A package of measures lawmakers introduced at the start of this legislative session to ease Hawaii’s cost of living have cleared the halfway point in the Legislature.

The four bills, two in the House and two in the Senate, were among hundreds of bills that crossed over Tuesday between the two chambers. Bills related to climate change, including a tax on carbon emissions, also passed.

The priority package would raise the minimum wage, develop housing, streamline maintenance at public schools and expand pre-K education in the state. They all sailed through with little opposition from legislators.

Wide view of the House floor. Legislature Crossover 2020
The House passed a measure increasing the minimum wage to $13 an hour by 2024 and making the state’s earned income tax credit refundable. Cory Lum/Civil Beat/2020

And as the House and Senate get each other’s bills, they are unlikely to make major changes to the package as its provisions were already agreed upon by lawmakers and Gov. David Ige before the session even started. The package was unveiled in January after legislators met with the business community last year.

House Bill 2541, which proposes the minimum wage increase, soared through in a 49-2 vote after about an hour of debate on the House floor.

Only Reps. Gene Ward and Val Okimoto, two of five Republicans in the 51-member House, voted “no” on the bill. Okimoto tried to get a tax credit for small businesses inserted into the bill, but that move was shouted down by the House’s Democratic majority over economic uncertainties and concerns that it could incentivize employers to never raise wages above the minimum.

Some groups have pushed for raising it to $15 an hour or even $17 an hour, and even the Legislature and Ige considered a $15 an hour increase just last year.

“The debate was is it too little or too much,” Rep. Aaron Johanson, chair of the House Labor Committee who worked on the bill, said regarding the minimum wage level.

Besides raising the minimum wage, HB 2541 would also make the state earned income tax credit refundable, meaning folks can get money back in their tax returns, and would set a food tax credit to $150 per eligible recipient in a family as opposed to the sliding scale found in the current law.

The package was developed last year with input from the business community, which has voiced strong opposition to minimum wage increases in the past.

However, they’ve flipped this year, and now support the slight increase. Members of the House who were opposed to an increase last year now support it as well. Some businesses in Hawaii including hotels, banks and some fast food restaurants already pay above the minimum wage.

HB 2541 also makes the state earned income tax credit refundable.

Rep. Aaron Johanson, pictured in 2019, chaired the House committee that worked on the minimum wage bill. Blaze Lovell/Civil Beat

In Hawaii, the tax credit, which cuts off at an annual gross income of $56,844 for a married couple with three children, is set at 20% of a similar federal tax credit.

That same family could expect a maximum of $1,320 if that credit is made refundable.

A report on tax returns from 2018, the most recent tax year for which data is available, shows that 55,656 claimants received the nonrefundable credit. The average credit amount per claim was $375.

A separate bill in the Legislature could spread out the credit over the year. House Bill 2708 has already cleared the House and is now awaiting committee hearings in the Senate.

The bill would let taxpayers withhold the amount of credits they expect to get, meaning they would pay less taxes throughout the year.

The tax benefits could cost the state more than $70 million a year to sustain.

House lawmakers also passed a bill to increase taxes for earners making over $96,000 a year. House Bill 2385 creates new tax brackets for every $100,000 earned up to $600,000.

The measure passed 41-10, with Reps. Lynn DeCoite, Sharon Har, Sam Kong, Calvin Say, James Tokioka, Ward, Okimoto, Lauren Matsumoto, Cynthia Thielen and Bob Mcdermott voting “no.”

The state tax department expects $59.8 million in additional tax revenues in 2022 if HB 2385 becomes law.

Will Hawaii Get A Carbon Tax?

State senators moved briskly through their agenda of hundreds of bills Tuesday. Many votes were unanimous or nearly so.

One of the few measures to spark debate was Senate Bill 3150, which calls for a carbon dioxide emissions tax. “Carbon pricing,” as it is known, is intended to encourage producers of oil, gas and coal to reduce the greenhouse gasses they emit into the atmosphere.

Sen. Karl Rhoads, the chief sponsor of SB 3150, told his colleagues on the chamber floor that an “overwhelming majority of economists support a carbon tax as a way to combat global warming.

“This is not controversial,” he said, at least for economists if not politicians.

Senator Lorraine Inouye debate on carbon tax in the Senate.
Sen. Lorraine Inouye spoke out in opposition to a carbon tax for Hawaii, saying the Legislature should await the results of a study on the matter. Cory Lum/Civil Beat/2020

But Sen. Lorraine Inouye warned that such a tax could be costly to the state, which depends heavily on imported fuel. She noted that the Hawaii State Energy Office is studying a carbon tax and expects to report its finding back to the Legislature.

Inouye also expressed concern that any state action could be challenged by the federal government.

