House lawmakers unanimously approved a bill to ask voters whether the state should be empowered to impose a tax surcharge on investment properties to help fund public education, and also voted Tuesday to impose a new tax on e-cigarettes.
Meanwhile, another bill to impose state income taxes on shareholders of real estate investment trusts, which own some of the state’s most valuable and high-profile commercial properties, appears to be dead for the year after it stalled at the Senate Ways and Means Committee.
Among failed bills also is a measure that was designed to prod the military into accelerating its efforts to safeguard Oahu’s groundwater from future leaks from the Navy’s huge fuel tanks at Red Hill, and another proposal to increase the container deposits on cans and bottles to 10 cents from 5 cents.
Thursday is the “second crossover” deadline that bills must beat to be considered for further action by the Legislature, and the House and Senate advanced hundreds of bills Tuesday to position them for the final weeks of this year’s session.
Most of the bills approved in votes this week will undergo further changes in conference committee meetings later this month. Lawmakers will engage in closed-door conference negotiations to iron out differences between House and Senate drafts of bills — including the $14 billion state budget — and then announce their decisions after those meetings are finished.
The proposed constitutional amendment would ask voters this fall whether the Legislature should be authorized to levy a surcharge on property taxes on investment properties to support education. Senate Bill 2922 sparked a lengthy debate Tuesday in the state House, but in the end all 50 House members voted to put the issue on the ballot.
Rep. Chris Todd, a third-generation graduate of Hilo High School who coaches football at the school, described a campus football field that slopes toward the ocean and has exposed rocks. Injuries are common because of the field’s poor condition. “That’s just the football field, and that might be one of the better parts of our campus,” Todd said.
The bathrooms in the old gym don’t work and are blocked off, and the weight room has dozens of holes in the ceiling, said Todd (D, Hilo-Waiakea-Keaukaha). “I think that there are stories like this in most public schools in Hawaii.”
“The point of this is that we’re at a point of desperation, and desperate times call for desperate measures,” he said. In addition to raising more money for education, Todd suggested that the proposed surcharge on property taxes for investment properties would “dramatically disincentivize” foreign invest- ment in Hawaii, Todd said.
Other lawmakers warned that a property tax surcharge imposed by the state would trigger rent increases for low-income families. State Rep. Bob McDermott cited the example of a three-story walk-up apartment building in Kalihi that qualifies as an “investment property.”
“These people are at the low end of the income scale. It is a struggle for them to pay rent every month,” said McDermott (R, Ewa Beach-Iroquois Point). “Now we’re going to tack on a surcharge. Now, does anybody think this owner is actually going to eat this surcharge as a gesture of goodwill? Of course not. He will pass it on to the renters.”
McDermott also worried that in the end, revenue from the new property tax surcharge might allow the state to scale back on the amount of funding it now commits to public education from the public treasury.
The measure has broad support in the Senate, where a more detailed version passed on a 24-1 vote before crossing over to the House.
Hawaii State Teachers Association President Corey Rosenlee said he hopes the Senate will agree to the House version to quickly resolve the debate and get the proposed amendment on the ballot this fall.
“Bills are always about compromise, and we feel that this one gives a lot of opportunity,” he said. “We’re not going after people’s homes. We’re going after a lot of these speculators.”
Polling by HSTA shows 74 percent of Hawaii residents support more funding for public education, Rosenlee said.
This is the third straight year HSTA has pressed lawmakers to boost spending on public education with a dedicated funding stream, and the union will return again to try to be sure any money raised through a surcharge actually increases spending on public education, he said.
Also winning House approval Tuesday was Senate Bill 2654, which would increase the state cigarette tax by an undefined amount and apply state tobacco taxes to e-liquid used in e-cigarettes.
The House and Senate both also advanced bills to provide for paid family leave. The House version in SB 2990 would create a Paid Family Leave Implementation Board to assist the Department of Human Services in establishing paid family leave for all workers. It requires DHS to adopt interim rules by 2020.
The Senate version of the bill in HB 2598 would require the Department of Labor and Industrial Relations to establish a paid family leave program by Jan. 1, 2021, that includes an expanded temporary disability insurance program, applies to employers with one or more employees and protects the jobs of employees who use the program.
Sen. Russell Ruderman (D, Puna), founder of Island Naturals markets, said he supports the intent but has reservations about the potential impact on business owners.
“As an employer of more than 200 people, I am concerned about the uncertainty of what it will look like,” he said.
Senate Labor Chairwoman Jill Tokuda, who helped draft the original bill, said paid family leave would not only benefit parents taking maternity or paternity leave, but also residents who need to care for aging or ill family members.
“We know all too well the statistics, and they’re very daunting. By 2020, 40 percent of our workforce will be taking care of an aging family member. In fact, right now in our community, over 240,000 individuals have that responsibility,” Tokuda (D, Kailua-Kaneohe) said. “Paid family leave, the bottom line: It just makes sense.”
The Senate also moved House Bill 2605 to allow home-sharing platforms like Airbnb to collect state taxes generated by short-term rentals.
The bill would require home-sharing platforms to file “periodic” returns that include the names and addresses of rental operators; accommodation addresses; and the number of nights rented and rates charged for all taxes being remitted.
A wide-ranging cannabis bill was also approved by the Senate that would prohibit employers from suspending, firing or discriminating against employees with cannabis patient cards who test positive for the drug.
House Bill 2729 would also authorize and regulate the manufacturing of edible cannabis products for medical purposes and allow out-of-state cannabis patients to buy their medicine at local dispensaries.
PASS / FAIL
PASSING
SB 2922 — Would ask the voters whether the state Constitution should be amended to authorize the state Legislature to levy a property tax surcharge on investment properties to help fund public education.
SB 2654 — Would apply the state tobacco tax to e-liquid used in electronic smoking devices and increase the existing state tobacco tax by an undefined amount.
HB 2605 — Would allow transient vacation rental platforms such as Airbnb to collect taxes on behalf of the state.
HB 2729 — Would prohibit employers from suspending, discharging or discriminating against an employee who tests positive for cannabis if the employee is a registered medical marijuana patient.
FAILING
SB 3099 — Would increase the deposit for bottles and cans to 10 cents from 5 cents per container.
SB 2930 — Would require state Department of Health to adopt rules for preventing leaks in underground storage tanks to include the military-operated tanks at Red Hill.
HB 2702 — Would impose state income taxes on shareholders of real estate investment trusts (REITs), including those who live out of state. REITs own some of Hawaii’s most prestigious and lucrative commercial properties.
HB 2541 — Would establish a statewide system for voting by mail by 2020.
