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Those Concerned About Education Are Missing a Golden Opportunity

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The debate rages on. Do we open schools in the face of the threat COVID-19 poses or do we keep schools closed? There are compelling arguments on both sides of the issue and ones not strictly based in politics. But those concerned with the quality of education in the United States, and especially those who believe our educational institutions have become indoctrination mills, are viewing this debate with a stunning amount of short-sightedness.

To say that the Progressive ideology is prevalent in our education system is to state the obvious. All you must do is utter a favorable statement about one of our nation’s Founders on any campus and you will be assailed as a heretic. “How can you glorify a slave owner,” you will almost instantly hear as you are pressured off the campus. Or bring up the name Christopher Columbus in any high school and you will immediately be confronted with the false narrative that he slaughtered legions of Native Americans. You will be castigated as a racist.

The truth of the matter where both of those points are concerned is this. Our Founders, including Thomas Jefferson and John Adams – two of those who crafted the Declaration of Independence, were abolitionists and laid the groundwork for the United States to be one of the first countries in the world to abolish the slave trade (as an aside, the slave trade thrives in Asia, Africa, and the Middle East still today). Columbus? All this Italian explorer did was to unwittingly expose Native Americans to the same diseases that the Mongols unwittingly brought to Europe during their campaigns of conquest.

But we don’t hear the full stories about these issues because our education system has become agendized politically to the ideological Left and in that realm the United States – and all Americans – are colonizing bastards who have sucked the wealth from every culture they have ever engaged. Never mind that the American Capitalist system created – created for the world – what we now recognize as the Middle Class; a way for people to break out of the class culture that before the American advent was impossible. Never mind that technology from the United States has revolutionized life for every person on the face of the planet. Ignore the medical, agricultural, engineering, and communication advances that the United States has brought to the world. As the Left believes it, we are horrible people who should be in a constant state of apology.

And why do so many from Generation X to present think this way? They believe because that’s what they were taught in school.

The Progressive movement, with a genesis circa the turn of the 20th Century, understood as fundamental that to erode the truth of what the United States has to hold they needed to change the narrative about the United States; from opportunity to hopelessness, freedom to oppression. To achieve that goal, they knew they had to capture both the education system and the media complex. Today, they have succeeded, and we are seeing the fruit from this poison tree.

But from the ashes there is an opportunity for a phoenix to rise and this phoenix would be the recreation of the American education system courtesy of the Coronavirus.

As the politicians and ideological activists disingenuously debate whether schools should re-open in the Fall, there is a gigantic opportunity for the private sector to destroy the union-owned, Progressive-captured, state-run education system. This opportunity won’t last long so those who love our country who have deep pockets might want to stow their megalomania for a bit and realize the two-fold opportunity presented by this moment in time.

Never before have so many parents been exposed to the idea of home schooling and/or remote learning outside of a formal school setting. School children across the country have been out of the formal school system since Spring break of last year and many in several states face the prospect of continuing this existence.

Never before have so many parents been in need of educational materials with which to engage their children. They are in need of easy-to-use albeit potent educational vehicles and curriculum that will allow them to both effectively educate their homebound children and execute their duties to either their households or employers or both.

And, never before has there been a transformative moment in time when a need and a market were so obviously presented along with an opportunity for the private sector to achieve influence and wealth even as it did a tremendous public service in the immediate while saving the Republic for the future.

The opportunity that presents is one in which a non-politicized, non-ideological, modular educational curriculum software is created. This easy-to-administer educational curriculum and software would, no doubt (and with the appropriate marketing) save our children from another quarter in which education was sacrificed to political opportunism. It would also super-charge the question of why we allow others to have control over our children’s education when we can more efficiently do so, at a fraction of the cost, and with a more desirable outcome: the institution of critical thinking skills without the indoctrination.

After the pandemic sequestration is exhausted, this curriculum could continue to be executed either in the home (bolstering the numbers of the home school demographic) or be instituted at public libraries or learning annexes, administered by librarians and/or technical aids with a clear instruction aid only with the technical execution of the lessons via the software.