But Sen. Russell Ruderman, a co-sponsor of the bill, called the carbon tax the most “meaningful” piece of legislation before lawmakers to tackle climate change. The cost of not addressing carbon emissions, he argued, would dwarf any expenses incurred by passing SB 3150.

“Procrastination is not acceptable,” he said, adding that Hawaii’s “dirty little secret” is that it has a very high carbon footprint because of its reliance on air transportation.

For nearly all other bills, however, there was very little floor discussion.

Senator Russell Ruderman carbon tax debate during crossover at the Legislature.
Sen. Russell Ruderman said Hawaii cannot afford to await the implementation of a carbon tax. A majority of his colleagues agreed, and the bill now moves to the House for consideration. Cory Lum/Civil Beat/2020

Among the measures passing the full Senate and crossing over to the House for its consideration were ones requiring a state agency to provide more ideas for mitigating sea-level rise, asking another agency to study the idea of assessing green fees on tourists to offset the impact of their visits, and finding ways to pay teachers more money.

Sen. Michelle Kidani, author of Senate Bill 2488, said, “If this body believes the keiki is the future for our state, then we must invest in those that prepare them for that role.” She called the bill “a first step” toward properly compensating teachers.

Regarding higher education, Senate Bill 2823 would forbid the University of Hawaii president from also serving as a campus chancellor, as is currently the situation with President David Lassner, who also leads the Manoa campus. Sen. Kurt Fevella, the Senate’s lone Republican, said the bill would prevent any “potential conflict of interest.”

The Senate also approved bills to fund the planting of lots of trees and forcing rental car companies to use zero-emission vehicles.

Other bills of interest advancing from the Senate to the House include legislation banning the sale of flavored products for electronic smoking devices, prohibiting large-capacity magazines for firearms, and regulating ride-share companies like Uber and Lyft.

Top Housing, Education Bills Advance

Senators also agreed to move along two of their four joint-package bills focused on education, housing and wages.

Senate Bill 3104 is an omnibus housing bill that, among other things, calls for $200 million to develop affordable housing units on lands near the University of Hawaii West Oahu and fast-tracks affordable housing developments.

The other joint-package measure passing was Senate Bill 3103, which establishes a School Facilities Agency to be responsible for all public school development, planning and construction. The measure has drawn the ire of environmental groups and labor unions because it exempts the agency from key state laws.

“It is unclear why this Agency and board or any state and county agency or board should be exempt from laws that are in place to protect the public’s interest, health, safety, welfare and our islands finite and fragile natural and cultural resources,” the environmental nonprofit Hawaii’s Thousand Friends said in its testimony opposing SB 3103.

Sen. Brian Taniguchi was the lone “no” vote on that bill, but seven other senators voted for it but with reservations. Taniguchi, who chairs the Senate Labor, Culture and the Arts Committee, was one of the legislators who worked on the joint package, including the minimum wage bill.

Senators also moved forward with reforms of the Our Care, Our Choice Act, which aims to improve access and options for terminally ill patients seeking medical-aid-in-dying support. Sen. Roz Baker is the author of Senate Bill 2582, which passed the Senate Friday and is already in the House.

The Senate will take up a handful of remaining bills Thursday.

Preschool Or Daycare?

If figuring out the minimum wage/tax credit bill was hard for lawmakers, finding a way to expand pre-K education was even more difficult, said Rep. Sylvia Luke.

“It is aspirational, but if we don’t do aspirational things, what are we here for?” Luke said during the floor session.

House Bill 2543 passed 50-1 with only McDermott voting “no.”

The bill seeks to remove barriers to early childcare, which at private institutions could cost between $7,000 and $20,000 a year.

The main mechanism for expanding access to care is with the Preschool Open Doors program administered by the state Department of Health and Human Services.

A new coordinator that works out of the governor’s office would coordinate all the programs between various state departments and any private entities that run early education programs.

Rep. Roy Takumi, who chairs the House Consumer Protection and Commerce Committee, worried that some of the new programs proposed in the bill or those that could receive extra funding do not operate at the same standard as public preschool programs, which lack the capacity to service every 3- and 4-year-old in the state.

Rep. Justin Woodson, chair of the House Lower and Higher Education Committee, disagreed, saying that many of those private programs are accredited. The bill also has reporting requirements that would mandate the state Department of Education collect data on students and from parents on where children went to school before entering kindergarten to ascertain how effective those programs are.

Register to attend our next Civil Cafe: Legislative Update. Panelists include House Speaker Scott Saiki, Senate Majority Leader J. Kalani English, and Civil Beat public health reporter Eleni Gill. It’s at noon, Wednesday, March 4, in Room 329 at the Hawaii State Capitol.

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