Political Radar


January 5th, 2015

More from last week's Star-Advertiser Q&A with Gov. David Ige. A full story from the interview appears in Monday's Star-Advertiser.

Star-Advertiser: Every year the state hospitals come in and ask for an emergency appropriation and we understand they’re readying that again this year. Is that any way to handle it or can you do something differently?

IGE: I think it’s about trying to figure out what actions we can take to make the current situation better. To that end, we have begun negotiations with (Hawaii Government Employees Association) Unit 9 (nurses) as well as with some of the other units where some of their membership is part of the hospital, so I do know that there needs to be some contract changes that are necessary to make the hospital system function better. I think that that’s kind of the starting point. I think we will be having discussions with the unions and talking about the kinds of things that are essential to allow the hospital system, operating as a government entity, to be successful.

Star-Advertiser: Would that be a modification of benefits?

IGE: I think it’s about just looking at the contract and trying to figure out what makes the most sense within the current collective bargaining law. So it means that maybe we would have provisions that are specific to employees at the hospital. It could be a master contract that applies to everyone and then specific requirements that are special to hospital facilities because there’s (24/7) function. I do know that we need to make the best effort in order for us to get to a point where the hospital system is sustainable.

Star-Advertiser: Where are you regarding the transient accommodations tax and should it be changed?

IGE: I think that it’s kind of connected to that whole (tax collection) system. The rail and transit tax is really collected on top of that same system that we have in place that is really not the most modern or adequate. I did meet with Mayor (Kirk) Caldwell and he had expressed some concerns about the fact that the transit surcharge is not generating the revenues that they had projected, and my commitment to him was that I would be committed to working with him to make sure that we are collecting the taxes that are owed. Because it’s built on that same tax collection system I'm confident that we’ll see an increase in the rail transit collections, like we will in all others. ... When I talked with the mayor I just said at this point in time I’m committed to working with working with you to examine the collections.  ... So it’s just a matter of sharing information -- being committed to examine the actuals and being committed to be willing to audit the income that we’re getting to make sure that people are paying what they should be paying.

Star-Advertiser: Do you have an opinion on keeping the rail tax, extending it, making it a permanent tax or dropping it?

 IGE: I do believe that extending it at this time is premature. I believe the tax sunsets in 2022 or 2023, something like that, which is a ways away. I told the mayor we would sit and talk about it more. He believes and the HART people believe there are very important reasons why the issue of extending has to be taken up sooner rather than later and I just haven’t had the time to sit and kind of go through what those reasons were. We’ll kind of be working through that.

Star-Advertiser: But back to the TAT, are you open to sharing more of that hotel room tax with counties?

IGE: I've had good conversations with the mayors and (we've talked)  about working together. I think it’s about talking roles and responsibilities and who’s responsible for doing what and then we can talk about resources and how those resources are apportioned. Like I said, I still believe that we don’t collect all the taxes that are owed, and clearly as I think the state does a better job of collecting taxes owed that would help with the taxes that end up at the county level. I just believe that we really should take a look at roles and responsibilities and if there are functions and services that are better provided by the counties we ought to do that and vice versa. So, my commitment is to have the full discussion about roles and responsibilities, services that the county and state provide – looking at areas of overlap and trying to work to eliminate that, and the TAT and tax revenues are all part and parcel of that whole mix.

Star-Advertiser: Can we expect the Marketplace Fairness or Internet Sales Tax to be among your proposals?

IGE: We’re looking at it. The challenge with Marketplace Fairness is it’s something the Congress really needs to enable. I think we would want to be able to (do it). That’s one of the things that we did talk about at the National Governors' Association (meeting) – the fact that virtually every state sees this issue as being important to their financial well-being. So it’s not only the state of Hawaii – especially with business transactions increasing significantly online – it's that every state is seeing the erosion of its revenue base becoming bigger and bigger.

Star-Advertiser: Have discussions taken place on the Hawaii Health Connector and whether to add funding for it in the budget?

IGE: We do have the (funding) requests for the Connector. I think it’s about getting the new directors of Health and Human Services together. I've had a couple conversations with both U.S. Sen. (Brian) Schatz and U.S. Sen. (Mazie) Hirono about the Health Connector. I think we all agree that preservation and protection of Hawaii Prepaid (Health Act) is kind of the first and foremost consideration as we try and figure out how to proceed. But I do know that both senators are working at trying to get more flexibility for the state of Hawaii because of Hawaii Prepaid Health. There is no other state that has what we have in Hawaii Prepaid Health, which assures that 90 percent of people already get health insurance coverage. So I think the challenge for us is different. Some of the provisions in the Affordable Care Act might make sense when you look at where other states are, but it clearly doesn’t make any sense when you look at where Hawaii is. So it’s really about working and trying to preserve Prepaid Health and get to a point that we can administer those other provisions of the Affordable Care Act in a way that makes sense for Hawaii.

