Gov. David Ige flexed his executive power in a big way on Monday, formally announcing he intends to veto 28 bills passed by the Legislature this year including measures that would distribute bonuses to public school teachers and increase Hawaii’s hotel room tax.

Ige’s veto plan would scrap some major fiscal bills and leave holes in the state budget that will need to be plugged with the help of state lawmakers. That almost certainly will trigger a veto override session or a special session in the weeks ahead.

One example is Ige’s announcement that he intends to use his line-item veto power to reject portions of the state budget because lawmakers specified the state must use federal funds from the American Rescue Plan Act to repay nearly $314 million in bond debt.

The federal government does not allow the state to use that pot of pandemic relief funding to pay down debt, Ige said, and lawmakers will therefore need to appropriate money from other sources to cover state borrowing.

Senate President Ron Kouchi declined to comment on Ige’s veto plans Monday, but House Speaker Scott Saiki said he wants to hear more from Ige about why the governor plans to wield the veto pen so aggressively this year.

“I’m waiting for more specificity from him,” Saiki said. “There also doesn’t seem to be any consistent rationale for why he wants to veto this number of bills. This is probably the largest number of bills that we’ve seen from Gov. Ige, assuming that he vetoes all of them.”

Governor David Ige speaks during bill signing ceremony at Washington Place.
Gov. David Ige has signaled he plans to veto up to 28 bills passed by the Legislature, citing the changing economic situation and restrictions on the use of federal funding. Cory Lum/Civil Beat/2021

Ige’s announcement on Monday formally gave notice to lawmakers that he intends to veto the 28 measures, but the governor has until July 6 to decide if he will actually reject all of them. His other options are to sign the bills into law, or allow them to become law on July 6 without his signature.

If lawmakers intend to override Ige’s veto or make amendments to the bills that Ige rejects, they have until noon on July 6 to return to the State Capitol in a special veto session do so.

One of the most closely watched bills on Ige’s intent-to-veto list was House Bill 613, which would use federal funds to award one-time bonuses or “education workforce stabilization payments” of $2,200 to Hawaii’s full- and part-time public school teachers.

That would cost nearly $30 million, and Ige said he intends to veto that bill because other provisions in the measure would restrict the use of federal pandemic relief funding for education in ways that conflict with guidance from the U.S. Department of Education.

“Violation of federal rules could require the return of such funds,” according to a written statement from the administration.

Ige said at a press conference Monday that a new contract with the teachers’ union has been finalized, and the proposal for bonuses is off the table for the time being.

Corey Rosenlee, president of the Hawaii State Teachers Association, said in a written statement that many states and school districts across the country used federal stimulus money to give out similar teacher stabilization payments “to retain teachers after a very stressful year and a half during the pandemic.”

“We hope Gov. David Ige will honor the bill that unanimously passed both houses of the Hawaii Legislature. And if the governor chooses to veto HB613, we hope that lawmakers override his veto,” Rosenlee said in his statement.

Another measure on the veto list that triggered intense lobbying was House Bill 862, which would allow each of the counties to levy a hotel room tax of up to 3% on top of the existing 10.25% transient accommodations tax.

The measure amounted to a money grab by the Legislature because it would have allowed the state to seize $103 million in transient accommodation revenues — that is, hotel room taxes — currently collected by the state and distributed to the counties.

The counties would then be authorized to impose their own hotel room taxes of up to 3% to recoup some or all of the lost revenue.

The measure was hotly opposed by the hotel industry, which warned it would interfere with the accelerating recovery of the tourism industry.

Waikiki Hotels and Waikiki Beach aerial 0371.
The hotel industry fought the proposal to allow the counties to impose their own hotel room tax of up to 3%, warning it would interfere with the tourism recovery. Cory Lum/Civil Beat

Ige also made it quite clear the day the session ended that he disliked the bill. He pointed out that HTA had developed destination management action plans to find ways to reduce the impact of mass tourism on local communities, something many residents are demanding.

The budget cuts imposed by the Legislature on HTA as part of HB 862 will make it harder to execute those plans, Ige said, and he warned the cuts would also make it more difficult to market Hawaii.

“How do you create programs if you’ve got to come back for money every year?” Ige asked at the end of session in early May. “It’s something that will create a huge challenge.”

Ige said in the written statement on Monday announcing his plan to veto the bill that the measure would “severely damage” HTA’s shift to destination management.

Hawaii County Mayor Mitch Roth opposed the bill, raising concerns that it would interfere with the economic recovery on his island.

“Our hospitality industry is more than just the hotels,” Roth said. “It’s the restaurants and everybody else. Everybody has been struggling … we want those businesses to be able to get back and thrive.”

Honolulu Mayor Rick Blangiardi initially criticized the measure as an unhelpful last-minute move by lawmakers, but later announced he actually supports the bill because it will empower the city to levy the tax and recoup the hotel tax money that the Legislature was taking away.

