Updated 11 a.m., 6/28/2016

Hawaii Gov. David Ige announced Monday that he intends to veto nine bills, including a measure that would allow vacation-rental companies to collect taxes on behalf of the state.

The so-called Airbnb bill was among the most intensely debated last legislative session, which wrapped up May 5.

House Bill 1850 presents too much potential for “unintended consequences,” Ige said. While the state stood to benefit from increased tax revenue, he called the measure “a bit premature,” and said it’s better to defer action on it and work with the counties on rules and regulations to stop illegal vacation rentals.

Sen. Laura Thielen, who was outspoken in her opposition to the Airbnb bill, said she hoped the governor would veto the measure and let the Legislature come back next year with clear standards of conduct.

“Online vacation rental hosts have a history of selling camping on Hawaii’s public beaches and on public lands,” Thielen said. “HB 1850 fails to include any provisions to assure the public that our precious public lands will be protected for public access, and not converted for the commercial advantage of a few illegal operators and the web companies who host them.”

She said other jurisdictions pass laws that hold these hosts and internet companies to fair, minimum standards to protect the public and the public trust.

Earlier in the day, Airbnb took out Twitter ads asking people to tell the governor to “support home sharing” and HB 1850.

The governor said his decision on the bill won’t affect Airbnb’s ability to do business in Hawaii.

Cynthia Wang, public policy manager for Airbnb, said in a statement that the company hopes Ige will reconsider his decision and help Hawaii’s middle class who are sharing their homes to make ends meet.

“It would be a shame to see Hawaii take a step back instead of streamlining tax collection for today’s economy,” she said. “This bill is a thoughtful approach that would ensure our community could pay its fair share of taxes, while leaving local land use regulations to the counties, where they belong.

“Airbnb has successfully worked with over 190 jurisdictions around the world to collect and remit taxes on behalf of our community — without a single dispute about accurate reporting, as falsely alleged by opponents.”

Maui Deal ‘Too Generous?’

The governor also plans to veto what’s been deemed a sweetheart deal for union members who work at three state-run hospitals on Maui and Lanai that are in the process of being privatized by Kaiser Permante.

Senate Bill 2077 would have offered special severance payments or pension bonuses to Hawaii Health Systems Corporation employees whose positions may be cut. It was estimated to cost the state an extra $40 million in the hospital transition and add hundreds of millions of dollars to the unfunded liability for pensions and benefits.

“We do have concerns that this measure is too generous,” Ige said, noting how it affects the economics of changing facilities from public to private and could be precedent-setting.

United Public Workers sued to stop the transition from happening and a judge temporarily halted activities. The state and union are negotiating to resolve the lawsuit, Ige said.

A&B Water Bill Signed

The governor has until July 12 to veto bills or let them become law without his signature.

The Legislature passed 272 bills last session. Ige has already signed many of them into law, such as the measure to cool Hawaii classrooms and a requirement for hospitals to provide instruction to family caregivers before discharging a patient.

But 145 bills were still pending as of Monday, and bills not on the governor’s intent-to-veto list are now destined to become law with or without his signature.

That includes House Bill 2501, which pitted Native Hawaiians and environmental activists against Alexander & Baldwin, one of the biggest landowners and developers in Hawaii.

The measure gives the Board of Land and Natural Resources the power to let A&B — on a holdover basis for up to three years — continue diverting water from streams as it’s done for decades while the state figures out a better way to lease the water rights, instead of the revokable permit process it had used until a judge ruled against it in January.

Ige said he signed the bill into law Monday morning.

“I do have significant reservations on this measure,” he said. “The challenge is balancing the requests and demands for water.”

The governor said the bill is important to ensure a smooth transition as A&B exits the sugar industry and a new agricultural era begins. But the Sierra Club and others saw it differently.

“The court agreed that A&B has been improperly diverting the public’s water, but instead of following the law the politicians are siding with the corporation that has been harming us for so long,” said Mahealani Wendt, a Wailuanui resident representing the East Maui community group, in a statement.

