Besides the Senate override, lawmakers in both chambers worked through numerous bills Tuesday, including some dealing with taxes and guns.

Gov. Josh Green’s first veto of his administration was quickly followed by the Senate’s first veto override, with all but one senator voting Tuesday to push forward the bill. The House has not put the measure up for a vote yet, but if members do consider it, they must do so by the time the legislative session finishes on Thursday.

Senate Bill 921 is short but technical. Basically, current law gives condominium associations a limited period of time – two years – to sue developers if they catch or should have caught construction defects.

A mix of apartments, condominiums, and hotels dot the skyline in urban Honolulu.
Senators say that a small subset of condominium residents would be severely negatively affected by the governor’s veto, pushing them to overwhelmingly override it. (Cory Lum/Civil Beat/2022)

Developers sometimes maintain control of association boards for longer than two years though, preventing the associations from suing within that period of time. In those cases, current law allows for the two-year period to be paused until residents regain control of the association. 

But a separate law also places an upper limit of 10 years on residents to sue. This means that if a developer maintains control for over 10 years, residents would no longer be able to take legal action against them for defects.

According to written supportive testimony from attorney Terry Revere, this exact scenario occurred at an unidentified Big Island development, where the developers maintained control for 11 years before residents could take legal action. 

SB 921 was written to get rid of this dynamic. 

“The veto hurts a very narrow group of condominium purchasers, but it can hurt them pretty badly,” said Sen. Karl Rhoads, the bill’s introducer, on the floor. 

Developers like the Building Industry Association have written in opposition to the bill, saying that this additional liability would mean higher insurance premium costs, which would be passed on to consumers. 

In his governor’s message explaining the veto, Green pointed to this potential cost increase. 

“Our administration is focused on alleviating our critical housing shortage in Hawai‘i and we are reluctant to enact any new law that could add costs to housing or delays in construction,” it says.

But every senator – except for Sen. Donna Mercado Kim – voted to override the veto anyway, easily surpassing the two-thirds majority needed.

The DLIR set up a temporary unemployment during the pandemic to process huge backlog of claims. To fund the state’s aged unemployment infrastructure, a bill to implement a new tax for businesses passed both chambers, though proved to be controversial in the Senate. (Courtesy: DLIR)

“Even when the condo owners know that there is a defect during the six to seven years,” Sen. Joy San Buenaventura said on the floor, “because the developer remain in the board, they are able to prevent the kind of actions against themselves.” 

The House might also vote to override Green’s veto, but that would need to happen on the last day of session on Thursday. House Speaker Scott Saiki said Tuesday the House Democrats have not yet discussed the issue, and will take it up during a closed-door caucus on Wednesday.

Saiki said he has not heard any groundswell of concern about lawsuits over construction defects in condominium projects. In fact, he said the only people who brought the issue up to him so far were some state senators who texted him.

“There hasn’t been discussion and members haven’t raised it, so tomorrow will be the first discussion,” he said.

New Tax And New Tax Credits

The House and Senate both gave unanimous final approval Tuesday to House Bill 954, which will dramatically increase three state tax credits that can be claimed by lower-income residents.

Green has praised that measure, and is almost certain to sign it into law. 

That measure will double the value of the state earned income tax credit for working families, and also double the value of the food excise tax credit, which is designed to offset the impact of the state excise tax on food, lawmakers said.

The same bill will overhaul the dependent care services tax credit to make that provision more generous as well. That bill will cost the state more than $125 million per year, and is designed to ease the cost of living for low-income working families.

“These are things that we all campaigned on, these are things that we all talked about in our majority package, and to finally be here today to pass out this measure is something that we can all be very proud of,” said House Economic Development Committee Chairman Daniel Holt. 

Holt described the EITC as “a powerful tool to help uplift families out of poverty. It encourages work and the economic security needed to support health lives, get a good education, and increase future earnings.” It is especially helpful to families with children, he said. 

More sweeping tax proposals that would have been helpful to middle-class residents failed to advance this session, and Rep. Della Au Belatti said lawmakers need to revisit that issue. 

“While I really, truly support the measures in this, I think we need to have a broader conversation about the tax relief to benefit middle class families here in the state of Hawaii,” she told her colleagues. 

