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Lawmakers’ Financial Disclosures Don’t Always Paint A Complete Picture
Sen. Russell Ruderman, who owns health foods stores, was the only lawmaker to report more than $1 million in outside income last year. Several of his colleagues reported no income beyond their legislative salaries.
Once a year, state lawmakers file financial disclosures outlining their income, stock ownership and other investment holdings during the previous year, offering Hawaii voters a window into their representatives’ wider financial interests.
But the window offers a somewhat vague view, since lawmakers are only required to offer an approximate range of their income and values of their business holdings.
In 2018, Sen. Russell Ruderman earned the most most money of any lawmaker. He received more than $1 million in income from Island Naturals Market—a Big Island-based chain of health food stores that he owns and operates—in addition to the $62,604 that he earns as a legislator.
Senator Russel Ruderman, owner of Island Naturals Market on the Big Island, was the only lawmaker to report more that $1 million dollars in outside income.
Cory Lum/Civil Beat
Sen. Kai Kahele came in at a distant second. He and his spouse, Maria Kahele, earned from $195,000 to $400,000 last year on top of Kahele’s state income. Of this total, Kahele earned $150,000 t0 $250,000 as a pilot with Hawaiian Airlines. The Kaheles also own an array of real estate, sharing nine different properties, seven of them in Tennessee.
In the House, Speaker Scott Saiki—a working attorney—reported the highest total income, receiving from $325,000 to $650,000 in addition to his legislative salary. That total includes the salary of his wife, Patsy Saiki, a senior vice president for First America Title.
Rep. Romy Cachola and his wife were the second biggest earners in the House, receiving a combined $260,000 to $525,000 in outside income. Of this total, Cachola’s wife—Erlinda Cachola—earned $250,000 to $500,000 as a doctor running the Cachola Medical Clinic in Kalihi. Together, they own six properties throughout Hawaii.
One notable difference between the Senate and House disclosures was that over 70 percent of senators reported income from a second job, while only 40 percent of representatives listed additional income. Many of those lawmakers reported income from their spouses.
Five senators and 16 House members — about 28 percent of the entire Legislature — reported no outside income or spousal income. Those lawmakers reported supporting themselves and for some, their families, on a $62,604 annual legislative salary.
Speaker Scott Saiki, an attorney, reported the largest income among House members. His total includes the salary of his wife, a title company executive.
Cory Lum/Civil Beat
That income is low enough to place even single lawmakers with no dependents within the 2018 federal “low income” housing classification for the City and County of Honolulu.
Rep. Bob McDermott worked exclusively as a legislator last year. McDermott said he usually works in real estate on the side but chose not to last year as he was running for reelection. However, McDermott said he started working again last month as a commercial broker because he needed the money.
“I’m so broke …That’s why I gotta do it,” McDermott said.
What the Disclosures Don’t Say
While the annual disclosures do reveal which lawmakers are the wealthiest, what other jobs they hold and their real estate and other business holdings, they don’t provide a detailed or precise depiction of legislators’ financial interests.
This is because lawmakers are not required to list the exact monetary value of any of their financial or business interests.
For example, a lawmaker who earned $30,000 from a part-time job would list their income as $25,000 to $50,000. Someone who earned $300,000 would list their income as $250,000 to $500,000.
State Rep. Bob McDermott was one of the lawmakers who reported no income beyond his state salary. He began selling real estate again because, he said, “I’m so broke.”
Cory Lum/Civil Beat
The highest income range—$1 million and up—does not have an upper limit. That leaves no way of knowing how much money Ruderman, who was the only lawmaker to reach this range, earned last year.
Daniel Gluck, executive director of the Hawaii State Ethics Commission, said that the income ranges were the result of the state government trying to balance transparency with privacy. Forcing lawmakers to reveal more financial data may come with consequences.
“You increase the risk that you may dissuade otherwise good people from being willing to serve in state government,” Gluck said. “In general, I think the legislature has done a pretty good job of setting a good balance here.”
However, Sandy Ma, executive director of Common Cause Hawaii, would prefer more specific income information. She said lawmakers should enter public service with the expectation that they would have to sacrifice some of the privacy they previously enjoyed.
“You have to have a certain level of transparency,” Ma said. “When you go into these positions, you become a public servant. And you have to think about doing right by the public.”
Mistakes and Confusion
Hawaii state law requires lawmakers to submit their disclosures by January 31 every year to the Hawaii State Ethics Commission.
Gluck said that ever since the Legislature voted in 2017 to allow the commission to publish the names of officials who missed their disclosure deadline, almost no state lawmakers have filed late.
Legislators can choose to fill out a paper form or file their information online through the commission’s new electronic filing system, introduced in time for the 2018 disclosure season. This year, all but one state lawmaker chose to file online, with Rep. Cynthia Thielen being the only hold out.
This year’s disclosures were not perfect, as several lawmakers made filing mistakes in their financial disclosures while others were confused on how to correctly report “gray areas” such as spouse and retirement income.
Saiki mistakenly listed that he had personally received $250,000 to $500,000 from First American Title, the real estate transaction company where his wife works.
And at least three other representatives forgot to list their legislative salary. After being contacted by Civil Beat, all immediately acknowledged their mistakes and either updated or promised to update their financial disclosures.
Besides these mistakes, some representatives seemed confused over what income was required by law to be disclosed.
Rep. Calvin Say said he did not know whether ethics commission rules required retirement income, such as his wife’s pension as a public school teacher, to be included on the disclosure. It isn’t.
Furthermore, Say said he did not know for sure whether state lawmakers needed to report any income their spouse received, which is required.
“It’s just the elected official’s (income) right? It’s just the elected official at this point,” Say said.
Gluck said the commission holds dozens of trainings every year, during which staff explains how to correctly file a disclosure. He said that a very extensive guide to the electronic filing system was available on its website.
Ma from Common Cause said that lawmakers have a duty to fully understand Hawaii’s ethics law, and that experienced legislators should not be confused over how to fill out their financial disclosures.
“People have an affirmative duty, especially our lawmakers, to ask questions and to know what their responsibilities are,” Ma said. “And we cannot keep on saying ‘Oh, we didn’t know, someone didn’t tell us.’”
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Joel Lau is a Civil Beat summer news intern. He grew up on Oahu and graduated from Hawaii Baptist Academy.
He is a student at Boston University, majoring in journalism and political science, and plans to return there for his sophomore year in September. Follow him on Twitter @JoelLau808.