With the 2016 legislative session set to end Thursday, drama arose Tuesday in the Senate over taxing Airbnb tourist accommodations; and in the House a Republican lawmaker was nearly booted from the chamber over his stance on funding Hawaiian Home Lands.

Democratic House Speaker Joe Souki threatened to have Republican Rep. Gene Ward removed from the chamber floor after he chastised his colleagues for their “niggardly” funding of DHHL.

After a brief recess to restore order, Ward said “cheapskate” would have been a better word choice; the two terms are synonymous, but the former is often mistaken as being related to an inappropriate term. 

The rest of the all-day House floor session went smoothly, as did the Senate floor session happening simultaneously on the other side of the Capitol. Nearly all the bills before them passed with overwhelming support, with the notable exception of a measure to give prescribing authority to psychologists, which the House killed.

Senator Laura Thielen AirBnB debate during floor session. 3 may 2016.
Sen. Laura Thielen failed to secure the votes to amend the Airbnb taxation bill during floor session, Tuesday. Cory Lum/Civil Beat

In the Senate, it was expected that action on House Bill 2501 — the water-rights bill favoring Alexander & Baldwin — might draw the most attention. There were protests, but they were mild. The bill passed 17 to 8 and now heads to Gov. David Ige, who will doubtless be lobbied by supporters and opponents of the measure.

The lengthiest debate in the Senate centered on a House bill that would require vacation rental companies like Airbnb to broker state taxes from people who use the accommodations.

People who rent a room or a house for less than a six-month period must pay the state’s 4 percent general excise tax (essentially Hawaii’s version of a sales tax) and 9.25 percent transient accommodations tax (known as the hotel tax). Tax evasion has been commonplace, however, and lawmakers — always hungry for more money — covet the revenue.

Rep Gene Ward floor session spiel1. 3 may 2016.
Rep. Gene Ward was very upset that the Department of Hawaiian Home Lands would not receive more funding than he desired. Cory Lum/Civil Beat

The Senate recently amended the bill to force rental companies to maintain listings that comply with state and county land-use laws, and to verify that properties are credible. Sen. Laura Thielen was the author of the amended language, and she complained of profit-earning tents propped up on public beaches and parks by so-called “hosts.”

During conference committee last week, however, that language disappeared. So, on Tuesday Thielen took the rare step on final reading of proposing a floor amendment to reinstate what was taken out.

As Thielen wrote in Civil Beat last week, a failure to amend House Bill 1850 would exempt Airbnb and others from tax laws that apply to local property managers, and would allow vacation rental companies to hide illegal operators, such as overnight hosts. Thielen argued that Airbnb helped write the original House bill and would thus be the recipients of a sweetheart deal.

Senate Floor session wide1. 3 may 2016
Senators cast final votes on bills Tuesday. The Legislature adjourns Thursday after one more day of voting. Cory Lum/Civil Beat

As the floor amendment was introduced, Thielen argued that the language would keep Airbnb “at the table” to negotiate taxes and regulations rather than force it to leave the state if they did not get a bill that favored the company’s business model.

She pointed to other tourist destinations, such as San Francisco, Los Angeles and New Orleans, that are trying to implement a similar comprehensive approach regarding the impact of vacation rentals.

Thielen had the vocal support of Sens. Gil Riviere and Donna Mercado Kim. But Sen. Donovan Dela Cruz objected, arguing that HB 1850 was a tax bill and that the state needed it.

Thielen’s floor amendment failed in a 15-10 vote, and a final vote on the measure that came out of conference committee was approved 14-11.

Rep Cynthia Thielen during floor session. 3 may 2016.
Rep. Cynthia Thielen also argued against the Airbnb bill. Cory Lum/Civil Beat

Several hours later, the House took up the same measure and heard many of the same arguments.

Republican Rep. Cynthia Thielen, Laura’s mother, said Airbnb was trading potential TAT revenue of $15 million for the degradation of neighborhoods. 

“It may be that we have to forgo those tax revenues, but the flipside is we then have the housing for people to stay here and they won’t be priced out of their homeland,” she said.