By engaging one opportunity we eliminate:

  • The ideological indoctrination of our children
  • The stranglehold the school textbook industry has on the historical narrative
  • The radical influence the teachers’ unions have in politics
  • One of the more intrusive taxing bases in our tax bills

By engaging one opportunity we achieve:

  • An education system that allows a student to succeed at his/her own pace
  • The independence of our education system from the tyranny of the minority
  • The reduction of education debt over a student’s lifetime
  • The preservation of history in a fact-based, unmanipulated manner
  • A new industry where costs will be mandated by product superiority and market-based competition

Today’s “deep thinkers” and “deep pockets” of the political Right are missing an opportunity to set Progressivism back a century, but to date not one of them has had the vision or the courage to execute. One must wonder, with the immense level of wealth and influence that executing on this issue would achieve, why isn’t there a race to this market?

It was once said to me back in my non-profit days, “No one invests in ideas anymore.” The more I contemplate that reality, the more I am delivered to this fact. That’s exactly what is wrong with our country today.

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Thousands infected, no contact tracing – and Ige calls senate visit “inappropriate”?

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UPDATE: Two days of press conferences and an announcement of further restrictions. From gathering of 10 to now, five. Ok. But nothing is being done. Today, Ige’s dog and pony show was about how they are using the convention center for contract tracing. Well, what happened to all the space they needed for the unemployment people? Ok. I guess they went away and now the stars of the show are the tracers that are not there. Bruce Anderson reported 126 contact tracers and 400 trained. So if 400 are trained, why aren’t they there? Is anyone else getting this disconnect?

Questions were asked about where is LG Josh Green? What about him saying that Park isn’t fit for the position? That ended up being a major dance around the answer. We know. He would tell the truth, albeit diplomatically. But it would not match the lies coming out of the Governor’s and Mayor’s offices. This crap is literally killing people. Two more died today (Aug. 19). -JW

In the Wall Street Journal (Monday, Aug. 17), there is a compelling article explaining how Chinese officials derailed their own CDC, failing to contain the outbreak of the COVID-19 virus that has sickened the world, because they were concerned about the poor publicity it would bring to Wuhan and to China.

Party officials tried frantically to suppress information about the mystery illness, fearing it would hurt Wuhan’s carefully crafted public image and chances for national partyrecognition. They worried about an international sports event, an upcoming political conference and the millions of Chinese that would soon be traveling for New Year’s celebrations.

Their behavior led to a world-wide pandemic that has crippled the world economy, sickened millions of people and caused untold economic damages across the globe. Nothing could have been worse.

On a smaller scale, Hawaii is experiencing the same myopic behavior by our governor with the same results, albeit on a smaller scale.

Residents of the state of Hawaii living on Oahu are, once again, pawns in the political games of muckity-mucks with their own agendas.

It’s been a few weeks since we heard Lt. Gov. Josh Green call for new leadership at the Department of Health, stating that, “This job is too great” for State Epidemiologist Dr. Sarah Park.

U.S. Rep. and former presidential candidate Tulsi Gabbard called for the resignation of Park and Health Director Bruce Anderson in April. By August, she was calling on Gov. David Ige to fire the duo.

“This is your responsibility,” she told Ige. “Your Health Director is keeping hundreds of trained contact tracers ‘on the bench’ because he doesn’t think they’re needed. Meanwhile we have the highest infection rage in the nation. This is gross negligence. Anderson & Park need to go.”

When Senators made a spontaneous visit to the DOH they found five tracers with hundreds of cases they could not possibly resolve in any meaningful time frame.

Ige has defended the duo, reprimanding the senate saying their visit to DOH was “neither respectful nor appropriate.”

Instead of admitting guilt in this grizzly case, where HUNDREDS, and now THOUSANDS of residents have become infected because we have no contact tracers, the governor sought to belittle the state senate and imply that the group were wandering around randomly. Indeed, Park herself had invited them. She was their tour guide.

This failure of government is simply insane. The pair, Anderson and Park, simply lied to the public. We were told we had 100 contact tracers and hundreds more being trained. Though the 100 is not enough, clearly, it is better than five.

Finally, the truth was out. We could see exactly what is actually going on and confirm what the evidence was telling us. Of the over 500 contact tracers recommended for a population our size, we had 5.

In the video of the event, Park smugly said that she had to train people, which is what we, the public, had been told was going on all that time. She was dismissive of the senator’s questions, giving the impression she thought they were all morons.

Maybe she is a micro-manager. Maybe she has an IQ so high that everyone is an imbecile. It doesn’t matter anymore. She failed.

Anderson, by the way, is not a medical doctor. He has a Masters from Yale in public health and a Ph.D. in biomedical science from UH. This is the second time he has held this position.

