Category Archives: Miscellaneous

SB 2801, CD-1

SUBJECT:  MISCELLANEOUS, Diversion of Penalties to Create a DLIR Special Fund

BILL NUMBER:  SB 2801, CD-1

INTRODUCED BY:  Conference Committee

EXECUTIVE SUMMARY:  The bill as introduced mandates that the collections of civil fines and penalties be deposited into a new enforcement special fund.  This would reduce transparency and accountability by bypassing the normal appropriations process.

SYNOPSIS:  Adds a new section to HRS chapter 371 to establish the labor law enforcement special fund.  States that the purpose of the fund is to provide for sufficient operating costs to collect penalties assessed by the department, and that moneys in the fund may be used for:  (1) Personnel and operating expenses; (2) Staff development, training, fees, and expenses; and (3) Litigation expenses, including but not limited to transcript costs, and interpretation and translation services.  Provides that the unencumbered balance of the fund exceeding $500,000 at the end of every fiscal year shall go to the general fund.

Amends sections 388-10 and 396-10, HRS, to redirect the civil fines and penalties imposed under those sections to the new special fund.

EFFECTIVE DATE:  July 1, 2018.

STAFF COMMENTS:  This bill is part of the Administration package and is sponsored by the Department of Labor and Industrial Relations.  It is designated LBR-01 (18).

In 2002, the Legislature set requirements for establishing and continuing special and revolving funds.  Sections 37-52.3 and 37-52.4, HRS, now state that the criteria used to review special and revolving funds are the extent to which each fund:

  • Serves a need, as demonstrated by the purpose of the program to be supported by the fund; the scope of the program, including financial information on fees to be charged, sources of projected revenue, and costs; and an explanation of why the program cannot be implemented successfully under the general fund appropriation process;

 

  • Reflects a clear nexus between the benefits sought and charges made upon the program users or beneficiaries, or a clear link between the program and the sources of revenue—as opposed to serving primarily as a means to provide the program or users with an automatic means of support, removed from the normal budget and appropriation process;

 

  • Provides an appropriate means of financing for the program or activity, that is used only when essential to the successful operation of the program or activity; and

 

  • Demonstrates the capacity to be financially self-sustaining.

We are concerned that the diversion of civil fines and penalties from the general fund to the new special fund to support additional positions subverts the appropriation process.  DLIR explained, in the justification sheet submitted with SB 2801, that it now has a backlog of cases and more than $2.7 million in accounts receivable; however, it did collect $5.1 million in Occupational Safety and Health penalties over a two-year period.  Thus, DLIR reasons that if it can just scoop the penalties, its enforcement function will be self-sustaining.

News flash to DLIR, as well as the Department of the Attorney General:  Enforcing the labor laws is your job.  It always has been your job.  The backlog is a good argument for the Legislature to appropriate more money to support DLIR’s enforcement responsibilities.  It is not a good argument for using a special funding mechanism as opposed to the normal general fund appropriations process.

The bill relies upon earmarking civil fine moneys for its success.  As with any earmarking of revenues, the legislature will be preapproving each of the programs fed by the fund into which the monies are diverted, expenses from the funds largely avoid legislative scrutiny, and the effectiveness of the programs funded becomes harder to ascertain. It is also difficult to determine whether the fund (or the departments involved) has too little or too much revenue.

Next, we expect our departments and agencies to enforce the laws fairly and impartially.  How impartial can a DLIR enforcement employee be if:  (1) his (or her) job is funded by the special fund, (2) the fund is fed by fines and penalties, and therefore (3) if the fines and penalties don’t come in, the employee’s job may be in jeopardy?

The fact that this type of bill is being introduced, furthermore, raises questions about how DLIR has been managed.  Its enforcement cases have been allowed to back up, so has it really been giving sufficient priority and resources to enforcing the laws over which it now has responsibility?

Digested 5/17/2018

HB 1508, CD-1

SUBJECT:  MISCELLANEOUS, Establish GEMS Sub-Fund to Loan to State Agencies

BILL NUMBER:  HB 1508, CD-1

INTRODUCED BY: Conference Committee

EXECUTIVE SUMMARY:  Creates a $50 million revolving line of credit sub-fund under the umbrella of the Green Energy Market Securitization (GEMS) loan fund for any state agency or department to finance energy efficiency measures.  If the GEMS program is to be allowed to live, it must be able to make loans at commercially reasonable rates at commercially reasonable terms.  If loans are to be repaid out of reduced utility costs, what happens if the utility rates go up and the reduction in utility costs fails to materialize?