Democrat Derek Kawakami of Kauai urged caution, having seen the way illegal vacation rentals have changed parts of the Garden Isle. He echoed Thielen’s concern about decimating neighborhoods and forcing local families to move elsewhere.

He said, “It’s almost like saying, if a drug dealer is paying their tax, should they be legal?”

But other reps shared Dela Cruz’s argument that the bill was ultimately about income opportunities for the state. Rep. Joy San Buenaventura said the measure also presents another enforcement mechanism.

Budget Passes, Prescription Bill Fails

Little else that happened in the Senate rose to the level of contentiousness that HB 1850 wrought. Perhaps the most emotional moment came when senators welcomed back lone Republican Sam Slom, who returned to the chamber in a wheelchair Tuesday, following coronary bypass surgery.

Most votes were unanimous or close to it, including a vote for the state budget. Even Slom, a fiscal conservative who has often voted against such measures, called it a responsible measure.

The $13.7 billion spending plan for fiscal 2017, which starts July 1, still relies heavily on a huge surplus to balance out.

Sen Sam Slom wheelchair at senate floor session. 3 may 2016.
Sen. Sam Slom was back in the Senate for the first time since coronary bypass surgery. Cory Lum/Civil Beat

Rep. Sylvia Luke, the House Finance Committee chair who shepherded the budget with her Senate counterpart, Jill Tokuda, said the budget is something they should all be proud of. 

Luke highlighted the $12 million lump sum for the administration to address homelessness, $10 million for 2,000 low-income families to send their kids to preschool, $150 million for the state’s rainy day fund, $100 million to cool public-school classrooms, $3 million for kupuna and funding to help address the threat of the Zika virus and dengue fever.

Slom did dissent on a bill allowing psychologists authority to write prescriptions, saying he wished to limit the use of such drugs. But Sen. Rosalyn Baker countered that House Bill 1072 was formulated carefully and with a lot of input, and that the bill would sunset in seven years and only apply to the neighbor islands where the need is most dire.

However, the House lacked the votes to pass the measure, so the members moved to recommit it, effectively killing the bill for the session.

“The level of denial of how bad Hawaii’s mental health gaps are is evidenced when our legislators are influenced by powerful lobbyists, while so many of our residents are suffering from mental illness and can’t access care,” Alex Santiago of the Hawaii Psychological Association said in a statement. “Are we being forced to debate for another year whether highly trained psychologists should have the ability to help these patients with medication needs, even though there’s a serious shortage of psychiatrists, and many of those won’t see the neediest patients?”

Santiago called it a “shameful and cowardly way” for the bill to be killed.

Representatives enjoy lunch break after morning floor session. 3 may 2016.
Representatives enjoy a midday lunch break after the House’s morning floor session. Cory Lum/Civil Beat

Rep. Richard Creagan, a Big Island physician, lobbied hard to defeat the bill. He said the bill would jeopardize safe mental health care for patients who live in rural areas.

Rep. Della Au Belatti, who negotiated the final draft of the bill last week with Baker, deferred a request for comment on the bill’s defeat to House Majority Leader Scott Saiki.

He said the bill failed for various reasons, including concerns about training, supervision and the scope of service. Some members, he said, had concerns about psychologists who got their credentials online being allowed to prescribe pills to minors.

Saiki said it’s now up to psychiatrists to show they can fill the need, or else “this bill will come back.” He said there are anecdotal stories about the problem of rural residents lacking access to certain medications, but not hard numbers.

Speaker Scolds Ward

Souki told Ward to leave the floor at one point during the House session, which was otherwise tame.

Ward wanted the Legislature to provide $28 million to reimburse the Department of Hawaiian Home Lands’ operating and administrative expenses this fiscal year, which ends June 30. But lawmakers agreed to fund $17 million, the same amount Ige requested.

During a lengthy floor speech, Ward cautioned his lawmakers of the potential consequences of not providing more money for DHHL.