They lied and now, people are paying for those lies with their lives. The entire State of Hawaii will pay for it by lost jobs, a failed economy, the renewed blow to tourism, another lockdown, schools that won’t open and the list goes on.

As we watch our hospitals filling up, medical staff becoming infected and our jails releasing criminals – we sit on the edge of a precipice that is defying gravity for the moment.

But soon, we all know, there will be a new stay-at-home order that will drive the nail into the coffins of some of our most treasured businesses and service providers. The glimmer of hope we had in May has faded into memory. Bit by bit, we are losing what we had gained.

Another hit to residents is the end of PPP, the end of the $600-up, the end of any substantial assistance from the Federal Government – and Ige’s insistence on dropping any additional Unemployment monies.

Our governor has not made any provisions for the eventual end to the moratorium on evictions either. In other states, like California, they have fashioned a payback that allows renters and mortgage holders some flexibility and time in paying back rents and mortgages, guaranteed by the state. California is going further by adding to their unemployment to make up for the Congressional failure to make a deal.

Perhaps the saddest headline is in today’s Star Advertiser – “No longer the safest place.”

That is for sure. No longer safe.

It is not just that people are not wearing masks, holding large gatherings and patronizing businesses that are open. That is surely where community spread happens. More importantly, it is that we do not have efficient contact tracing. Our testing turnaround is too long. Quarantine enforcement is poor. And most of all, we have officials in powerful positions who are lying to us who are being protected by other officials.

The Doomsday Rules in the General Excise Tax

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Now that the economy is down and tax revenues are in the tank, we are now seeing cases of our Department of Taxation using some particularly nasty provisions in the tax code.

In 2010, lawmakers enacted Act 155, which the Department named the “General Excise Tax Protection Act.”

The Act has two draconian provisions.  The first says that if you don’t file your GET annual return within a year after it’s due, you lose the benefit of all exemptions, deductions, and reduced rates.  This means, for example, that if I had wholesaling income of $1 million and didn’t file my annual return within a year after it was due, even though I paid the $5,000 in tax when it was due, I could now owe $40,000 more.

The consequences are severe, but the idea is not new.  The federal tax code says that if you are a non-resident alien or a foreign company, you’re not entitled to take deductions, credits, or other tax benefits unless you file a return.  Federal regulations specify a “doomsday date” after which the tax benefits are disallowed.  The federal law has been around for a while so there are court cases as well as regulations and rulings giving us guidelines on when the full force of these provisions can be applied.  Not so with the state provision, which has been in existence only ten years.

Indeed, one feature of the GET that isn’t found in the federal system is that periodic (monthly, quarterly, or semiannual) returns are required, with the same information called for in the annual returns, but the periodic returns don’t count for purposes of this doomsday provision.  Many states with a sales tax also require submitting detailed information with a periodic return, but no annual return is required in those states so some taxpayers are genuinely surprised to find that we have an annual return requirement with severe consequences in addition to the doomsday provision (for example, the statute of limitations never starts to run) if it is not followed.

The second provision in the GET Protection Act says that if GET is owed by a business entity and the entity doesn’t pay it, the department can go after “responsible officials“ of the company, basically meaning anybody who could’ve signed a company check, and collect the tax as a personal debt of any of those individuals.  

Again, the provision is harsh but is not new. The payroll tax has had a similar provision for decades.  So, the many precedents under payroll tax should be useful in giving us an idea of how this provision should be applied.

Of special interest is the “willfulness” requirement.  It says that a company’s GET debt can’t fall upon you as an individual unless you made a conscious decision to pay another creditor before paying the State.  For example, if you paid the tax shown on the company returns and more was assessed later, you aren’t responsible to satisfy the assessment out of your personal assets — unless you, now knowing about the back tax assessment, then pay another bill (rent, electricity, etc.) while leaving the deficiencies unpaid.  Those with check signing authority could easily be put into a very tough situation if they don’t know how this law works.

When the economy is down and cash is tight, businesses might be tempted to pay other priority items.  After all, if you don’t pay your taxes the water isn’t shut off, the lights don’t stop working, and the Internet connection doesn’t go dark.  (At least not right away.)  But, as we see here, the Department has some very scary tools to make sure that taxes keep getting paid.  The best we can do is know how the tools work and make sure they are being used responsibly and not arbitrarily.

