Governor Announces Laundry List of 28 Bills up For Veto

Governor David Ige announced his Intent to Veto list Monday, June 21. It was not lacking for line items.

A total of 28 out of 268 bills passed during the 2021 Hawai‘i legislative session made the list — a total of more than 10% of those measures deemed worthy of becoming law by the State Legislature. It is perhaps the longest such list since Ige’s administration began in 2014.

“I don’t remember all of the veto lists during my administration,” the governor said when asked about the number of bills he may ultimately veto this year. “Twenty-eight bills is quite a lot. I don’t know if it’s the most that I’ve looked at. I do think that the situation the Legislature looked at (during session) and the current situation (are) significantly different.”

“The state’s economic position has significantly brightened since the beginning of the legislative session, and we no longer need to take some of the extraordinary revenue actions proposed,” he continued.

Based on the measures included in the Intent to Veto list and highlighted at a press conference Monday, the governor’s top priorities include taking aim at legislation he says violates federal spending restrictions accompanying the use COVID-19 pandemic relief funds, along with bills his administration does not feel are necessary due to improved economic projections developed after this year’s legislative session concluded.

The governor asserted two specific reasons for the improved economic position in which the state finds itself:

• First, the Coronavirus Response and Relief Supplemental Appropriations Act of 2020 and American Rescue Plan Act of 2021 (ARPA) provide substantial federal funding to address a range of pandemic-related state costs. They include nearly $600 million for the Department of Education and $1.64 billion of general-purpose funding to mitigate state revenue losses and increased COVID-related expenses.
• Second, the Council on Revenues has met three times since the FB 2021-23 Executive Biennium Budget and Financial Plan were presented to the Legislature in December 2020. It increased its general fund revenue projections for fiscal years 2021 through 2027 by a total of $6.1 billion over this seven-year period.

“New guidance from the federal government clearly states that rescue funds cannot be used for debt service, and this created a gap in the budget that must be corrected,” Ige said.

Another measure the governor intends to veto, HB 613, would administer monetary bonuses to teachers. The governor said rules and guidance from the US Dept. of Education about how those funds are allowed to be spent were released just before the conclusion of the legislative session, adding that because of that the measure is not in compliance with the guidelines issued.

“We actually concluded negotiations with the teacher’s union, and we will not be providing a teacher’s bonus at this time,” Ige said when asked if he planned to try and replace those bonuses or administer them in another manner.

Just because a bill is on the Intent to Veto list does not mean it will be vetoed. The governor has the option to allow a measure to become law without his signature. He can also propose an amended version of the bill to the Legislature for approval by a simple majority vote.

“House members will meet this week to discuss the governor’s intended veto list,” said House Speaker Scott Saiki. “The governor has not made his rationale for vetoes clear in his written notice. We hope that he will provide further rationale in the next few days. At that time, we will decide whether to override any vetoes.”

According to the Hawai‘i State Constitution, the Legislature may convene before noon on Tuesday, July 6, 2021, for the sole purpose of acting upon any such bill returned by the governor.

Below is a list of some of the measures on the governor’s Intent to Veto list with accompanying rationales explaining why:

HB54 HD1 SD1 CD1 – Relating to the State Budget

This bill appropriates general funds and federal stimulus funds to the Department of Budget and Finance to cover fixed costs and replenish the state’s rainy-day fund.

RATIONALE: The federal stimulus funds appropriated in this bill for debt service are not an allowable use of ARPA Coronavirus State Fiscal Recovery Fund (CSFRF) funds.

Ige said that he supports “…the Legislature’s intent to replenish the emergency fund to fix essential debt service appropriations,” but in a different manner.

HB200 HD1, SD1, CD1 – Relating to the State Budget

This bill makes appropriations and fund authorizations for the Executive Branch in FB 2021-23.

RATIONALE: The ARPA restricts states from using Coronavirus State Fiscal Recovery Fund (CSFRF) monies for:

• General obligation bond debt service. HB200 appropriates $160 million in FY22 and $153.7 million in FY23 of CSFRF for this purpose.
• Programs that have federal fund matching requirements. HB200 appropriates $134,000 in FY22 and $1.1 million in FY23 of CSFRF for this purpose.

