot give you who's taking it, but you could give it to us by area. So, what stood out when you sent us the information, if you lived in a challenged area, so West Oahu, sorry, places like that, hardly anybody was taking those credits.

But if you lived in a well to do area, Kahala, Wailai, whoever could and a lot of people were, were taking those credits, which kind of made sense, right? Because they have the worth all, they have the understanding of the tax code.

They have CPAs, they can pay these people to do this for them and they're going to take advantage of everything they could. So, that's, when we're creating the Bill, we determined that it'd be better if we increase the standard deduction because people that are financially challenged usually don't itemize. So, we just give them the money. Right?

So, that's why in the opposite year, we double the standard deductions and then in out years, every other year, we were increasing the standard deduction to just, don't make them apply, just give them the money, and that was the idea. Right?

So, you know, these bills are going to increase those credits that, again, may still have challenges to get to that. I would prefer we focused on something—just, just give them the money. Right? That's number one and I want your thoughts on that because this information came from DoTax. And then number two is that—and this is hard to measure.

So, I've asked this question for a number of years. As we started increasing income tax to higher brackets, right, that created incentives, if you will, and maybe that's, that's the wrong word, but for people to export income out of state because it just made financial sense to, if they have the ability to just find a state or an area that doesn't have income tax, right?

And what they'd save in income tax, many, many cases, would help pay for wherever they, they are and, and then they spend, you know, have disposed to send over half the year in that airplace and then—but they still have a house in Hawaii.

And so, I've always believed that we need to increase property to be able to fix that. But that's, that's a whole 'nother discussion. So, the—while I do agree with a lot of testifiers in support of this Bill that the target should be the high-income earners, but I do believe that we have three major taxes.

We have income tax, we have consumption taxes, the GT, and then we have property taxes. Right? Property taxes are close to home issues. So, in most states, education, community hospital, jails, traffic court, and ambulance service and parks, public safety, all these things are paid for by property taxes, close to home issues. Makes sense, right?

Better services you actually paid for by property. Consumption taxes are usually taxes that the state pay, state collects it.

Makes sense because, you know, we have, there's a nexus to the services. Income should be at the federal level and if you want to target those people, it should be at the federal level because then they cannot export because wherever they go in the country, they're going to be at that top level.

Versus when the state increases it, we give that opportunity for people to export and to decide to move their income out of state and things like that. Our trouble right now in our state is that, and I agree with all of—our people are challenged and they're voting with their feet, right?

The middle income and bottom have the ability to—they're moving out of the state, they're voting with their feet. It's hard to live here. It's high cost of living, all those things. Right? The opposite applies to high income earners, business people. Most of them now are not traditional corporations. They're passed through entities, LLC, LLPs, right?

So, the money flows to the individual and where they're putting their voting? With their money, right? They're not reinvesting in our state, they're investing out of state, they're taking their money and they're putting it out of state because it's just, it's like many people said, it's just difficult to do business in Hawaii.

So, they're choosing to vote with their—where they put their money. And the more we start to do things like this, my concern is that they will continue to vote where they invest their money and that's going to be a challenge. So, my question is that, you know, is what I said still true?

What DoTax—when you told me that people taking those, the EITC, the Child Impact Credit, food, all those credits, is it still difficult or not being taken by people on the bottom row?

And do you think that increasing the standard deduction would be a better policy to get money directly to them and don't make them apply, just give them the money?

So, I think there have been efforts. I realize and I acknowledge that there are still issues with having taxpayers who need tax relief the most applying and not everyone does, for these credits. However, there has been an increase in the number of credits.

We have been making an effort to educate the public through publications and outreach and whatnot. With that said, you know, I would agree that a standard deduction is a great way to address income equality and to provide benefits.

I think specifically for this Bill, however, you know, we ran through various scenarios, and we did also look at the standard deduction and it—we just were not able to find a way to recover the revenue that we needed and target the population that we wanted to help. So, this was the solution that we had come up with.

And that leads to the second question. So, this is for you. So, it was brought up that it would be prudent for the Legislature to maybe look into tightening our own belt first before we ask people to have a delay in what we promised. Right? So, did you look into some possibilities?

Yes.

Okay. And have you sent back to this Committee?

No. So, what, so, what we looked at is—so, you know, this is a little complicated. I think, in my mind, having, as you know, worked on budgets for many years, this one's a little trickier because it is, I think, more of a moving target than I've ever seen before on the federal level, as far as how these.

I understand, you know, I understand the challenges of what the uncertainty. And you know, that's something that we discuss here at... Right? And I agree that uncertainty is probably one of our biggest challenges. But at the same time, it'd be prudent for us to look, especially because, right.

And I brought this up in the budget briefings when Uhero was here, as well as BNF, that, right, with the—we know our workforce age people, the population is shrinking, they're moving away. Right? We know that. And in fact, the economists tell us that in the near future, the population may start going backwards.

For the longest time, we've been holding at about 1.4 million people. For the first time in history, we might start going backwards and it's mostly people of workforce age that are leaving. So, with that, and then I argue that, at some point in time, the Federal Government will change, and they will start hiring again.

And they are probably the employer of choice, so, people will leave the state to work for them. Tourism will recover and they will pay what they need to get workers. And then, so, it will be at the expense of the Legislature.

So, I believe that this is a good time for us to reexamine and right size government to provide the services that we need to provide and that's our responsibility. So, we should, we should have a, to address the cost of living, we should have a well-compensated, well trained, smaller workforce.

But we got to start working on that. Right? Because, again, we know the population is shrinking and we know, at some point in time in the future, people may choose to work for the employer of choices, right, which, which happened—this is not new. Right? And the Federal Government hiring, people leave—when, when, when tourism is booming, they hire and they take employees from us.

So, you know, these are the kind of times where we, we're supposed to be doing the hard work. We're supposed to be looking at these things. Have you considered that?

Okay. So, what's your plan?

Yes.

So, so, I think we, this, this previous, or this year, excuse me, we looked at, you know, flattening out the budget to begin with. The only increases that we submitted in this supplemental year were related to the.

Those are ads. I'm talking about going into the base.

Right. So, if, right now, the decision was made that we're going to continue to work with the Legislature on that, but we were not going to submit a budget that was going to cut positions.

So, you have no recommendations?

Services. Our recommendations were included in the.

As far as going into the...?

No.

Okay. So, there's nothing that you can recommend to us?

I mean, we, we have already submitted the budget request to you.

The budget is an, is an ad. But I'm talking about tightening our belt and looking into the base.

Yeah. I mean, you know, some of the things that were brought up are definite things that we can do. They're a little bit of one-time adjustments. Right? So, the idea of going to the special fund.