How We’re Going to Spend CARES Act Money

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Imagine what would happen if a genie came up to you and said, “Here’s a pot of money for you.  All you need to do is spend it by the end of the year.  If you don’t, whatever you haven’t spent will disappear.”  What would you do with it?

Our State government just got that genie visit.  The genie is called Uncle Sam, and the pot of money contained $1.25 billion.  Our recently passed budget bill, SB 126, parceled it out – or tried to.

The largest chunk of the money, around $560 million, was given to county governments.  Honolulu received about $387 million, the Big Island $80 million, Maui $67 million, and Kauai $29 million.

Then, the Legislature called for $230 million to be spent on a State enhancement, or “plus-up,”to the weekly benefit to those now on unemployment.  The federal government’s extra $600 per week ran out at the end of July, and, as of press time, no deal was in place to extend the benefit.  The idea was for the State to kick in $100 per week from August 1 to December 31, but that won’t happen because Gov. Ige has line-item vetoed this appropriation.  According to the Governor’s office, he prefers to wait until the federal government reaches a deal on what to do on their end.  This reasoning, if true, would be strange because there is already a provision in the appropriation saying that the $100 per week isn’t payable if the federal government is kicking in more than $300 per week.  In the meantime, the unemployed need to survive without any plus-up at all.

The bill appropriated $100 million to assist childcare, elderly care facilities, hospitals, small businesses, nonprofits, and schools in buying personal protective equipment.  The Hawaii Emergency Management Agency (HIEMA) is supposed to be on top of this program.  The Governor chopped the $100 million to $61 million.

The bill also appropriated $100 million for a housing relief and resiliency program, administered through HHFDC.  There, the idea is to give assistance – 50% of rent payable up to $500 per month from August 1 to December 31 – to renters and homeowners impacted by COVID-19 and whose income level doesn’t exceed 100% of Area Median Income (which is about $101,600 for a family of four here).  The Governor slashed the $100 million to $50 million.

The bill directed $90 million to the airports, specifically to augment airport screening and health assurance security initiatives.  On the Department of Transportation’s wish list is a thermal screening system, a Web-based traveler verification application, traveler verification rooms (sounds like interrogation rooms), a swab and testing facility, and a service contract for testing.  The Governor reduced the appropriation to $70 million.

There are many other appropriations of lesser amounts.  Some of them were reduced.

And, of course, there is a “slush fund” category.  $40 million is appropriated to the Governor’s office, supposedly to take care of any unanticipated needs.  That appropriation wasn’t reduced.

Finally, there is a catch-all clause.  Any money appropriated but unspent as of December 28 is sent to the Unemployment Insurance trust fund, and hopefully that money will help soften the automatic increases in the unemployment taxes that otherwise are triggered at the end of the year, as we recently wrote about.  But a big question remains:  Are moneys dumped into the trust fund “necessary expenditures incurred” before the end of the year, within the meaning of section 5001 of the CARES Act?  If we can’t answer this question with a definitive “Yes,” we had better get some clarity from the federal government pronto, or risk having to pay that money back to the genie.  And the $366 million that was line-item vetoed is unappropriated money that won’t even be going to the trust fund.  Those dollars will be disappearing unless we do something about it ASAP.

We don’t get a genie visit that often, so we had better make the best of it when it does happen.

Unemployment Tax in the Nonprofit Sector

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Two weeks ago, in this space, we discussed the unemployment tax and insurance system and how employers are likely to be hit with a significant and automatic rate increase at the end of this year.

For many nonprofit employers, the system works differently.  Tax-exempt 501(c)(3) charities (like the Tax Foundation of Hawaii) may “self-insure” against unemployment claims.  That means a nonprofit sector employer doesn’t need to pay the unemployment tax that for-profit employers need to pay, but if a nonprofit sector employee gets laid off and makes an unemployment claim that the State pays, the State bills the employer and doesn’t take the money out of its unemployment insurance trust fund.  Some of the larger nonprofits have cash reserves and can pay the bill.  Others buy unemployment insurance from insurance companies selling only to the nonprofit sector and find that their premiums are quite a bit less because they are not sharing losses with high-cost seasonal businesses.

With employees in the nonprofit sector dropping like flies just as in the private sector, nonprofits have good news and bad news.  The good news is that the huge rate increase that is likely to hit at the end of the year won’t affect them.  The bad news is that they need to get out their checkbooks now to pay the unemployment claims that they are being charged with.