Hawaii Lodging and Tourism Association President and CEO Mufi Hannemann praised Ige’s announcement that he plans to veto HB 862, saying it is “critical in the defeat of this measure that would have major ramifications for our local governments, businesses, and the economy as a whole.”

Ige also plans to veto a measure that would have required the DOE to publish a more detailed weekly report of new positive COVID-19 cases listed by specific school, date the positive test was reported and the day the impacted person was last on campus.

This past school year, the DOE published a weekly tally of COVID-19 cases grouped only by the state’s 15 complex areas, which can cover a broad swath of area.

Senator Michelle Kidani during crossover floor session.
A bill introduced by Sen. Michelle Kidani would require weekly reports of which schools had COVID-19 cases, but it also appears to be headed for a veto. Cory Lum/Civil Beat

Supporters of the Sen. Michelle Kidani-introduced bill, including the teacher’s union and Office of Hawaiian Affairs, said a school-based update would help provide “critical, real-time data” to parents and the school community on new cases and help schools respond to outbreak events, therefore protecting the community at large.

Ige, echoing the DOE’s privacy pushback against the bill, said reporting more granular school-based data would subject those impacted to harassment or discrimination or risk identification, especially in smaller communities around the state.

“The concern we had was it was very specific, especially in rural schools or smaller schools across the state,” he told reporters. His rationale for a veto added that the DOE and DOH have already developed protocols to protect school members and prevent further spread once a positive case is reported at a school.

Ige also signaled he may scrap one of the Legislature’s last major tax increase proposals.

House Bill 58 sought to raise taxes on the sale of multi-million dollar homes. State officials estimate it would raise an additional $2 million to $3 million a year for the state general treasury. The bill also would suspend various general excise tax exemptions that some businesses and industries claim each year.

“Hawaii’s fiscal situation has changed so much since this bill was introduced that there is no longer the pressing need for the extraordinary revenue actions proposed in HB 58,” Ige wrote in his explanation.

During a Monday press conference, the governor also cited a recent decision by the Council on Revenues to raise projected tax collections for the state over the next six years, a sign of better economic conditions. HB 58 was the last major progressive tax proposal lawmakers pushed through to the end of session.

Beth Geisting, executive director of the Hawaii Budget and Policy Center, said not advancing measures to shore up the budget is shortsighted. While federal relief funds may be helping the state now, Hawaii still has a multitude of fixed costs like retirement, health and personnel payments that could grow in the coming years, Giesting said.

Beth Giesting, executive director of the Hawaii Budget and Policy Center. Beth Giesting

“We’ve got to figure out some ways to make sure we have some steady stream of revenues,” Giesting said. “Not only for the things we need to pay for, but want to pay for.”

The governor is also targeting Senate Bill 404, which would allow political candidates to sidestep certain advertising reports.

Ige says that although the bill was originally meant to clarify certain rules regarding those ad reports, the final version would result in less public transparency.

“To completely exempt candidates from the political advertisements disclosure requirement for the 2022 elections and beyond would be a tremendous blow to public transparency in political spending,” Ige wrote in his rationale.

Also making the list of bills to be vetoed is Senate Bill 1409, a bill that would require members of state boards and commissions to complete training in Native Hawaiian cultural rights.

A review of boards attached to the Department of Land and Natural Resources found that only two members of those panels failed to complete cultural training, according to Ige’s intent to veto statement.

All other bills not listed on the governor’s intent to veto list will become law. That includes a bill that would allow development of a new Aloha Stadium to move forward, although there have been concerns over the project’s potential cost to taxpayers.

Another measure that will become law is House Bill 499, a controversial measure that would allow lessees on state lands to extend their leases 40 years without having to competitively bid for them.

Businesses on those state lands have said that they need long-term lease extensions in order to secure financing to make improvements on their properties. But the measure ran into significant opposition in the Legislature, with nine senators and 15 House members voting “no” on the bill.

On Monday, Ige said that allowing the bill to become law “would be the best course at this time.”

“This is one of the bills I spent a lot of time on and heard from many people, the concerns they have,” Ige said. “I do share their concerns.”

Ige said that the bill would allow for public comment on any lease extension before that extension is approved.

M. Healani Sonoda-Pale, who has lead opposition to HB 499, said she was disappointed in the governor’s decision Monday and worries that it would allow some lessees to circumvent established practices.

“The process we have now allows a certain amount of public oversight and input in the process. It allows for public bids,” Sonoda-Pale said.

Senators are scheduled to meet privately in caucus Tuesday morning to discuss the governor’s intent to veto list and figure out what to do next, according to a Senate spokesman.

Sen. Donovan Dela Cruz, chairman of the Senate Ways and Means Committee, said lawmakers are still waiting to get more specifics on Ige’s objections before determining how, and if, they should go about fixing any bills.

Saiki said House members will also meet this week to discuss the veto list.

Civil Beat reporter Suevon Lee contributed to this report.

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