But you haven't looked.

Or, of course—well, we have looked, of course.

Are there recommendations that you can send to us?

I'm sorry?

Are there recommendations you can send?

We can look at it. Yeah, right now.

So, you haven't looked then?

We have looked.

Okay, so are there recommendations you can send?

I don't have any recommendations right now to send to you, no.

All right, thank you. Thank you, Chair.

Members, additional questions on this measure? Yeah, there you go. Go for it.

Grassroots. Are they still here? Welcome and like to thank the representative from Maui for his comments and questions. We were talking about looking internally at how we can tighten our belt. You had some suggestions in your testimony. I was wondering if you could expand on that a little bit.

Sure. I appreciate the question. I appreciate Rep. Yamashita's questions as well. You know, and it is—some of these are things that would be one time savings. So, you look at abolishing vacant positions that have been vacant for years. Anything over, I believe it's four years, that's $30 million.

But there are other positions that have been vacant two years, three years, and really have not had any efforts to fill. There's the special funds that have been flagged by the auditor. There is getting rid of the FAMAS accounting system, which is $60 million. Also, just looking at the budget itself from 2019. Right?

And going back to that year, adjusting for inflation, that's $120 million right there. So, there are opportunities and ways to not necessarily cut a bunch of services for folks. But to, as you mentioned, Rep., right size government and go back to a time where we're not spending so much money, especially when we're asking local residents to give up thousands of dollars.

So, some of these recommendations that you mentioned, what kind of effect do you think it would have on some of the services that are currently being given to those?

I mean, a lot of these things are not necessarily cuts. You look at like the Hawaii Convention Center. I know this may be controversial, but like that's a money pit right now. You look at the controversial Hawaii Tourism Authority, which, every year, it seems like they have to fight for funding. That's $66 million right there.

So, there's a lot of opportunities. And again, I would be happy to provide this list to this Committee afterwards. We've identified probably close to around $500 million in areas that would be ripe for cutting without necessarily getting rid of essential services.

I'd love to get that study.

Yeah, absolutely. I can send that after this.

Thank you.

Rep. Kusch.

Opposite, thank you. Yeah, I'd love to get a copy of that as well. That's really interesting. I just had a quick follow up question. You mentioned that the budget has grown about 120 million since 2019. Is that inflation?

So, if you were to adjust for inflation, there's about $120 million in excess after that adjustment.

Okay. So, that includes the inflation index.

Correct.

Okay. Thank you.

Members, additional questions on this measure? No?

Ah, there you go.

Mr. King. For my own edification, if we were to take some of the recommendations that had just been discussed around removing vacancies from the state budget, does it actually save us money or does that just change the amount of money that, let me put it that way, does that actually save us money?

So, that's, it's a good question and I think it's an exercise that the Legislature and the Executive been through multiple times since I've been around. Right?

So, we look at these vacancies over time and then, we go to the departments and then, you know, we try to pull down all these vacancies and then, we come to find out that there's actually people moving in or there's this or you know, sometimes and, let's just be honest, that some of that vacancy savings is being used for operations and if we remove the vacancy, then you're going to have to fund the operational side of it.

So, it's, it—there's a kind of a bit of a wash. So, can there be vacancy savings? Sure. But if those, I would also say though, but that's, that's like a bit of a budget exercise because if those positions are not filled with warm bodies, there's nothing being paid out—necessarily not being paid out for them.

So, that money would still lapse back to the treasury at the end of the year anyway, which could then be reappropriated. So, the idea that there's this hundreds of millions of sitting there that's going out that we can pull back I think is a little off.

Okay, thank you for clarifying that.

Okay, anyone else? All right, if not, I'm going to make a couple of quick announcements just so that we can kind of level set expectations. We're going to be taking up the next Bill, HB 1776, HD 2, relating to residential landlord tenant code.

Then, we're going to take the last item on our agenda, which is relating to Banding Drive Makaoku Community Development District. And we take that out of order and hear that after 1776 because we do have people who've flown here who are here for one measure and then we'll get onto the regular agenda.

The plan would be after HB 1939, which is the Film Tax Credit Bill, we would probably take about a half hour break. So, just if you're after that on the agenda, don't want to, you know, hold you here the next couple hours with that expectation and then, we'll reconvene after that.

Okay, so moving on to HB 1776 HD2 relating to the residential landlord tenant code.

First we have DCCA Office of Consumer Protection.

Hello Chair, Vice Chair, Members of the Committee, My name is Emma Olson for the Office of Consumer Protection. We will stand on our written testimony offering comments. Our office is happy to publish a notice of tenants rights. We do request a delayed effective date and an appropriation for publication and translation costs. Thank you. Being available for questions.

Thank you. We have the Hawaii Realtors with comments. Thank you. Hawaii Children's Action Network speaks in support on Zoom.

Aloha. We stand on our written comments in support of this Bill. Thank you.

Thank you. Hawaii Appleseed Center for Law and Economic justice and support.

Morning Chair, Vice Chair. Members of the Committee on Finance, we appreciate the legislator for hearing this measure on both the House and the Senate side. This is one of our priority measures around tenant protections. The ability for a tenant to understand what their rights are and how to exercise them under the landlord tenant code is incredibly important.

So having DCCA create accessible multilingual landlord tenant guidebooks is incredibly important, additionally including it in the signing of a lease agreement. I personally have dealt with issues around the landlord tenant code with a registered agent in the state who is a well known landlord who did not know landlord tenant code themselves.

So if anybody doesn't know after 14 days when you do your final walkthrough and looking to get your security deposit back, if your landlord has not done that, they cannot take, if they have not given it to you within those 14 days, they cannot take out like what they would take to repaint the place, replace louvers, they have to give

you your full refund back. I encountered this with a landlord that frankly didn't know the rules even though they are registered real estate agents and had to go back and forth with them for days.

And so this was over two weeks where I didn't get my security deposit back and it was finally like prompting, checking the landlord tenant code, calling DCCA and then imploring the landlord to check with their legal Department. Because what was told to me was it's just not a part of our policy to follow these rules.

So I think this has benefit both landlords and tenants. And we really appreciate the legislator for moving this forward and thank you.

Thank you Members. That's everyone who indicated they would be joining us today. Also additional testimony and support from the Disability and Communication Access Board, three other organizations and five individuals. Is there anybody else in the room wishing to testify?

Anybody on ZOOM Members questions on this measure? Go Ahead

For OCP please. Sorry. I was reminded when I was reading the realtor's testimony. There's the landlord, the working group to go over the entire landlord tenant code and make recommendations. That was passed last year and you guys are a Member of that working group. Yes.

