Two House committees gave preliminary approval Tuesday to a top-to-bottom rewrite of a hotel room tax bill in a maneuver that looks much like the banned “gut-and-replace” tactic that the state Supreme Court struck down last year.

The new draft bill approved by the House Finance Committee and the House Labor & Tourism Committee would create a new 14-member Natural Resource Management Commission to distribute up to $30 million in grants that would be funded by hotel room tax revenues.

The grants would go to the counties, state and private nonprofits to use to protect natural resources, help cope with climate change, upgrade public parks, and to offset the impact on natural resources by residents and visitors.

The latest draft of Senate Bill 775 would also provide $60 million a year to the Hawaii Tourism Authority, which is tasked with marketing Hawaii to the world.

That new version was warmly received, drawing praise from environmental groups and several state departments. But none of those provisions in the bill were in any of the earlier drafts of SB 775, which raises a legal question.

The state Supreme Court last year rejected a legislative maneuver known as “gut-and-replace,” in which the contents of a bill are stripped out during the session and replaced with entirely new material that accomplishes different purposes.

Now that the state Supreme Court has banned a tactic known as “gut and replace,” the Legislature needs to be more cautious about making radical amendments to bills mid-session. Anthony Quintano/Civil Beat/2018

Lawmakers had used that gut-and-replace tactic for years, but it triggered complaints from activists and the general public. People participating in the process at the Capitol were sometimes frustrated to discover that proposals or appropriations in the bills they were following had simply disappeared during the session, and were replaced by unrelated provisions.

The state Supreme Court rejected that gut and replace tactic in its decision last year, ruling in a 3-2 decision that “rather than encouraging public participation in the legislative process, gut and replace discourages public confidence and participation.”

The state constitution requires that each bill must pass three readings or floor votes in both the House and Senate, and the court in its decision issued a new rule that “the three readings begin anew after a non-germane amendment changes the object or subject of a bill so that it is no longer related to the original bill as introduced.”

Exactly what that “new rule” means is still unclear. Lawmakers sought guidance from the state Attorney General’s Office after the decision to help them navigate how extensively bills can be changed or rewritten mid-session. This is the first legislative session since the court ruling.

In the case of SB 775, the version of the bill the Senate sent to the House last month would have adjusted the state hotel room tax upward or downward depending on the number of tourists who visited the previous year. It had nothing to do with environmental grants or allocating funding for the Hawaii Tourism Authority.

But House Labor & Tourism Committee Chairman Richard Onishi said the new House draft of the bill complies with the Supreme Court decision because both the Senate and the House drafts of SB 775 are aimed at “reducing the cost burden and negative impact from tourism.”

“They are different in method, right, but the purpose is still the same,” Onishi said. “We feel it is germane to the original bill, and that’s why we used this vehicle, because we didn’t have other vehicles that address this same issue.”

Onishi said he believes the bill will hold up in court if it is challenged.

Others are not so certain. Sandy Ma, executive director of Common Cause Hawaii, said she has received calls from lawmakers’ staffs asking if she thinks bills including the House amendments to SB 775 comply with the court ruling. Common Cause and the League of Women Voters of Honolulu filed the lawsuit over gut-and-replace that prompted the Supreme Court ruling.

The lawsuit challenged the validity of a measure that started out addressing recidivism of prison inmates, and ended up at the end of session as a measure mandating that hurricane shelters be incorporated into the design of any new state building.

In the case of SB 775, at least the Senate and House drafts both deal with hotel room taxes “and they added everything else to it,” she said. “At what point do you cross that line?”

“It just kind of strung things together, and it should just be a pure one subject, one title, and it’s not,” Ma said. “It does seem like they are testing the boundaries of what is allowable, and what they can get away with.”

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