Vice Speaker John Mizuno cautioned him to keep his gesturing at the main podium, not toward the statue outside of Queen Liliuokalani, and to stay focused on the contents of the state budget bill that was up for debate.

“The more you push at me, the more I’m going to push back so leave me alone,” Ward said.

Souki, who was sitting in Mizuno’s seat while he conducted business, told Mizuno to call Ward out of order. The gavel came down, a recess was called and lawmakers returned to calmly finish out the day.

The issue of funding the Home Lands is not purely legislative. First Circuit Judge Jeannette Castagnetti ruled in Nelson v. Hawaiian Homes Commission that the state must fulfill its constitutional duty to make “sufficient” sums available to the department for its administrative and operating budget.

The judge decided not to order the governor and Legislature to pay a specific amount, after concerns arose about the separation of powers. But Castagnetti said in March that there is “substantial evidence” in the trial record to support the court’s factual findings that “sufficient” means at least $28 million.

Ward has threatened to sue for contempt of court if the Legislature fails to increase the amount to $28 million before session ends Thursday.

One of the department’s main goals is to help Native Hawaiians acquire homestead lands. The waiting list is now 27,700 people long. It was 5,700 when the mandate was enacted in 1978.

A state audit blasted the department in 2013 for failing to meet its fiduciary responsibilities, and a follow-up report released last week showed there are still a number of shortcomings.

Energy, Hemp And More

Reps. Takashi Ohno, Chris Lee and Nicole Lowen celebrated the passage of House Bill 2569, which required the Department of Education to set a goal of becoming net-zero with respect to energy by 2035.

Hawaii is one of the first states in the country to establish such a goal, Lee said. He noted that if the department trims just a few percent off its electric bill, there could be hundreds of millions of dollars in savings over the next 20 years.

“That’s money we can put back into classrooms,” he said.

Ohno said the department will undoubtedly come back to the Legislature asking for financial help to become net zero, and that he hopes his colleagues support such a funding request.

“In this journey to get this work done, today’s vote is going to be the easiest part,” he said.

While there are only seven Republicans in the 51-member House, Democrats did not hesitate to applaud Thielen after passing a bill to launch a robust pilot project for industrial hemp, an issue she’s been pushing for 20 years.

“It’s a wonderful day,” she said. “There are over 25,000 uses for this crop; none of them will get you high.”

“Hemp, hemp hooray and mahalo to all of you,” she added.

Lawmakers also passed AARP’s top priority bill of the session, the CARE Act.

“AARP and the Hawaii CARE Act Coalition applaud legislators for passing a bill that gives family caregivers the opportunity to receive instructions when their loved ones are discharged from the hospital,” AARP Hawaii State Director Barbara Kim Stanton said in a statement. “This bill provides essential support to unpaid caregivers who are often called on to provide complex medical care for which they receive little or no instruction,” she said.

Right, Rep Marcus Oshiro looks on Rep Takumi floor session. 3 may 2016.
Rep. Marcus Oshiro looks on as Rep. Roy Takumi speaks on the House floor, Tuesday. Cory Lum/Civil Beat

Senate Bill 2647, which bans the sale of ivory except under certain exceptions, passed final reading.

And the Senate killed a measure that would have amended the criminal trespass law to apply to state properties regardless of whether they are enclosed or otherwise secured, and another that would have clarified crosswalk procedures and establish safety precautions at crosswalks.

Also passing the Senate with ease were measures clarifying when video, audio or photos of police officers in public places is allowed; to deny firearms and ammunition to the mentally ill; to allow the use of campaign funds for membership in civic or community groups; to give $450,000 to the Kahoolawe Island Reserve Commission; to have the Department of Transportation conduct a feasibility study of interisland and intra-island ferry system; to cap the consecutive use of 89-day hires in state government; and to require law enforcement agencies and departments charged with “maintenance, storage and preservation” of sexual assault evidence collection kits to conduct an inventory and report to the Attorney General.

All told, scores of measures cleared both the Senate and House on Tuesday, and what’s left will be taken up Thursday, when session concludes.

Here’s the list of all the bills that have cleared the Legislature so far.

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