So I was just a little confused because I thought we were not going to be doing piecemeal things until you know, recommendations came from the working group and that was the whole point why we paused a bunch of stuff last year and then now.

So can you speak to when should we be waiting until the full recommendations come out from the working group which I think is not going to be for another couple of years.

Yes, that is a good question. I am personally not the Member that is on the working group for our office. So I can't speak with specificity on that. I do know that it is a three year working group. I can go back and speak with my office to see kind of what the recommendation is.

Okay. Because I know, I mean because your office oversees most of the, most of the issues right. With tenant Codes.

So, I mean, I think it would be helpful if you guys gave us that insight because again, my thought was when we did that, the intention was to again, not piecemeal things together until a full overview and comprehensive recommendation could go through. I think some of the stuff know, you can do, you can do.

And it would make it helpful for landlords and tenants to have these documents available and make it clearer for people, which I do think is helpful. But I do kind of then have an issue with mandating things on landlords with the fines and everything, since, you know, my district has a lot of smaller landlords.

You know, they're just renting out their grandma's home or something because it's still in the family property. And, you know, to. I think part of the working group was to look at solutions to how to better educate the smaller landlords who don't have the resources to do some of these things.

So I do kind of have concerns about levying things like fines at this point if we're going to be doing some of this work. So maybe if you guys could take it back and kind of consider that in your testimony when you're providing things that. Right.

We are supposed to be waiting for this kind of comprehensive review of what's going on.

Yes. Yeah. We do provide the Landlord Tenant Residential Handbook, which does offer information for both landlords and tenants, which is available online digitally for free. And this notice contemplated in the Bill would also be published online. So I don't know about costs that that would require landlords to pay if they could just pull it from our website.

Yeah, I mean, I think to the point of the previous testifier, also about, you know, I don't think smaller landlords have the ability all the time to know what's out there and know what they're supposed to be doing, which again, is something the working group I know is supposed to be looking at to provide those resources to everyone to kind of make sure we kind of, I guess, right size.

What's going on in community. Thank you. Thank you, Chair.

No problem. Any additional questions on this measure? If not, we're going to move to the last item on our agenda and move it out of order, and that is HB 2616 HD1 relating to the Banyan Drive Makaoku Community Development.

We have the Department of Land and Natural Resources in support,

testimony in support.

Thank you. We have ACDA in support,

Community Development Authority stand on testimony. Thank you.

Thank you. We have the Banyan Drive Hawaii Redevelopment Agency with comments on Zoom.

Yes, thank you. We'll stand on our testimony and available for questions.

Thank you. We have Nā Wai Iwi Ola Foundation and the Waika Crown Land Heirs in opposition on zoom.

Aloha. Hi. Aloha. I'm here at Maka Oku. My name is Kanoe Case. I'm representing Waiakea Crown Land Heirs today. So I'm just wanting to bring you folks to the space. Yeah. That's what it's all about. We have Mako Oku behind me and I'm here to testify in an opposition to HB2616 House Draft 1.

The reasonings for that is because it specifically excluded the original intent of the Bill to include lineal descendants such like us, who are advocating for our healing of this beautiful place that we have to Malama and our Kuleana to steward this place.

We are asking for support for this to be revamped and for our recommendations to be put into the House draft two to be recognized as formal voting Members on the authority. The Kupuna don't want this to be complicated. And I probably know I only have a few more seconds, so we just don't want to complicate this.

Our intent to be on the board or on this authority is very clear. It's not to roadblock. It's not to do any sort of funny business. The reasons why, which we should not having to be saying this over and over and complicated.

Hate the matter is that we are lineal descendants who own title to land that's present on the crown lands. We are different from oha, we are different from dnr. Different in so many ways to. To proceed with the roles that. That need to be recognized here.

And if lineal descendants are not part of the authority, then there should be no advisory and they should be contingent. Yeah. So if. If we're going to keep it being put inside this metal cages. Yeah. Or on blocks. As you can see, there's barriers around the Pohasu for protection. Right. But symbolically they are.

They're symbolically put into a barrier that's protecting them, but yet not protected. Right. So I'm just here to testify on the zoom with Kupuna. And I know you folks are listening because we're moving into an era with younger opio that are going to be pushing this. Yeah. So it's not going to go away. Right.

So we're coming forward to ask kindly, please. I will wrap it up. So we're just asking kindly to please consider these things because it's not going to go away. It's probably going to get stronger and stronger if it continues. So we just want to say mahalo and aloha to you folks.

Mahalo, Chair Chris Todd, and mahalo, Jenna, Vice Chair Jenna and all the Members of the Committee. I know this will go well. If not today, it'll be in the future. But that's okay because we're not going to go away. So we mahalo you folks, and

thank you. Thank you. You're welcome. We have Walking Keaukaha Action Network in opposition.

Is it required to sit? It's probably fine. No stress to my brain. Yeah. Yeah. So I am Terry Napiahi, co author to the Bill HB 2616, before it was amended and gutted. So I wanted to bring attention to the day that it was gutted and amended.

That was a day that we had 100 testifiers. Well, actually petitioners who were in support of Linear descendants and 100 support in the Bill. And there was only one entity that came in, swooped in and made an amendment and it was accepted as. By gutting out lineal descendants, the purpose of the Bill.

So today I think I'm here to justify why lineal descendants. I am a lineal descendant. 27 lineal descendants of Waiake.

In the last two decades, my family has been asked and invited to be in environmental assessments, Environmental Impact Statements, CIA's Cultural Impact Assessments, and NHPA Section 106s, all of the environmental reviews that consider one group of people, and that is a native people of this aina, of this home grounds of our people.

So it's not like I jumped on board last minute to ask this request. I think it's feasible because we are already in the process that is placed in development. I have a business major and economics major. I'm also an archaeologist, a carpenter, and I'm also an entrepreneur. But I wasn't asked and invited to the table to comment.

I was asked to the table for all these environmental reviews because I am a lineal descendant with ancestral knowledge, with moolelo. I get to sit with every development that comes in the Waiakea Ahupua. This is not. Not the first.

So I just wanted to let you know how long the Napias were invited to talk about development in Waiakea. Ahupuaa. It's been decades, so this is not new. So I think it's a feasible ask. We do all the heavy lifting. We do all the advising to archaeologists, to legislators, to the Planning Department. I'm a planner.

I'm a city planner for the county of Hawaii. But I wasn't asked to the table because I'm a planner. I was asked to the table because I have ancestral knowledge. And for this Waiakea Ahupuaa, I think it's a feasible ask. One entity came in, swoop up and gutted out two things. Item number six and item number seven.