Many tax relief measures died during this year’s legislative session, and Rep. Della Au Belatti said that lawmakers will have to revisit those measures in the future. (Nathan Eagle/Civil Beat/2018)

While individuals are set to receive some tax relief, employers will likely have to pay a bit more.

A bill that would implement a new tax for employers in order to upgrade the state’s ancient unemployment insurance technology – a system heavily strained during the pandemic, when hundreds of thousands of people filed unemployment applications – passed both chambers on Tuesday.  

If it receives a signature from the governor – and it likely will – Senate Bill 1383 would implement a new unemployment insurance technology special fund, its purpose being to upgrade the state’s current system that’s more than 40 years old. 

Funding would come from businesses in the form of a 0.01% tax on the wages taxed for unemployment insurance. 

It’s a relatively obscure and technical measure. During two of its three hearings, the only written testimony came from the Department of Labor and Industrial Relations, which wrote in strong support.

But the Maui Chamber of Commerce wrote in opposition, arguing that many business owners are still financially struggling and that the state should get its funding from somewhere else. 

“We strongly believe the technology systems maintenance and upgrades are the responsibility of the state agency, not its clients,” the chamber wrote. 

Senators clearly listened.

Bills that make it to floor session votes often pass overwhelmingly, but Senate Bill 1383 only received 16 votes in favor, with nine senators voting in opposition. 

“I think if we’re going to modernize IT in different departments,” said Sen. Angus McKelvey on the floor, “we should be doing it through general appropriations and other ways that will give us the legislative oversight necessary to ensure it’s being done properly.” 

Along with McKelvey, Sens. Brenton Awa, Lynn Decoite, Lorraine Inouye, Jarrett Keohokalole, Donna Mercado Kim, Tim Richards, Joy San Buenaventura, and Glenn Wakai all voted in opposition. 

Sen. Sharon Moriwaki spoke in support of the bill, saying that the current unemployment insurance system funding goes largely toward wages for laid-off workers. 

“There is very little that is for the infrastructure that we need to stand up our technology system so we can help claimants who came through the pandemic and could not get their claims processed because of an old system,” she said on the floor.

Ultimately – after an extended silence while the clerk counted votes – the measure passed. It now goes to the governor, who will likely sign it.

Sensitive Places Bill Moves On

A bill to restrict the locations where concealed firearms can be carried in Hawaii proved to be somewhat more controversial in the House, but still passed easily. Out of the 51-member state House, three Democrats and the six House Republicans voted against Senate Bill 1230.

That bill is a response to a U.S. Supreme Court decision in New York State Rifle and Pistol Association v. Bruen, which overturned laws that deal with the carrying of concealed firearms in New York, Hawaii and other states. 

Lawmakers hope that they’ve figured out how to contend with a U.S. Supreme Court decision that cleared the way for concealed carry in Hawaii. (Cory Lum/Civil Beat/2022)

That ruling last year found that U.S. Constitution’s Second and 14th Amendments “protect an individual’s right to carry a handgun for self-defense outside the home.” 

The ruling barred states such as Hawaii from requiring that applicants for permits to carry a concealed firearm demonstrate any “special need” to carry a gun outside the home. 

Hawaii police departments issue permits to carry firearms, and the court decision required police here to overhaul their permitting procedures. 

SB 1230 would prohibit the carrying of firearms in “sensitive places,” including government buildings, medical facilities, bars or restaurants that serve alcohol, stadiums and concert halls, public libraries, parks and schools, among others. 

House Judiciary and Hawaiian Affairs Committee Chairman David Tarnas told his colleagues before the floor vote Tuesday the bill “protects the right of those who wish to bear arms. It also protects the public interest, and the desire of the public to feel safe in their environment.” 

But Republican Rep. Elijah Pierick countered that “this bill is unconstitutional. The Second Amendment gives Americans the right to bear arms. These rights should not be infringed.”

Critics of the measure have said the bill is too broad, and have promised to challenge the restrictions in court if the bill is signed into law. 

Voting against the bill were Democratic Reps. Cedric Gates, Darius Kila and Sam Kong; and Republican Reps. David Alcos, Diamond Garcia, Lauren Matsumoto, Pierick, Kanani Souza, and Gene Ward. 

In the Senate, Republican Sens. Brenton Awa and Kurt Fevella, and Democratic Sen. Mike Gabbard voted against the measure.

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