Star-Advertiser: Do you care if NextEra takes over Hawaiian Electric, or is it just a business deal?

IGE: I do care that the leadership at Hawaiian Electric really embraces the goal of getting off of fossil fuel 100 percent in the long term. I really do believe that everything that I’ve seen at this point talks about electric utilities having to change their business model form what it used to be where essentially the utility was the generator and distributor of 100 percent of the energy needs to something that separates the generation function from the distribution function so that the utility becomes responsible for distribution and some of the generation rather than 100 percent. … I think that my interest on behalf of the people of Hawaii is to make sure that the acquisition of HECO really does advance the broader desire of the community to get off of imported fossil fuel and really on to more renewable energy sources.



6 Responses to “One-on-one”

  1. zzzzzz:

    IMO, C&C of Honolulu should be much more aggressive about collecting TAT from vacation rentals before they complain about the state not giving them enough of the TAT that is collected.

  2. Manoa_Fisherman:

    When the Obamacare was being passed, the question of the need for the Hawaii Prepaid Health Act was in question since the question of federal preemption and the original drop dead clause in the original act would have been triggered if a national health care law was passed.

    Time and time again, the congressional delegation said that the Hawaii law was exempt and pointed to a provision in Obamacare that said:
    HEALTH CARE ACT.—Nothing in this title (or an amendment made
    by this title) shall be construed to modify or limit the application
    of the exemption for Hawaii’s Prepaid Health Care Act (Haw. Rev.
    Stat. §§ 393–1 et seq.) as provided for under section 514(b)(5)
    of the Employee Retirement Income Security Act of 1974 (29 U.S.C.

    In the end, this section meant nothing and all the requirements of Obamacare were foisted on the Hawaii insurance payers and users, whether they wanted to or not. In using the new Obamacare requirements as an excuse, the insurance companies, HMSA especially, jacked up the rates and the protests began.

    Making things even worse, the Abercrombie administration chose to use Age Rating for the basis of determining the rates. This had never been used in Hawaii, since most insurance companies used a hybrid method of usage to determine rates. Using a straight Age Rating system, older people saw a potential of a three-fold increase in their premiums. The response by the Insurance Commissioner, Gordon Ito, was that it could have been worse if he chose the 5 times program that would have allowed a five fold increase in older rate payers. Gee, thanks for nothing, Ito.

    As it turned out, even HMSA did not want to stay on the Titanic called the Hawaii Health Connector when the howls from the small business community started to even reach the ears of their board and their $1.3 million a year CEO. Rather than riding that disaster, HMSA jumped off the sinking ship and went ever so far as to throw them under the bus at the same time.

    So as the sun slowly sinks on the Hawaii Health Connector, the issue before the Governor is whether or not he wants to "throw good money after bad". In the end, if a Republican President is elected in 2016, the likelihood of Obamacare being repealed is almost guaranteed. What happens then to the HHC?

  3. Kolea:

    The county governments do have their own taxing authority. While they do not have the power to impose an income tax, increase the GET (except for transit) or impose an additional TAT, they have exclusive control over the property tax.

    The structure of wealth in Hawaii has evolved considerably from the time the GET was established as the primary source of revenue for running state operations. During the Big Five days, the wealthy were also Hawaii taxpayers. That has changed in recent years. More and more of the wealthiest people in Hawaii escape paying their share of the income tax because they are only part time residents. Yet they continue to buy up an increasing share of the tangible wealth in Hawaii in the form of luxury houses and condos.

    There is plenty of wealth present in the state (and counties) of Hawaii. More than enough to provide decent schools and social services to our people, as well as fund environmental protection efforts. But the most obvious means for raising revenues, for getting the wealthy to pay their fair share, is the property tax, which is under the exclusive control of the counties. The mayors and county councils, instead of begging the Legislature for a bigger share of the TAT should take responsibility for their own budgets and give serious consideration of means to use the property tax to raise revenue, but in ways which protect the interests of most residents, both as homeowners and as tenants.

    Somehow, that discussion has been rather muted.

  4. Ted Baker:

    ZZZZZ, not sure what your point is. The TAT is a State tax and, to my knowledge, the C&C of Honolulu plays no role in its collection for activities to which the tax applies on Oahu.

  5. zzzzzz:

    The C&C of Honolulu isn't enforcing its vacation rental restrictions, letting a lot of illegal rentals (e.g., VRBOs) go unpunished. Most of these are probably not paying the TAT.

  6. Nala007:

    @ Marcos X - HMSA is a non-profit. It doesn't have stockholders.

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