Remove the linear descendant. They have no justification for that. None whatsoever. Their justification in a Senate was, zero, because we don't want to lose the money. We're not here asking for money. We're here to ask for a voting voice to be a Member because I am an expertise.

If you look at the list that they came up with, not one of them pick up rubbish in Waiakea Ahupua'. A, not one of them do ceremony in the places of significance. But I do my ohana does because we have ancestral knowledge that every agency needs. You need me.

I don't want to. I don't want to interrupt your flow, which we're trying to give a little bit of leeway, but if it could summarize towards the end.

Okay, so this is what I'm going to say. We recommended my tutus and I recommended. We were Kuleana, stewards of a heiau that stood 60ft tall. And it was dismantled. My tutors saved the main stone. It has a name, Maka Okuikalani, which was protected through generations. This pohaku is in my possession.

We are asking that you use this heiau as a people because you will have the buy in from the entire community. 200 people supported this Bill, but one didn't. I'd like to have you justify why they didn't because to me that might be discriminatory. Thank you.

So I oppose the amended Bill and I'm asking that you put it back the way we wrote it. Mahalo nui. Mahalo nui Mahalanui. Thank you for letting my blood flow. Thank you.

Members also please note additional testimony with comments from the Office of Hawaiian Affairs. Testimony and support from Mayor Alameda from Hawaii County, from Hawaii County, the county of Hawaii Department of Research and Development, the County of Hawaii Planning Department, Council Member Pelton from the Maui County Council, one organization and three individuals and seven other individuals in opposition.

Is there anybody else in the room wishing to testify? Please just state your name and sense for the record before you begin.

Hello. My name is Tanya Yamanaka Aynessazian. I'm a Chamber of Sustainable Commerce and you know we support people, Planet, place and prosperity. Communities and indigenous people must have agency over their own future and they can only do that if they have agency over their sense of place and that's all that they're really asking for.

So we support the lineal descendants and their right to have voting representation in the Reb of Makoku. And please support the original intent of this Bill. Thank you.

Thank you. Anybody else in the room? Anybody? zero please just state your name for the record before you begin.

Hello? Mai Kakou or Kahaka Patolo Koi? No, I oppose this HB2616HD1 I'm on behalf of speaking as a linear air and it will be foolish not to include us in the decision making that's how it should be just going to be honest but it really comes down to is a title issue who has

a superior alloy land title? We do. They have the Palapala, we have the maps and we have our proof. So I just hope that you guys would make the right decision, you know and have integrity. Thank you for your time.

Thank you. Anybody else in the room? Anybody on Zoom wishing to testify.

Members questions on this measure? Repossi I have a question for HCDA.

Morning, Members.

Good morning. Thanks so much for responding to the request. I was curious if you could share your concerns with, including lineal descendants, in the, in this process.

Actually, let me clarify and maybe provide some context. So, right now, as some of you may know, we're undergoing a master planning process for the Waiakea area. This is with monies that were funds that were provided a couple years ago by Representative Nakashima. So, we're starting on that process.

The process will be to kind of come up with a community master plan that will really guide the development, the areas where there will be cultural resources, a cultural center, perhaps maybe another hotel on in that area. This process is ongoing right now. Once that—once the community master plan is done and we hope that this Bill gets enacted, we need to do rules to govern the development for the district.

As part of this master planning process, we're going to convene a community advisory committee that will be made up of lineal descendants, will be made up of community folks, and that will be there to advise on the planning process.

I would submit to this Committee that that's where the kind of heavy lift and impactful, you know, kind of guidance can be given. Because once those, once the—go through the planning process and we set forth land uses, that's what's going to be sort of the roadmap for the future.

Not necessarily how the board responds to those things, because for the board, it's going to be permitting, you know, just saying, well, is this entitled to be built there? So, the heavy lift, Representative Hussey, is actually right now with that committee, action committee that we're going to form, which will include lineal descendants.

And then, that community action committee, I envision, is going to be transit, going to transition into a community advisory council that's going to serve to advise the board on development permits that get submitted for the district. So, they're not excluded.

Just suggesting that maybe a more impactful way right now is this putting them on this community advisory committee, which are planning organization entity, our planning consultant is preparing to do. And then, that community advisory committee will transition into a community advisory council that will advise the board.

Okay, I appreciate that response. You know, I do hope that we could work with HCDA to make you feel comfortable with what the lineal descendants are asking for. You know, because, you know, most native Hawaiians are sort of, I think of ourselves as sort of like internally diasporic.

You know, most Hawaiians don't live on our ancestral land anymore because of the changes of the plantation era, and you know, land loss and all that kind of stuff. Sometimes all we have is our connection ancestrally to a place.

And that doesn't mean, though, that we don't want to be connected to those places and that we would like to re-establish a connection at some point in the future. So, you know, it would be great if we could work with your agency to, you know, to make that more possible. Thank you.

Yeah. And if I can share, if I can add one more thing, I think all of us want the same thing for Wakea. I think we all want the same thing. You know, my predecessors before me and my seat, going back, I think several years, if I kind of research—rudimentary research of legislative history, there were several bills that were introduced about creating a community development district for Waiakea Banyan Drive, and all of them were never acted upon.

I think it's because the agency, my agency, never really went to the author of the bill and said, we're willing to do it.

When Rep. Nakashima introduced a Bill Back in 2023, I approached Rep. Nakashima about it and said, you know, we want to work with you and we want to do something. And he told me that was maybe one of the few times that anybody from the agency approached him to work with him.

So, I guess what I'm saying, Rep. Hussey, is I agree, I should work with—work with all of you on this, but I also, and I think that our agency right now is really the best agency to see this implementation of the redevelopment of Wakea area.

I think our agency is the best agency to do that right now, and we're poised to do that. We are working on it already and I think we're making progress with the, with the planning and we intend to see this through. So, I agree. I agree with your comment.

Thank you.

Members, additional questions on this measure, part two?

Sorry, Chair. If you could stay seated. I want to follow up on this conversation about legal descendants. If this Bill were to move forward, am I understanding you correctly that the agency is open to adding them back on to be voting members?

Representative Hartfield, you know, I not going to, you know, my testimony that I submitted prior really stands. I think I prefer that we have this strong advisory committee that translates into advisory council and then we move forward with that. I really think that that's the most impactful way, Representative Hartfield, for, for input into this process.

Okay. If you can just help me to better understand, because from what I'm hearing is lineal descendants, they're good to be on the advisory board, that the information they can provide is extremely helpful when it comes to decisions and voting, that they're not as necessary.