Continue reading HB 1508, CD-1

SB 2910, HD-1

SUBJECT:  MISCELLANEOUS, Establish GEMS Sub-Fund to Loan to State Agencies

BILL NUMBER:  SB 2910, HD-1

INTRODUCED BY: House Committee on Energy & Environmental Protection

EXECUTIVE SUMMARY:  Creates a $50,000,000 revolving line of credit sub-fund under the umbrella of the Green Energy Market Securitization (GEMS) loan fund for any state agency or department to finance energy efficiency measures.  If the GEMS program is to be allowed to live, it must be able to make loans at commercially reasonable rates at commercially reasonable terms.  If loans are to be repaid out of reduced utility costs, what happens if the utility rates go up and the reduction in utility costs fails to materialize?

Continue reading SB 2910, HD-1

HB 2587, HD-1, SD-1

SUBJECT:  MISCELLANEOUS, Extends Period for Counties to Opt-In on GET Surcharge

BILL NUMBER:  HB 2587, HD-1, SD-1

INTRODUCED BY:  Senate Committees on Transportation & Energy

EXECUTIVE SUMMARY:  Extends the period by three months that a county may adopt a surcharge on state tax, under certain conditions, from March 31, 2018, to June 30, 2018.  Allows Neighbor Island counties additional flexibility in using surcharge money and requires that at most 2% of the money be used on roads.  Both the additional flexibility and the restriction may be constitutionally problematic.

Continue reading HB 2587, HD-1, SD-1

HB 2605, HD-2, SD-1

SUBJECT:  GENERAL EXCISE, TRANSIENT ACCOMMODATIONS, MISCELLANEOUS, Transient Accommodations Brokers as Tax Collection Agents; Amnesty

BILL NUMBER:  HB 2605, HD-2, SD-1

INTRODUCED BY:  Senate Committees on Economic Development, Tourism, and Technology and Public Safety, Intergovernmental, and Military Affairs

EXECUTIVE SUMMARY:  Allows a transient accommodations broker to serve as a collection agent for general excise and transient accommodations taxes.  This type of arrangement would probably enhance collection of taxes because of the difficulty of policing individual owners.  However, the number of caveats, conditions, and restrictions that are placed on the broker signing up for this program is so large that it is unlikely that any broker in its right mind would sign up.  If no broker is motivated to sign up, this legislation will accomplish nothing.

Continue reading HB 2605, HD-2, SD-1

SB 2801, SD-2, HD-1

SUBJECT:  MISCELLANEOUS, Diversion of Penalties to Create a DLIR Special Fund

BILL NUMBER:  SB 2801, SD-2, HD-1

INTRODUCED BY:  House Committee on Labor & Public Employment

EXECUTIVE SUMMARY:  The bill as introduced mandates that the collections of civil fines and penalties be deposited into a new enforcement special fund.  This would reduce transparency and accountability by bypassing the normal appropriations process.

Continue reading SB 2801, SD-2, HD-1

HB 2605, Proposed SD-1

SUBJECT:  GENERAL EXCISE, TRANSIENT ACCOMMODATIONS, MISCELLANEOUS, Transient Accommodations Brokers as Tax Collection Agents; Amnesty

BILL NUMBER:  HB 2605, Proposed SD-1

INTRODUCED BY:  Senate Committees on Economic Development, Tourism, and Technology and Public Safety, Intergovernmental, and Military Affairs

EXECUTIVE SUMMARY:  Part I enacts an amnesty program.  Amnesty programs have been tried in various states with mixed results, and has been tried in Hawaii once.  Amnesty programs in general can erode taxpayer confidence in the system and should be used with caution.  Part II allows a transient accommodations broker to serve as a collection agent for general excise and transient accommodations taxes.  This type of arrangement would probably enhance collection of taxes because of the difficulty of policing individual owners.

Continue reading HB 2605, Proposed SD-1

SB 2257, SD-1

SUBJECT:  MISCELLANEOUS, Disclosure of Department of Taxation Revenue Estimates

BILL NUMBER:  SB 2257, SD-1

INTRODUCED BY:  Senate Committee on Ways & Means

EXECUTIVE SUMMARY:  Requires every revenue estimate provided to the legislature or to an executive or administrative office regarding proposed state legislation to have a description of the methodology and assumptions, and requires that it be available to the public.  It’s a welcome step toward government transparency, and some tweaks may be needed to make sure it works as intended.

Continue reading SB 2257, SD-1

HB 2605, HD-2

SUBJECT:  MISCELLANEOUS, County Vacation Rental Enforcement

BILL NUMBER:  HB 2605, HD-2

INTRODUCED BY:  House Committee on Finance

EXECUTIVE SUMMARY:  Provides that a county shall be eligible to receive $_____ from general revenues for the purpose of enforcing all applicable laws and ordinances relating to transient accommodations and short-term vacation rentals, provided that no funds shall be released to a county until it has satisfactorily complied with specified conditions.

Continue reading HB 2605, HD-2