Only these items will be line-item vetoed. All other legislative appropriations in HB200 will remain, according to a release from the administration.

HB613 HD2 SD2 CD2 – Relating to Education

This bill seeks to appropriate federal funds from the Coronavirus Response and Relief Supplemental Appropriation and the ARPA for the purposes of conducting various education related services. The bill also requires the Dept. of Education to seek legislative approval to make any adjustments to the appropriations made in each category specified in the bill.

RATIONALE: According to guidance issued by the U.S. Dept. of Education, state legislatures do not have the ability to limit a local education agency’s use of funds appropriated through the CARES Act or ARPA. For federal purposes, the Hawaiʻi Department of Education (HIDOE) is considered both a state education agency, as well as a local education agency. The proscriptive limits on spending for each service category outlined in the bill, effectively limit HIDOE’s ability to allocate funds under current federal guidance.  

Additionally, the federal government requires a local education agency using ARPA funds to develop a spending plan that incorporates “meaningful consultation” with community stakeholders, including teachers, principals students, school staff, unions, civil rights organizations, English learners, and various other groups. The spending plan outlined in HB 613 was developed during conference committee and it is unclear whether any meaningful community consultation occurred. This lack of a transparent and open consultation process further puts the state and Department of Education at risk of being in violation of federal guidance, the governor claimed.

“The appropriations made in this bill do not comply with federal guidance for spending and put the state at risk of being in violation of federal rules, which could require the return of the funds,” Ige said.

Other bills on the governor’s Intent to Veto List were deemed objectionable because of concerns about legality, practicality of implementation and/or lack of transparency, according to the governor’s release.

HB862 HD2 SD2 CD1 – Relating to State Government

This measure makes significant funding and functional changes to the Transient Accommodations Tax (TAT) and the Hawaiʻi Tourism Authority (HTA).

RATIONALE:

• Using ARPA appropriations makes funding less predictable and adds potential inefficiencies.
• An added 3% county TAT represents a significant increase that could have a major impact on Hawaiʻi’s nascent economic recovery.
• Coupled with HB200, this bill would limit operational funding for the Hawaiʻi Convention Center (HCC) to no more than $11 million, which is only 20% of the $54.1 million requested in the Administration’s Executive Biennium Budget based on projections from interest received. Such extremely low funding would severely restrict the HCC from attracting additional events and fulfilling its mission.

“I am very concerned that the funding and functional changes in this bill will severely damage HTA’s shift to destination management,” Ige said. “We need to find ways to mitigate the impact of visitors on our islands, and this bill would make it impossible for the HTA to strike a more sustainable balance in our communities.”

Hawai´i County Mayor Mitch Roth released a statement Monday supporting Ige’s stance on HB 862.

““We are very pleased with the Governor’s intent to veto HB 862, which would create an additional 3 percent Transient Accommodation Tax (TAT) on our hotel industry and potentially price our locals out of staycations,” the mayor said. “TAT was originally established to provide dedicated funding to allow visitor spending to mitigate visitor impacts on our community, but has instead, for the last few years, been a failsafe funding source for statewide issues.”

“The roughly $19 million TAT that we, as a county, collect every year helps us maintain county infrastructure, beach parks, community centers, gymnasiums, etc. As we begin to emerge from the COVID-19 pandemic, we cannot afford to put further strain on our hospitality industry, one of the largest employers in the state, by allowing them to continually foot the bill,” Roth continued. “We need to remember that visitors are not the only ones who use our hotels and facilities, and therefore it would not be only the visitors to suffer from the increased tax. We must do a better job of thinking outside the box to address our many budgetary issues. Otherwise, we will just keep kicking the can down the road.”

Ige said he believes that HB 862 is the only measure to pass the Legislature with funding for HTA, which is a gap need his administration will address in the coming weeks.

Such issues could demand the convening of a special session of the State Legislature. However, when the Legislature convenes to consider attempts to override vetoes, Ige could submit amended bills for passage without calling a special session.

The governor has until July 6 to make his final decisions. Any measures passed by the Hawai‘i State Legislature this session that are not on this list will become law with or without Gov. Ige’s signature.

The public is urged to make comments on legislation at: https://governor.hawaii.gov/contact-us/comments-on-legislation/.