So, help me connect that bridge so I can better understand why it's okay to have them on an advisory board, but not have them on a board where they can vote and actually make decisions that will impact their community that their ancestors have been on for a number of years. So, help me understand that.

Representative Hartsfield, before I say anything, I'm not, I'm not disputing or arguing with their connection to the land. I'm not disputing any of that.

And I'm going to say this, but I don't want to sound too bureaucratic about the way I—what I'm going to say, but I mean, we have right now five boards that I did—I administer. Six if this one gets put into place, seven if another Bill is session passes. I think that's more—six more boards than any other state agency has.

So, there's a, somewhat of a, you know, need for some continuity standardization on this board. That's one reason. And I don't need to sound bureaucratic or technocratic about it. And then, the other reason is I think on the board we have representation from a cultural specialist who sits on all of our boards.

Again, I don't want to sound too bureaucratic about it, but we have six boards. Maybe we have six boards with this, seven boards if there's another bill that passes this session and there's a sense that is for some standardization.

Thank you.

Members, anything else? If not, before we move on to the next item, just thank you for all being here and being part of it.

You know, we're not going to all see eye to eye and everything, but to your credit, you have been super engaged over the last few years in a way that no one from the state has been prior. We'll disagree on some of the details and we'll figure some stuff out. We'll be all right. Thank you.

Okay, before we get into the next bill, which is HB 2007, I did want to give everyone a heads up for decision making.

For HB 2306, which is the income tax bill, and for HB 2007, which is what we're about to hear, and also for HB 2616, the plan would be to have decision making tomorrow at the end of our Wednesday, 10:00 AM agenda. It'll give the Committee and the Chair some time to kind of digest and work some stuff up.

But don't want to keep you guys here for that same reason. Okay, next, we're moving on to HB 2007, HD 2, relating to the Household and Dependent Care Services Tax Credit.

Okay. First we have the Department of Taxation with comments.

DoTax stands on our written comments.

Thank you. Hawaii Public Health Institute in support.

Hello, Chair, Vice Chair, Committee Members. I'm Chris Kauff from Hawaii Public Health Institute. We're in support of this Bill. As you all know, for working families, childcare has become very unaffordable. Everything else becomes unstable when childcare is so unaffordable. Hawaii families are paying some of the highest childcare costs in the Nation.

More than $24,000 a year for infant care, and in many cases, over $2,700 a month. That means families are spending 13.5% of their income on childcare, which is the highest share in the nation. When families can't afford care, they have to make these impossible choices.

They reduce work hours, they leave jobs, they postpone careers, struggle to afford food, housing, and health care. And of course, our children lose access to safe, stable, nurturing environments to support their development during the earliest and most important years of their life.

So, for us, we view the skyrocketing cost of childcare not just as an economic issue, but as a primary public health concern.

And this proposal actually fixes Act 163 from 2023, which increased the amount that taxpayers could claim under the Household Independent Care Credit, but failed to increase the percentage of expenses they could claim and did not adjust the income thresholds to which the credit applies, and that severely limited the act's intended impact.

So, investing in child care is investment in the future of the state, our workforce, our economy, our next generation. As our cost of living continues to soar, working—working parents—are demanding and deserve our support. Thank you so much.

Thank you. Next, we have Tax Foundation of Hawaii, with comments on zoom.

Thank you, Chair, Vice Chair, Members of the Committee. Tom Yamachika from Tax Foundation. The comments that we have on this Bill are also applied to House Bill 2306, which you heard previously.

There are debarment provisions in this Bill, and we think if this Bill moves forward, the Committee should clarify what happens with a partial disallowance, as opposed to a full disallowance.

We're also concerned generally, and this applies to 2306 as well, that some of the changes in this Bill do increase the complexity of the credit and make it less approachable for people who need it to claim it, which I think is perhaps one reason behind Senator, I mean, Representative Yamashita's, observation that the people in depressed areas of the state weren't claiming the credits that they otherwise might be entitled to.

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

Thank you. Hawaii Children's Action Network Speaks, in support on Zoom.

Aloha, Chair, Vice Chair, Members of the Committee. Nicole Wu again. We support this Bill. As Chris from Hi Fi mentioned, child care and also dependent care, if you have an adult family member who needs dependent care, those costs are crushing and it's affecting the affordability and the ability of families to afford to live here.

As Chris mentioned, three years ago, the Legislature increased the amount that families could claim for their care credits, for their care expenses, and that was great because it caught it up closer to inflation. But the percent cap is still there.

So, if you make over $50,000 a year, the current cap is only 15—1-5%—of your care expenses. So, if your Pre K costs $10,000, right now you can only claim $1,500.

So, this Bill would increase the amount the percent of your care that you could claim, up to 50% at a certain income level, and then it goes down as you make more and more money.

On page 12 of the PDF, I have a table that shows how this really helps Alice Survival budget families and median income families because the lowest income families do get child care subsidies. So, this really targets those families who make too much for those subsidies but still are struggling to make ends meet.

And child care costs are one of the highest costs for families with children. So, we encourage you to pass this Bill and thank you so much for hearing it.

Thank you. Indivisible Hawaii, in support. Thank you. Members, that's everyone indicating they would be joining us today. Also, testimony in support from the Office of Hawaiian Affairs, five organizations, and 17 individuals. Is there anybody else in the room wishing to testify? Anybody on Zoom?

Members, questions on this measure? Seeing none. Moving on to the final Bill before we will recess for about a half hour break, going to have HB 1939, HD 1, relating to taxation.

We have the Office of the Governor in support.

Aloha, Chair, Vice Chair, Members of the Committee...Chapman, Governor's Office, here on behalf of...the Office of the Governor stands on its written testimony in support.

Thank you. We have DBEDT with comments, on Zoom.

Yes. Good, good, almost late morning. Georja Skinner, Creative Industries Division, standing on our support the intent of the measure and offering some comments. Here for questions. Thank you.

Thank you. Department of the Attorney General with comments.

Good morning, Chairman Todd, Members of the Committee. Michael Dunford, Office of the Attorney General. The Department of the Attorney General understands and supports the intent of the Bill and offers the following comment. There are portions of the Bill that provide tax credits to productions based on the percentage of local hires that are employed.

That provision may be subject to challenge under the Commerce Clause. We are available to answer any questions that the Committee might have.

Thank you. We have the Department of Taxation with comments. Thank you. We have SAG-AFTRA, Hawaii Local, in support. Not present. Hawaii Film Alliance, in support, on Zoom.