Marti Townsend, director for the Sierra Club of Hawaii, said the governor’s decision “unnecessarily favors profit-driven water diversions above the best interests of the public.”

Ige emphasized that the bill doesn’t award any water rights, rather it provides additional time for the state to decide what actions to take.

“We do know that the current law does not work, and results in litigation that really has prevented progress on water leases for at least several decades,” he said, adding that he’s committed to bringing the parties together to negotiate in good faith.

“I’m challenging A&B to really define what their water needs are,” Ige said. “The water is not A&B’s specifically, or any of the other interests. It truly is a public trust.”

Nine Bills On The Veto List

Here’s a complete list of bills Ige intends to veto, with descriptions and rationale provided by the governor’s office:

• HB1370, relating to divorce
  • This measure authorizes the Employees’ Retirement System to make direct payments to a divorced spouse of an ERS member or retired ERS member upon order of the court.
  • Rationale: The ERS must modify its information technology systems before direct payments can be made. It will need state resources to do so. The ERS trust fund cannot be used to pay for its work.
• HB1739, relating to employment
  • This measure prohibits employers from accessing and/or obtaining employees’ social media accounts and passwords via coercion or other means.
  • Rationale: In reviewing testimony on this measure, it remains unclear if this practice is occurring in workplaces at a level that requires state intervention at this time. Also, the Department of Labor and Industrial Relations was not provided with any additional financial resources to undertake enforcement. DLIR will need both time and resources to establish an enforcement mechanism.
• HB1747, relating to motor vehicles
  • This measure authorizes police officers to request towing of motor vehicles if a driver is arrested for driving under the influence (DUI).
  • Rationale: Current enforcement does not allow drivers to operate their vehicles anyway, once they’ve been arrested or cited for DUI. Also, there are other motor vehicle violations where police should be authorized to request towing. We suggest that this bill be expanded to include the other violations for consistency across the state.
• HB1850, relating to taxation
  • The intent of this measure is to allow transient accommodations brokers to register as tax collection agents with the state. This would allow companies such as Airbnb to collect and remit general excise and transient accommodations taxes on behalf of the hosts and visitors who use their services.
  • Rationale: We believe there could be unintended consequences of this proposed measure. Vacation rentals fall under the city’s jurisdiction. In order for this bill to work as intended, counties must more actively enforce their own laws on vacation rentals before they claim additional tax revenues.
• HB2016, relating to public employees
  • This measure requires the Employees’ Retirement System to transfer contributions by retirees and beneficiaries to the Hawaii Employer-Union Benefits Trust Fund for health insurance payments.
  • Rationale: While we understand the practical reasons for this bill, the ERS would be required to comply with the Health Insurance Portability and Accountability Act, which protects health insurance information. Additionally, the ERS would need sufficient time and resources to make modifications to information technology sytems to process such payments.
• HB2277, relating to the King Kamehameha Celebration Commission
  • The intent of this measure is to clarify the membership and mission of the King  Kamehameha Celebration Commission.
  • Rationale: Unfortunately, the amendments proposed in this measure create an ambiguity in the law on how the commission will make decisions. The specific number of commission members was deleted from the bill. Consequently, the commission will not be able to determine a quorum for the purpose of conducting business.
• SB2077, relating to separation benefits
  • This measure offers benefits to Hawaii Health Systems Corporation employees facing position abolishment, reduction-in-force or workforce restructuring.
  • Rationale: This measure is still undergoing fiscal, legal, and policy review at this time.
• SB2542, relating to repair and maintenance
  • This measure establishes a full funding policy and budgetary procedures for routine repair and maintenance of state-owned buildings, including judiciary-owned facilities.
  • Rationale: This measure is still undergoing fiscal, legal, and policy review at this time. 
• SB3102, relating to the Department of Business, Economic Development and Tourism
  • This measure mandates that DBEDT develop — and state agencies enter into — inter-agency agreements with the department rather than memoranda of agreements or memoranda of understanding. This measure also establishes a state grant program to fund business development  for qualified businesses.
  • Rationale: It is not clear from the testimony why state agency inter-departmental agreements are more efficient or effective in directing resource allocation.