The teachers union is again pushing for legislation to create a dedicated funding stream for public schools by taxing investment homes and visitor accommodations to pay for things like retaining teachers and expanding public preschool and after-school programs.
A similar attempt last year by the 13,500-member Hawaii State Teachers Association failed late in the session as lawmakers tussled over tax rates and exemptions that would have watered down the proposal to generate an estimated $500 million a year for public education.
This time the union is hoping to simplify the debate with broader language.
Last session, HSTA floated a pair of bills. One sought a proposed constitutional amendment to ask voters whether the state should be allowed to tap into property taxes to fund education. An amendment is needed because the state Constitution gives counties the exclusive power to levy property taxes.
The other measure sought specific tax surcharges on residential investment properties and a daily surcharge on visitor accommodations — with various thresholds, rates and exemptions — and detailed how the generated funds could be spent.
The union is pursuing only a constitutional amendment this year.
“Last year we had two bills — one was a ballot question and one was the enabling language. Everyone was so focused on the enabling language that we didn’t even get to the ballot question,” HSTA President Corey Rosenlee said in an interview.
“This year … we’re only going to do the ballot question,” he said. “This is the big question, whether legislators will let the people decide whether they want to give the children of Hawaii a better future and a quality public education.”
Nearly identical bills have been introduced in both chambers, calling for a constitutional amendment to ask voters if the Legislature should fund a “quality public education system” by establishing a surcharge on residential investment properties and visitor accommodations.
Senate Bill 2922 and House Bill 2608 would impose surcharges on investment homes, excluding a homeowner’s primary residence, valued at $1 million or more and on visitor accommodations to fund public education.
The current versions of the bills do not propose any tax rates. Under the measures that failed last year, five property tax rates based on a home’s value were considered along with a daily surcharge of $3 to $5 on visitor accommodations.
The proposals faced some pushback last session from county officials who argued that property taxes and the transient accommodations tax, or hotel tax, are their primary revenue sources. There also were concerns about overburdening local families who rent out second homes that have high assessed values on paper but are not high-end properties.
Hawaii, which has the only statewide school district in the country, also is the only state where property taxes do not go toward financing education. Isle schools are state-funded primarily from the general fund, which is filled by revenue from the general excise tax, personal income tax and others.
The Department of Education’s operating budget for the current fiscal year is $1.98 billion, with $1.61 billion from the general fund.
“We are unique in the entire country in that there is a revenue source that we do not use to fund public education,” Rosenlee said. “Hawaii is the only state that does not use property taxes to fund its schools and Hawaii also has the lowest property tax rates in the nation. One-third of all homes in Hawaii are owned by nonresidents. And so not only are we trying to fund public education, we’re trying to disincentivize the rampant speculation that is going on with Hawaii properties.”
Under the new bills, the funds would go toward broad categories including “recruitment and retention of teachers, public preschools, smaller class sizes, special education programming, career and technical education, art education, music education, Hawaiian studies, Hawaiian language instruction and after-school programs.”
Last session the bills stalled in conference committee, where negotiators from both chambers aim to work out differences. The measures had the backing of Senate negotiators, led by Education Committee Chairwoman Michelle Kidani, but House Education Chairman Justin Woodson said at the time that the House believed the bill wasn’t “the proper solution.”
“If the desire and the support is still with the Senate, as I believe it is, then we have to look to the House for the support to pass it out,” Kidani (D, Mililani-Waikele-Kunia) said Friday.
Woodson, who is the lead sponsor of the House version of the bill, did not respond to a request for comment.
Kidani said the state has to find other revenue sources to supplement education funding because the main tax generators — general excise and personal income taxes — are not enough to fund the state’s competing interests.
“We’re having to adjust the slices of the pie and we just can’t continue on what we have if we want to raise the bar for education for our students,” said Kidani, who is also vice president of the Senate. “This is just another way to figure out how we give our teachers and our students the funding they deserve to make Hawaii a world-class education system.”
At a legislative briefing at the Capitol on Friday, education officials were asked exactly how much more money the DOE thinks it needs.
Schools Superintendent Christina Kishimoto said she didn’t have a dollar figure offhand, but said a priority area would be for recruitment and retention of teachers.
“I need the best teachers in my classrooms,” she said, adding that teachers should be paid “respectable, professional” wages. “If you’re going to ask me what do we need, I would be calculating what I need in terms of teacher salaries. I think that we are not competitive enough and it shows.”
On the facilities side, the DOE said there is a $300 million repair and maintenance backlog on top of the $150 million required annually for new repair and maintenance.