State lawmakers set the stage Friday for a vote to hold off on pay raises for themselves as well as members of Gov. David Ige’s Cabinet and judges after a year that saw business closures and record high levels of unemployment in Hawaii due to the pandemic.

The House and Senate also reached preliminary agreement on scores of bills to raise taxes on tourists, fund a prison oversight commission, expand voter access, limit the governor’s emergency powers and pay for government retiree health benefits.

The Legislature will convene next week for final floor votes on all those proposals and more before adjourning the 2021 session on Thursday.

But the deal reached Friday to defer until January 2023 pay raises that had been scheduled to go into effect on July 1 received overwhelming approval from House and Senate lawmakers.

“When so many in our community are facing tough times, it can be agreed that pay raises for the governor and lieutenant governor, state justices and judges, executive branch heads and legislators should be deferred,” Sen. Sharon Moriwaki said.

House members gather on the floor before opening day of the 2021 legislature.
Hawaii lawmakers have agreed to hold off on their pay raises until January 2023. Cory Lum/Civil Beat

The Legislature, which also delayed the raises last year, has been criticized by labor groups for failing to pass a minimum wage increase in the same year its members were set to see their pay rise.

Under a schedule approved by the state Salary Commission in 2019, lawmakers would have boosted their pay from $62,604 now to $70,584 while the House speaker and Senate president would have seen an increase from $70,104 today to $79,044 as of July 1.

Those raises will be delayed until January 2023.

Ige supported the idea and has previously said he would not accept a pay raise. He asked his Cabinet to decline theirs as well.

Senate Bill 1350, which would delay the pay raises, also included provisions for state reapportionment. Lawmakers set aside $297,000 for the state’s Reapportionment Commission, which will be tasked with redrawing legislative boundaries based on 2020 Census data.

The measure also required that the commission only count permanent residents in a manner consistent with a 2012 Hawaii Supreme Court decision that excluded thousands of transient military members and college students. The decision led to Hawaii island gaining a Senate seat.

Candidates for the 2022 races would also have extra time to file candidate paperwork under the measure.

Some Public Workers Agree To No Raises

Public workers across five bargaining units in state government agreed to table pay raises for the next fiscal year, which begins July 1.

The bargaining units included those representing non-supervisory workers as well as University of Hawaii faculty and administrative, professional and technical staff. The workers come from three public workers unions including the Hawaii Government Employees Association, United Public Workers and the University of Hawaii Professional Assembly.

Some Hawaii public workers have agreed to no pay raises this year. Sara Lin/Civil Beat

The units that ratified the tentative agreement reached earlier this week will have to reopen negotiations on pay raises next year.

Because lawmakers had a deadline of 6 p.m. Friday to agree on any fiscal measures, employees in those bargaining units that don’t have agreement yet will have to wait until the 2022 session to get any additional funds for future pay raises and medical benefits.

Ige, meanwhile, has indicated that he is drafting executive orders to extend similar terms for certain excluded employees not eligible to participate in collective bargaining negotiations.

Lawmakers inserted funding for the bargaining agreements into House Bill 1297, but details were not available on Friday.

The total cost over the next two years could be about $33.3 million, according to several letters Ige sent to lawmakers.

Prison Commission Gets Funding

Lawmakers struck a deal Friday to fund a commission tasked with overseeing the state’s correctional system.

The Hawaii Corrections Oversight Commission was created in 2019 after a panel of advocates, prosecutors, judges and other experts spent years studying justice systems around the world and decided that Hawaii’s needed an overhaul.

However, the commission has struggled to be an effective force and has been hampered by a lack of action from Ige’s administration, which has so far refused to hire the staff the commission says it needs to accomplish its work.

Lawmakers agreed to give the commission $330,000 in each of the next two fiscal years to fund activities and hire an executive director and other staff.

Halawa Correctional Facility inmate pushes empty wheelchair back to module.
A state commission tasked with overseeing state jails and prisons will get funding for two more years. Cory Lum/Civil Beat

The administration also refused to put money for the commission into its budget request in December. However, Ige has since tentatively agreed to hire staff should the Legislature approve funding for the commission.

Rep. Sonny Ganaden, who worked on the bill for the House, said the funds could help advance prison reform efforts.

“We are having an international conversation about racial and justice equality. We hope it leads to a better system, and the conclusion of the state’s relationship with private prisons in the near future,” Ganaden said, referring to the Saguaro Correctional Facility in Arizona that houses more than 1,000 Hawaii inmates.

Taxes On Tourists And The Wealthy

In a move demonstrating that lawmakers are happy to increase taxes on tourists this year, House and Senate negotiators tentatively agreed Friday on a new draft of House Bill 485, which would increase the rental car surcharge from $5 to $8 per day in a series of steps.

Senate Transportation Chairman Chris Lee said in a written response to questions that lawmakers want to generate extra cash that can be used to match federal transportation funds for road and highway improvement projects. That will reduce the burden on local residents, he said.

The bill would increase the rental car surcharge in increments of 50 cents per year for the next six years, when the surcharge would top out at $8 per day in 2027, lawmakers said.

The proposed increase in the rental car surcharge came just hours after lawmakers tentatively agreed Thursday night on another tax that targets tourists by authorizing the counties to levy a new surcharge of up to 3% on hotel room and vacation rentals.

Despite pressure from the left wing of the Democratic Party, the House and Senate this year have been much more reluctant to impose tax increases on local residents.

Some advocates argued that wealthy people enjoyed huge tax cuts under the Tax Cuts and Jobs Act of 2017 and urged lawmakers to claim some of that tax savings now being enjoyed by the rich.

They lobbied to shift more of the state tax burden away from Hawaii’s working families to wealthier residents, but the tax changes hit a wall at the Capitol.

A proposal to increase the state income tax on Hawaii’s highest-earning residents died earlier in the session, and lawmakers on Thursday scrapped a plan that would have increased the number of multimillion dollar estates subject to the state inheritance tax.

Scores of visitors along Waikiki Beach during COVID-19 pandemic and the return of tourism and visitors. April 11, 2021
A bill that raises a surcharge on rental vehicles is among measures meant to target tourists. Cory Lum/Civil Beat/2021

On Friday morning, House and Senate negotiators announced they were also abandoning a plan to increase the state capital gains tax, which is imposed on the profits from sales of capital assets such as houses, stocks, bonds or jewelry. The current top capital gains tax rate is 7.25%, and House Bill 133 would have increased the top rate to 9% for individuals.

That change would have allowed the state to collect an extra $50 million a year — a hefty sum — but Rep. Sean Quinlan announced on Friday it will not be approved this year.

“You know, unfortunately we just could not reach agreement on this measure, but it’s one that I really believe in,” Quinlan said. “I want to commend the introducer. I hope the introducer comes back next year with the exact same bill.”

The measure was introduced by freshman Rep. Jackson Sayama.

More In-Person Voting Sites

Lawmakers will give counties more flexibility in opening additional in-person voting locations during the next election.

That’s one provision in Senate Bill 548, a 60-page measure seeking to clarify parts of Hawaii’s mail voting law.

The number of voter service centers, as the in-person sites are called, was a hotly debated topic during the last election season. In the November election, almost every site in the state saw lines that lasted hours as voters tried casting ballots at the last minute.

The county clerks, who determine the number and siting for the voting locations on each island, had wanted to open more locations but were hamstrung by a law requiring all voter centers to operate during the same business hours. Lawmakers failed to pass a bill last year that would have given clerks the flexibility to open more locations.

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