Chair, Vice Chair, Members of the Committee, Irish Barber, President of the Hawaii Film Alliance. We stand in support, but we respectfully request that the amendments in our written testimony be included in this Bill.

We especially love the local hire language which would strengthen the hiring of Hawaii film workers to stay here and work at home rather than find work on the mainland. Mahalo for the opportunity. I'm happy to answer any questions you may have.

Thank you. Hawaii Teamsters Local 996, in support.

Yes. Morning, Chair, Vice Chair, Members of the Committee. Really strong support. Like Barber just said...

Thank you. Tax Foundation of Hawaii, with comments on Zoom.

Thank you, Chair, Vice Chair, Members of the Committee. Tom Yamachika for Tax Foundation. We'll stand on our written comments, be available for questions.

Thank you. Shereen Balas in support.

That was an acting...for everyone here today. I stand in strong support of this Bill. As a local film industry—I have like this long, long thing that I was going to do, but I know we have, we are short on time.

I don't want to bore you guys with my little story, but I do have a story when the industry got, you know, like some of the industry shows got canceled. NCIS Hawaii, I was a recurring actress on that one as an agent and then Hawaii, Hawaii Surf, ended up getting canceled as well. Yeah.

So, those productions got canceled. A lot of us lost work and for like almost two years, we haven't been working. Now, now, we, we lucky. We have three productions working at the moment.

My—the reason why I'm here is to make sure that you all know that a lot of our Hawaii industry professionals have moved away or they have taken other jobs because they couldn't work. Same like me. I almost actually went to California and LA. I was going to live there for three months.

That was my, my, my—what I was going to do. But I decided, you know what, I'm going to stay home and work through the fight because that's what we're, that's how I feel inside...

I'm being very, very candid with you guys but unfortunately, if you guys don't pass this Bill, our industry is going to fail, especially if you don't employ the people of Hawaii. We have plenty, plenty staff in our industry that are professional, very, very professional.

And to see the continent, people coming here for—almost 90% of them are here, and it's sad to see that. So, if you guys can hear us, please hear me as an actual independent filmmaker. I want to be able to work on those big productions. Please, please pass this Bill. Mahalo.

Thank you. We have testimony from Christopher Wiecking, in support.

Good morning, Chair, Vice Chair, Members of the Committee. My name is Christopher Wiecking, President of Local 665, IATSC. I've been in the business for 35 years, been a, IAA Union Member for 27 years. I strongly support this Bill, and I stand on my testimony. Thank you.

Thank you. Members, that's everyone indicating they would be joining us today. Additional testimony in support from 3 organizations and 25 individuals. Is there anybody else in the room wishing to testify? Anybody on Zoom?

Okay, Members, any questions on this measure? If not, we are going to recess and we're going to reconvene at 12:25. Recess.

Hi everyone. We're reconvening our 10am agenda here on Tuesday, March 32026 in Conference Room 308. We are moving on to HB2490HD2 relating to coastal resilience.

First we have the State Historic Preservation Division with comments Thank you. Office of Hawaiian affairs with comments on Zoom.

Aloha Chair and Vice Chair Members of the Committee Leialoha Makuanani with the Office of Hawaiian affairs will mostly stand on our written comments.

But I just want to highlight that while we generally support regional planning to address coastal erosion and sea rise, we believe that the project specific exemptions from existing coastal management regulatory frameworks risks setting a precedent for bypassing those safeguards in other erosion prone areas.

So we're recommending removal of the provisions that would allow for the project to be exempt from the CZMA Conservation District and environmental review requirements. Mahalo. I'm available for questions.

Thank you. We have testimony and support from the Paia Mantokuji Soto Mission and Support.

Chair, Vice Chair, Members of the Committee. I'm Eric Moto, President of the Paia Mantokuji Soto Mission. Administrator Matoku Ji has worked hard, long and hard and spent close to a million dollars to gain approval for and install a temporary sandbag structure on our eroding shoreline. The sandbag structure was what is allowed under current rules and restrictions.

Unfortunately, the sandbags are proving no match for the forces of nature. The scope and scale of the damage is significant and the rapid rate of progression of loss can seem unbelievable, but is part of our daily reality.

HB2490 will give us an opportunity to work on alternative nature based longer term solutions while also trying to streamline the complicated multi agency approval process. We will continue to work with government departments and agencies under the guidance and supervision of our expert coastal engineers.

And we hope that we want our successes and achievements to be a part of a pilot program for how to better serve and protect other threatened shorelines. So I offer a humble please and thank you for your support of House Bill 2490.

And if I may, I also have a copy of your HERO report that provides supportive information that I'd like to share with the Committee.

Yeah, you can give it to the staff person on the table side and they'll make sure it gets to the Committee. Thank you. We have Maui Nui Resiliency Hui in opposition on Zoom.

Aloha Chair, Vice Chair and Members of the Committee. My name is Kai Nishiki from Maui. First, I want to acknowledge how deeply painful this situation unfolding at Montu CI in Paia is it is incredibly distressing and the cultural and spiritual significance of that site do deserve our compassion and respect.

At the same time, we must acknowledge the physical reality coastal erosion is occurring and accelerating. The shoreline in this bay is part of a dynamic coastal system and ignoring these processes or attempting to override them without careful study will will not produce lasting solutions.

I appreciate the intent of this Bill to explore regional coastal resilience strategies and that additional amendments have been made. However, Section 2H remains extremely concerning and should be deleted. That section seeks to exempt this project from Hawaii's environmental review process and several core coastal protection laws.

These safeguards exist to ensure that projects affecting our shoreline receive proper scientific review, public discussion and input, and careful evaluation of impacts to beaches, ecosystems and cultural resources. Removing those protections, especially for a project that is not clearly defined, sets a dangerous statewide precedent.

If the Legislature allows coastal projects to bypass environmental review through special exemptions, we will likely see similar requests across Hawaii shoreline. Importantly, on Maui's North Shore in Pa', Ia, we are already implementing managed relocation solutions that show a path forward.

At Baldwin Beach Park, a much loved but collapsing shoreline pavilion was just recently removed and the area is now being restored with a wonderful dune project in collaboration with the county of Maui, UHC Grant, surfrider and many community organizations, and the Youth and Cultural center has submitted plans and is conducting an environmental assessment to demolish their shoreline facility threatened by erosion and they are rebuilding a new facility farther inland, restoring the shoreline.

These projects support the natural landward migration of our they move development back. Instead of trying to engineer your testimony, please yes, engineer the shoreline. Hawaii has spent decades building a careful coastal and cultural resource management framework. We should not set a precedent of bypassing those safeguards when facing the very challenges they were designed to address.

