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Hawaii lawmakers started on a relatively smooth note Friday morning with budget negotiators signing off on a $12.1 billion state spending plan for 2015.
But as the clocked ticked toward the 6 p.m. deadline to pass dozens of other bills that have been hanging in legislative limbo all week — increasing the minimum wage, funding for education initiatives or increasing the counties’ share of hotel tax money — the pace grew more frantic and the tension increased at the Capitol.
Hanging over everything on this critical day — the last chance for bills to either move on for final approval before the full House and Senate next week or die — was a last-minute scramble to find $40 million for the state’s share of a land deal with Turtle Bay Resort.
With five minutes to spare in an overflowing conference room, lawmakers reached an agreement to make it happen.
It didn’t come easily.
The $48.5 million deal involves Honolulu kicking in $5 million, the Trust for Public Land pitching in $3.5 million and the state picking up the remainder.
But House Finance Chair Sylvia Luke and Senate Ways and Means Chair David Ige, who together served as the lead budget negotiators the past two weeks, did not include the money in the overall state spending plan for next year.
The clock in the conference room passes the 6 p.m. deadline for lawmakers to pass bills, April 25, 2014, at the Capitol.
Ige said Wednesday that lawmakers were under the impression that the negotiations for concluding the agreement would take at least until the end of the year, so there was no need to fund it this session.
A backlash from the administration, land trust and public ensued and by Thursday night Ige had crafted a plan to come up with the money without cutting funding for other projects or raising taxes.
Still, he had to get the House on board. Speaker Joe Souki and other reps have been frustrated because they have been left out of the negotiations and seemed inclined to just roll it over to next session.
Abercrombie’s deputy chief of staff, Blake Oshiro, along with Attorney General David Louie, Finance Director Kalbert Young and others from his administration met privately with Souki and House leaders Friday afternoon to try to find a solution.
They left the meeting visibly frustrated, but things seemed to be moving forward. Souki called it a “lively discussion” but said their talk ended without a decision.
Something obviously gave over the next few hours and it just came down to getting the plan passed in conference committee before the deadline lapsed.
The agreement essentially follows Ige’s proposal, which involves restructuring the debt owed on the Hawaii Convention Center.
His plan would use $33 million of the transient accommodations tax that currently goes to the Hawaii Tourism Authority to pay for debt services and operating costs to be restructured so that interest payments will be reduced from $26 million to $16 million, according to a Senate release. A portion of the interest savings from the restructuring would then be set aside to pay the interest for revenue bonds.
Using House Bill 2434 as the vehicle, lawmakers voted to put this plan in place with only minor adjustments such as where the excess money goes and language making it clear the public has full access to the conservation easement.
Luke told reporters earlier Friday that House members have been confused over what the state was actually acquiring. She said many were under the impression that the state was buying the land itself.
When asked why there was confusion over a deal that has been in the works for several months, she said she doesn’t think everyone knows what a conservation easement is.
Abercrombie issued a statement soon after the committee approved the bill to provide the $40 million in revenue bonds. He thanked lawmakers for advancing the proposal and went to greater length explaining what the state is in the process of buying.
“A conservation easement will permanently prohibit development on these parcels while simultaneously affirming public access in perpetuity to ensure public access to the shoreline,” he said. “This means the preservation of more than five miles of privately maintained, but publicly enjoyed coastal hiking trails. Rather than taking ownership of the land, the title remains with Turtle Bay Resort, but the community, our residents and visitors alike will soon be assured that this beautiful area will remain open and accessible.”
House Speaker Joe Souki talks to reporters about the Turtle Bay deal, April 25, 2014, at the Capitol.
The morning started with lawmakers agreeing to a conference draft of the overall state budget that shaves $173 million from Abercrombie’s proposed spending plan for the biennium. The bill is set to go before the full House and Senate Tuesday morning for final approval.
The committee passed a $12.1 billion budget for fiscal 2015, which starts July 1, and adjusted this year’s budget to $11.7 billion.
When the Council on Revenues downgraded the state revenue forecast last month to zero growth for 2014 and to 5.5 percent for 2015, lawmakers were left with almost half a billion dollars less than they expected to have to balance the two-year budget. This meant cuts.
“Although we are in better, yet cautious, economic times than past sessions, this year we were faced with many challenges, including lower revenue projections announced midsession,” Ige said in a statement. “My colleagues in the Senate and I worked diligently with our counterparts in the House to take this into consideration and balance the state budget through a financially responsible approach.”
Luke and Ige found more common ground than not in terms of what to fund, but were unable to reach an agreement on thousands of items — particularly capital improvement projects.
The committee eventually settled on a $5 billion construction plan. The CIP budget includes $33 million for the University of Hawaii’s College of Pharmacy in Hilo, $700 million for the Department of Education to renovate aging schools, $90 million for the UH system and $1.9 billion for various Department of Transportation projects.
Lawmakers struggled to agree on how to address the huge backlog of repair and maintenance projects needed at UH though, so only a fraction of the requested money was approved.
“One might have thought that assembling the construction budget in better economic times would be easier than in the immediate past, but this has not been the case,” said Sen. Michelle Kidani, vice chair of the WAM Committee. “Despite challenges, we crafted the CIP budget prioritizing two essential goals: continue the progress begun over the last few years in renovating, repairing and maintaining existing state-owned facilities to utilize our current resources and reduce general fund expenditures in the future, and designate funds for projects needed to address future capacity needs and economic growth.”
Highlights of budget agreements announced earlier this week include $7 million for foster care pay rate increases; 16 suicide-watch positions, 21 mental-health positions and funding for various correctional facilities; $800,000 for fisheries enforcement; $19 million in pay raises for UH professors; and 89 positions and funding for UH’s West Oahu campus.
