Hawaii lawmakers gave the resource-strapped Ethics Commission what it wanted last legislative session — the public’s help in sifting through hundreds of records to weed out financial conflicts of interest among dozens of powerful state board members.

It was a politically astute, albeit surprising, election-year move for the Legislature, which unanimously passed Senate Bill 2682 in April. The measure adds 15 important boards to the list of those whose members already have to file public financial disclosure statements, arguably the biggest boost to government transparency in years.

But with all that promise has come controversy — and a growing number of resignations.

Land Use Commission in Honolulu.

The Land Use Commission deliberates on D.R. Horton’s Hoopili development in 2012.

Sophie Cocke/Civil Beat

The law, which took effect Tuesday, leaves questions of implementation unanswered, particularly for current board members who filed their disclosure statements under the expectation that they would remain confidential.

State Sen. David Ige has made it a campaign issue in the Aug. 9 gubernatorial primary. He chastised Gov. Neil Abercrombie, his Democratic opponent, for threatening to veto the bill last month before deciding to let it become law without his signature.

In the meantime, some board members — primarily those with oversight over education and development — are leaving nothing to chance. They are bailing before the Ethics Commission decides how it will administer the law, a matter that could ultimately end up in court. 

14 Resignations and Counting

The number of board members to quit this summer had leapt to 14 by Monday, according to the governor’s office, and more resignations are rumored to be forthcoming.

In all, five members of the Land Use Commission, four from the University of Hawaii Board of Regents, two from the Agribusiness Development Corporation, two from the Hawaii Housing Finance and Development Corporation and one from the Board of Land and Natural Resources have submitted letters of resignation. 

Only five names have been released so far because the governor has yet to officially accept the others. Regents Saedene Ota and John Dean and LUC members Ernest Matsumura, Dennis Esaki and Sheldon Biga have all stepped down.

The five LUC resignations leave the nine-member commission without a quorum, halting its ability to conduct business since it cannot meet to take action.

This is no fringe board. The LUC administers the state land use law, which establishes the framework of land use management and regulation for all lands in Hawaii.

The commission literally shapes the future of the islands, determining if land should be designated agriculture, rural, conservation or urban. It also gives approval to major projects, such as the 12,000-home Hoopili development in Kapolei. 

Until the governor appoints at least one new member and the Senate confirms him or her — historically a months-long process — the commission appears to be on pause.

It could be that the public is better off with a fresh set of faces at the Land Use Commission, often criticized as an agency beholden to developers.

Or it could be that the board members who resigned are just private people who don’t want to share their financial information with the public for personal reasons.

Either way, the law has already had a profound effect on four boards. And that’s before a single disclosure statement has even been made public.

What’s the Fuss About?

Almost 1,800 state employees and members of boards and commissions must file annual financial disclosure statements, according to the Ethics Commission. Of those, only about 180 were public before the law took effect. 

There has been much confusion — helped in no small part by Abercrombie’s recent public statements — over what information is actually contained in the financial disclosures.

When the governor announced last week that he was going to let the legislation become law without his signature, he raised questions about the tough issues to be considered in the bill.

The law has already had a profound effect on four boards. And that’s before a single disclosure statement has even been made public.

He noted “legitimate concerns about personal information on family, finances, credit history and medical records becoming cannon fodder in political battles.”

The comment suggests a person’s credit report or medical records are included in the financial disclosure statements. In fact, the forms only ask for financial and economic information in relatively general terms.

The reports say where the person works and provide business affiliations. Salary information is given by letters representing broad ranges, as are details about how much a person’s property is worth, along with stock values and any loans. 

By way of example, here is Board of Education Chair Don Horner’s most recent disclosure statement, filed May 23: 

To view the reports filed by other state employees and board members, visit the Ethics Commission’s website here. And here’s the link to the key that decodes the financial values for each letter, ranging from under $1,000 for “A” to over $1 million for “I.”

Looking Out and Looking Ahead

The Ethics Commission faces a tough and surely controversial task of deciding how to interpret and apply the law before it can even begin thinking about enforcement.

The commission could just open up to the public all of the financial disclosure statements filed by members of the boards and commissions that the law identifies.

This would spur questions of fairness though. These board members are predominantly unpaid volunteers who accepted the appointment with the understanding that their financial disclosures would be kept private with the Ethics Commission.

Whatever the ethics commissioners decide on how they want to administer the law will apply to themselves as well.

Alternatively, the commission could apply the law on a prospective basis, preserving the confidentiality of the reports already filed and making public all the reports filed after the law took effect. 

That approach would create an awkward situation where the financial reports of some members of a board are open to public scrutiny and others are not during this transitional period.

Ethics Executive Director Les Kondo would not say how he thinks the commission should administer the law. In an interview last week, he said the commission would take a look at the legislation and make sure it is applied the way it was intended.

The law simply says: “The financial disclosure statements of the following persons shall be public records and available for inspection and duplication.” And then it lists everyone who must abide by the requirement, including the 15 additional boards and commissions.

The Attorney General’s Office deferred to the Ethics Commission when asked how the law will be applied to existing board members who have already filed their reports. The AG’s special assistant, Anne Lopez, said it’s an excellent question that’s best suited for Kondo.

The Ethics Commission is expected to meet in the next week or two, so more clues could emerge soon.

The five-member commission is currently short two members whose terms expired June 30. Kondo had said he is hopeful the governor will have chosen replacements by the next meeting, but there’s been no word about any new appointments.

The Ethics Commission, coincidentally, is one of the 15 boards that were added to the list of those that must now file public financial disclosure statements. So whatever the commissioners decide on how they want to administer the law will apply to themselves as well. 

The law is clearly a deterrent that will keep some from serving, which underscores the most common argument against the bill as it worked its way through the legislative process earlier this year.

But Hawaii’s elected officials have made it equally clear that the new requirement is reasonable, given the power these boards wield, and that it instills greater public confidence in government.

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