Please delete Section 2H and support additional amendments provided by OHA, SHPD and DLNR. Mahalo.

Thank you Members. That's everyone indicating they will be joining us today. Additional testimony and support from Mayor Bisson of McAllen county of Maui and one organization or two organizations as well as one organization in opposition. Is there anybody else in the room wishing to testify? Anybody on Zoom

Members, questions on this measure? Seeing none. We're going to move on to the next item on the agenda, HB 1733, HD 1, relating to the housing loan and mortgage program.

Nobody indicating they would be joining us today, but testimony in support from the Office of Planning and Sustainable Development, HHFDC, and two organizations. Any—if any of them are here, anybody else in the room wishing to testify?

Hi, Chair, Vice Chair, Members of the Committee. Diana Sutton with the Office of Planning and Sustainable Development. We'd just like to stand on our written testimony in support. Be available for questions.

Thank you. Anybody else in the room? Anybody on Zoom?

Members, questions on this measure? If not, HB 2049, HD 2, relating to housing.

We have the Department of Taxation with comments. Department of Hawaiian Homelands in support. Thank you. Department of Land and Natural Resources in support. Not present. Office of Planning and Sustainable Development in support. Thank you. Office of Hawaiian Affairs in support.

We'll stand on our written testimony in support.

Thank you. Tax Foundation of Hawaii, with comments on zoom.

Good afternoon, Chair, Vice Chair, Members of the Committee. Tom Yamachika from Tax Foundation. On this Bill, we will stand our comments and be available for questions.

Thank you. Catholic Charities Hawaii in support.

Chair, Vice Chair, and Members of the Committee. I'm Betty Lou Larson with Catholic Charities Hawaii. We stand in strong support of this Bill. We do have a two amendment, however, that we would like to suggest to you. This Bill would reduce the current percentage of the tax revenues to the Rental Housing Revolving Fund from 50% to 20%.

This conveyance tax revenues is the only dedicated source of funding for this very needed fund, which creates the gap funding that actually enables the many thousands of units that had been produced in the last 10 or 20 years for low-income people. It has to be matched with federal tax credits and that makes it all possible.

So, we really feel that we want to balance the needs of others in the state but also don't neglect the low-income population. This is a very serious program that has really done a lot of good.

So, we ask that balance be achieved by dedicating 30% of the conveyance tax with a cap of $60 million to the Rental Housing Revolving Fund. The other need is for ending homelessness. This is a great straight priority, you hear, I'm sure with all your constituents—I'm sorry, sorry.

And in order to do that, we need services, we need stable services. And so, we are respectfully urging you to also dedicate 10% of the conveyance tax revenues, capped at $20 million, for a homeless services special fund. At this time, our homeless services are really under risk.

So, this is really an urgent need to have some stability in the services. On February 22nd, the partners in Care, the local Oahu Coalition, published a report, the 2026 HUD Impacts Report.

If—this warns that the Oahu Continuum of Care faces catastrophic housing losses if HUD does not automatically renew the 2025 program grants. This is in the courts because HUD was not wanting to renew these grants. So, they provide the services that are needed for perm, supportive housing, rapid re-housing, transitional housing, these very critical, ongoing, proven programs.

Without these renewals, people who are stably housed for the last two or three years will be displaced. They cannot afford it and they need the services, the outreach, et cetera. So, we feel that dedicating 10% to a special homeless services fund.

Can I have you—interrupt your testimony?

Yeah, just feel that that would really strategically allow programs to continue and to invest in the future. Thank you very much.

Thank you. We have NIOP Hawaii, in opposition. Not present. The Hawaii Realtors, in opposition.

We stand on our testimony. Thank you.

Thank you. Hawaii Children's Action Network Speaks, in support on Zoom.

Aloha, Chair, Vice Chair, member of the—Members of the Committee. Nicole Wu from Hawaii Children's Action Network Speaks. We support this Bill. The conveyance tax is basically a sales tax when properties are sold. As you know, here in Hawaii, we cannot directly tax property at the state level because it's written in the State Constitution.

So, how do we get at these super ultra luxury properties on our shorelines owned by investors? Most of those folks don't live here so that they're not subject to our income tax. So, the second best way to ask them to contribute to our state is through this sales tax on properties.

I know the Bill has blanked out the numbers, but looking at the original version, my testimony is on page 33 of the PDF. I have a table showing how the original version would have affected conveyance tax. It actually lowers the amount of conveyance tax on lower property values, making it more affordable for regular working families to be able to keep their homes, but it increases the tax on the higher value properties.

So, like my table shows like a $1 million property actually will save a little bit of money on conveyance tax, while those at the higher end will pay more.

This body, the Legislature, passed a very similar bill about five years ago. It was vetoed by the Governor back then, but you and your colleagues thought this was a good idea, so, I'm glad you're hearing it again.

I think it does seem like a good way to get at some of the wealth that we see around us and ask those wealthy, lucky people to contribute to our society. Thank you.

Thank you. We have Indivisible Hawaii in support.

We stand on our written testimony in support. Thank you.

Thank you. Hawaii Public Health Institute, in support.

Hello, Chair, Vice Chair, Committee Members. Good afternoon. I'm Chris Kauff from Hawaii Public Health Institute. We're in support of this Bill as well. We frequently say that housing is a human right, but too often, our policies don't match our rhetoric.

Hawaii is in the midst of a housing crisis, as you've heard so often this session and prior sessions as well, destabilizing working families and reshaping our future. And on Oahu, as you all know, the median income for a single family home or median price of single family home exceeds $1 million.

Just to put more context behind this, according to the National Low Income Housing Coalition's Out of Reach Report, their most recent one in 2025, to afford a modest two-bedroom apartment of fair market value in our state, a minimum wage worker would have to work 141 hours a week, which is almost literally impossible.

When we talk about revenue generation, we often hear concerns about wealth, but it's actually working families who are fleeing the state are falling into homelessness because the market has failed on an intergenerational level. Housing is not just a, not just shelter for the Public Health Institute, it's a powerful social determinant of health.

The stability of a home shapes everything from a child's brain development to an adult's risk of chronic illness to better mental health outcomes and longer lifespans. At the same time, our real estate market is continuing to generate extraordinary wealth, particularly for high value investors.

And much of that wealth is flowing out of our state untethered to our communities.

By modernizing the conveyance tax and applying higher marginal rates to high value transactions, this Bill would ensure that those who benefit most from our real estate economy contribute to affordable housing solutions for those most in need, including Native Hawaiians who remain displaced within their own homeland but overrepresented in our state's house list and prison populations.