More details of the budget will become available after the conference draft of the bill is finalized and the committee releases its report.
State lawmakers meet in conference committee, April 25, 2014, at the Capitol.
The counties are set to receive a larger share of the hotel tax money the state collects next year if House Bill 1671 goes on to pass next week as expected, but not as much as they wanted.
Kauai, Maui, Hawaii and Honolulu counties currently get a combined $93 million of the transient accommodations tax revenue since the state capped it in 2010. They used to get 44.8 percent of however much money the state collected each year to split between them and that’s what they want to get back to.
The House had proposed lifting the cap over the next four years, giving the counties 33 percent starting July 1, 2014; 37 percent in 2015; 41 percent in 2016; and 44.8 percent in 2017. But that plan was shot down and in its place emerged an amendment to simply increase the cap to $103 million, giving the counties an extra $10 million to split.
Young, the state finance director, has said that if the cap is lifted and the counties still get 44.8 percent of the TAT money, the general fund would lose $81 million in fiscal 2015, $98 million in 2016, $107 million in 2017, $116 million in 2018 and $126 million in 2019.
County mayors and council members have lobbied hard for the cap to be lifted and many were back at the Capitol Friday, frustrated as lawmakers kept deferring their decision all day. Kauai Mayor Bernard Carvalho Jr. and Councilman Mel Rapozo, Big Island Mayor Billy Kenoi and Maui Councilman Mike Victorino were among those roaming the halls and filling the conference room seats.
The counties say they deserve the money because it goes toward services they provide that tourists use, including roads, parks, police and lifeguards.
Honolulu Mayor Kirk Caldwell estimates that the city spends $140 million to $180 million, 7 percent to 9 percent of the city’s operating budget, on services that are “key to keeping Honolulu globally competitive as a safe and desirable destination.” The city’s portion of the TAT is currently $41 million; it’s expected to go up $4 million next year.
After two years of discussing the issue and multiple drafts of legislation, Hawaii is now set to increase its minimum wage from $7.25 an hour to $10.10.
Though the House had held out all session for a $10 wage, on Friday it agreed to the Senate’s desire for an extra 10 cents.
“This is a giant step for the working poor,” said Sen. Clayton Hee, who championed the bill. “Two-thirds of them are women. Forty percent are homeless.”
The wage will be gradually increased and reach $10.10 in January 2018. The tip credit will grow from 25 cents to 75 cents by 2016. And $7 will be the trigger when employers can deduct the tip credit from employees that depend on tips.
The conferees on SB 2609 agreed on the compromise draft after 4 p.m., but a final vote awaited approval from leadership. As the clock passed 5:15 p.m. and inched toward the bottom of the hour, all the conferees were ready to vote in Conference Room 325. But Luke was missing.
That set off an anxious scramble to find her. Turns out that the Finance chairwoman was in Room 309, where the money committees do their conference work. All the people in Room 325 rose en masse and walked across to the other side of the Capitol where Room 309 was already packed.
A final vote on SB 2609 came at around 5:33 p.m., and the bill passed easily.
“We have a minimum wage bill,” Hee said as the room erupted in applause and one or two shouts of joy.
Legislative insiders said the House decided to give in to the $10.10 wage after the Senate agreed to move on the tip credit. Hee’s original bill actually called for its elimination.
The governor, who has sought a wage hike, welcomed the good news.
“It is imperative to provide our lowest paid workers with the economic stability and security they deserve,” Abercrombie said in a statement right after the vote.
Earlier in the day, Senate conferees led by Maile Shimabukuro stunned House conferees led by Cindy Evans by saying they would accept the House’s proposal to allow OHA to ask the Hawaii Community Development Authority to build on two parcels along Ala Moana Boulevard but also permit Kamehameha Schools to do the same.
“We do not want to be stigmatized and branded as being responsible for what we believe would be a travesty of the public land trust and would rather stand down,” Apo said in a statement. “OHA has always pledged to do what is pono. Adding new properties at the 11th hour is not pono.”
Shimabukuro and Senate Majority Leader Brickwood Galuteria urged the House to accept a new draft allowing only OHA to build. That was at 9:30 a.m. Friday. When the lawmakers regrouped at 11:30 a.m., Shimabukuro turned the tables and said the Senate had “no other option” but to accept the House’s offer.
Evans seemed taken aback.
“We will have to float the CD1 by FIN to get approval,” she said, referring to the conference draft and House Finance.
The approval never came, though SB 3122 conferees met again at 3 p.m., and then 4:45 p.m. and finally a quarter to 6. A few minutes later, Hee, one of the conferees, walked in and embraced Shimabukuro over the news of a Turtle Bay agreement — something Hee very much wanted, as the resort is in his district.
The mood quickly dampened when Evans finally came into the room. She tersely read a statement from Speaker Souki stating, “After much deliberation, House and Senate conferees could not agree on a final version of SB 3122. In addition, OHA has stated publicly that it would not support expanding the number of parcels for residential development in Kakaako-Makai. We look forward to working with OHA during the interim to find solutions to help maximize the value of OHA’s Kakaako properties.”
A typical session at the Hawaii Legislature: big winners and big losers.
What’s next: The full House and Senate will convene in separate floor sessions Tuesday to give final approval to all the bills that made it through conference committee. As always, it’s possible something that dies may be resurrected. The final day of session is Thursday.
The big, square building on Beretania was hopping on the last day of conference committee, April 25, 2014.
Contact Chad Blair via email at email@example.com or follow him on Twitter at @chadblairCB.