As Governor Green frequently declares, housing is health care. And we urge you to pass this measure and invest in a future where housing is not just a promise—or is a promise, but not just a dream deferred. Thank you so much.

Thank you. Testimony in support from the Hawaii Appleseed Center for Law and Economic Justice.

Good afternoon. Arjuna Heim on behalf of Hawaii Appleseed. Thank you for hearing this measure. This is one of our priority measures. I'm standing on our testimony but also would like to propose that this Committee pass out an HD 3 and add in the rates. We would humbly suggest increasing rates significantly from 5 to 25 million dollars.

If we are afraid that, you know, there's some elasticity in the housing market, residents are least likely to get hit at the $5 million mark and above those are all largely investment properties.

And we should do so in kind to other high cost municipalities that have demonstrated clearly that higher transfer of taxes on luxury property do not dissuade wealthy buyers. In LA, properties sold above $5 million are taxed at 4.45% and sales above $25 million are taxed at nearly 6%.

Similar progressive transfer tax structures, conveyance tax structures, are in place in New York City and Seattle as well. These markets remain among the strongest and most expensive in the country. High net worth purchasers continue to transact despite elevated conveyance tax. Our luxury market is comparably resilient.

Increasing rates at the very top end will not deter affluent buyers, but it will provide critical recurring revenue to fulfill the state's constitutional obligations to DHHL, as well as the other noble causes for dedicated revenue. And this would also, I think, help relieve some tensions on the distribution of funds.

Instead of the lower percentile, it would max out at the flat rate. So, thank you very much.

Thank you. We have Grassroots Institute of Hawaii in opposition. Not present. We have an individual, Layla K, in support on Zoom. Not present. We have Ella Hanks in opposition. Not present. Kanani Higby in support on Zoom. Not present. Members, that's all the testimony we received on this measure who indicated they'll be joining us.

Also, testimony in support from Council Member Paulson from the Maui County Council. Support from 8 organizations. 2—or 8, 8 organizations in support. 2 organizations providing comments, as well, and, apologies, 52 individuals in support, one in opposition, and one providing comments. Anybody else in the room wishing to testify?

Oh, please. Just state your name for the record before you proceed.

David Penn for DLNR. I think I missed the first round here. I was sitting here this morning and uncertainty is one of the key words for today. In our written testimony, we're supporting a $10 million cap for the Land Conservation Fund and the—we're in solidarity with Hawaiian Homes and Housing Advocates and all the other uses of the conveyance tax revenue.

But who knew that a Council on revenues projection of $26.8 million in conveyance tax revenue for fiscal year '22 General Fund would turn into $145.3 million of actual General Fund revenue? And the following year, the projection of $157.5 million turned into 49 million of conveyance tax revenue for the General Fund.

So, our current spending ceiling is $9 million. At this level, over the last two grant cycles, we've been unable to award about $7.5 million of high priority competitive grants that are funded through our program for land acquisition.

And on top of that, we no longer have cash available from above the spending ceiling that we've used in the past for capital improvement projects that take advantage of short-term opportunities for the state, counties, and nonprofit land conservation organizations to take advantage of opportunities that arise suddenly and disappear just as quickly.

So, if you have complete faith in the accuracy of six-year projections for conveyance tax revenue, that 5% might get us to $10 million at some point, but 10% would definitely get us there faster, as some of our key supporters and partners have indicated in their testimony.

This may reflect concerns about uncertainty, faith in adhering to the fiscal policy for our program that was established by the 2005 Legislature, which was 10% uncapped, straight up, and long term underfunding of this important program, which we've gone over in our testimony for all the time that I've been in the program, which is like 10 years now.

So, we also have a sense that despite our solidarity with everybody else, we may barely survive as poorer cousins of our other partners, rather than forging ahead together to protect our Ina and support the wellbeing of our communities to the fullest extent possible.

Again, we fully support using the conveyance tax for whatever this body decides is appropriate, but we've been seeking relief since 2013 when the spending ceiling fell below the actual revenue that we were receiving and then, again, we were capped on the revenue side...2015 and 2020.

So, mahalo for listening and we're always available to further explain our program, its funding needs, and to work with the Legislature to craft solutions that help all the programs that stand under the conveyance tax waterfall to thrive now and in the future.

Thank you.

Anybody else in the room? Anybody on Zoom?

Members, questions on this measure? Rep. Miyake.

For DoTax, please. Thank you, Kristen. What is the fiscal impact of this Bill?

So, right now, the amounts are blank. So, we don't have one prepared for the draft, the current draft.

So, the previous testifier said about like a hundred so million. Would that—well, I guess because you don't have it, but I'll just ask my question anyway. Would DoTax—or did DoTax analyze whether the increase in conveyance tax would shift market behavior and have an overall impact of revenue collections?

So, we have looked at a couple of scenarios for these conveyance tax type measures. My understanding is that we have not taken into account those types of behavioral shifts or our revenue estimates.

Okay. Thank you, Kristen. Thank you, Chair.

Rep. Kusch.

Thanks. Maybe DoTax and maybe DLNR. We'll just see. I remember there used to be part of the commands tax had money going to the Natural Area Reserve System. Is that in this Bill missing or is that just something that's not detailed out in the Bill?

Thank you for the question. The Natural Area Reserves Fund dropped out in 2016. Up until that point, it was receiving 25% and at one point, the Rental Housing Revolving Fund was also uncapped, so the combined effect of those was receiving 75% and plus 10% for the Land Conservation Fund leaving 15% for the General Fund.

Gotcha. Thanks for that history. Appreciate that.

Members, anything additional? Nope? If not, we're going to move on to HB 1710, HD 2.

State Historic Preservation Division in support. Thank you. Department of Attorney General with comments.

Good afternoon, Chair Todd, Vice Chair Takenouchi, and Members of the Committee. Deputy Attorney General Alyssa Kau on behalf of the Department. The Department of the Attorney General will offer comments pursuant to Section 3 of the Bill.

So, Section 3 amends Section 6E-42 of the Hawaii Revised Statutes. However, it appears to be the incorrect version of the Hawaii Revised Statutes since the section was changed last year by Act 160 and is scheduled to be changed again in 2026 by Act 306.

So, we would just recommend that the Legislature line up the amendments into section 6E-42 with the current version in the Hawaii Revised Statutes and I'm available if you have any questions.

Thank you. Office of Hawaiian Affairs with comments, on Zoom.

Aloha, Chair, Vice Chair, Members of the Committee. Leialoha Makuanani, on behalf of Office of Hawaiian Affairs. Our comments are pretty dense, so I'll highlight the main gist of what our comments state.