One provision of the CARES Act, section 2103, is supposed to help with that situation.  It says that the federal government is going to cover half of the unemployment benefit costs that self-insured employers need to pay to the State for weeks of unemployment beginning on or after March 13, 2020 and ending on or before December 31, 2020.  But, according to the U.S. Department of Labor, the employer needs to pay DLIR first, the federal government reimburses half the cost, and then DLIR then repays or credits the employer for the federal money received.  (The CARES Act says that the state workforce agency can’t use the money for any purpose other than reimbursing the employers, so it can’t keep the money.)  The trouble is that these reimbursement processes “take a while,” and by the time the State receives the federal funds and gets around to repaying the nonprofit employer, the employer either may have closed for good or may be overwhelmed with penalties and interest if they couldn’t pay the full amount of the unemployment benefits when they were billed.

When I spoke with the Employer Services Section at the DLIR, the good folks there were aware of the federal provision but hadn’t yet received guidance from their leadership on how the State was going to implement it.  (Translation:  They either haven’t figured out what to do or haven’t yet been convinced that they have to do anything.)

I can’t help but wonder if the DLIR feels like it is being forced to do something it doesn’t want.  It’s certainly more work for DLIR to keep tabs on its self-insured employers, put together claims to the federal government, and then dole out the money to the employers when the federal money appears.  DLIR doesn’t get separately paid to do that.  And it does seem that they already have their hands full fighting the backlog on individual unemployment claimants.

DLIR, please hang in there.  The public needs you and the nonprofits do too!

6 Things You Never Knew Existed in Hawaii That Even Locals Scratch Their Heads Over

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Blue Dragon

If you think you know everything there is to know about Hawaii, you might want to think again.

Blue Dragon

1. Blue dragons

These curious little creatures are known as Glaucus atlanticus and are quite beautiful. They are a sea slug that are rarely seen except during periods of on-shore winds which bring them in. They spend their entire lives drifting with the foot oriented toward the surface. They eat a variety of drifting prey including Portuguese man-o-war. They can actually absorb and store venom. If you think this guy is amazing, there’s another version that looks like Pikachu!

2. Glass floats

Glass floats are like hitting the jackpot for beach goers who find them on the shore.  They come in all sizes, as small as a lemon and as large as a beach ball.  The holy grail are the larger ones intact with rope netting, barnacles, even tiny little crabs. Most originated in Japan as early as the 1920’s because of its large deep sea fishing industry. They were used to keep fishing nets afloat. But when a float broke free, it would drift off on a long journey along Pacific surface currents, from Japan up to the Aleutians and down the West Coast. They have been washing ashore ever since.   You can buy them on eBay and in specialty stores ranging from $30-$3000!  Read more about them here.

Photo: Patrick Ching

3. Wallabies

Yes WALLABIES! The brush-tailed wallabies normally from Australia that are similar to kangaroos. Someone in the early 1900s brought a pair to Oahu and they escaped. Since then, the marsupials have been reproducing in Kalihi Valley.Because they are elusive, hiding in the bushes most of the time, people rarely see them.

Photo: Hawaii News Now

4. Hummingbird Hawk Moth

These guys are so fast, so most people don’t even know they exist.   If you are lucky you may spot one in Kaneohe or Moanaloa Valley. Hummingbird moths dart so quickly from flower to flower that you have to anticipate where they will be in order to photograph them. They behave much like bees, sucking on nectar.  These moths are also known as maile pilau hornworms after the host plant their catepillars prefer.

By Charles J Sharp – Own work, from Sharp Photography, sharpphotography.co.uk, CC BY-SA 4.0, https://commons.wikimedia.org/w/index.php?curid=76891220

5. Sea Aspargus

This is also, known as sea beans, glasswort or samphire, is especiallypopular in Europe and widely used in the US market. The green ocean vegetable has a delicious crunchy, salty flavor. Nutritionally, it is an excellent source of vitamins and loaded with Dietary Fiber, Amino Acids, Minerals, and TMG, a super antioxidant that metabolizes homocysteine, an FDA approved treatment for cardiovascular disease. You can find it at local farmers markets and grocery stores in Hawaii.

By Marco Schmidt [1] – Own work, CC BY-SA 2.5, https://commons.wikimedia.org/w/index.php?curid=1516915

Wholphin Sea Life Park Hawaii - Photographer: Daniela Stolfi

6. Wholphin –  Part whale, part dolphin!

Kekaimalu, the only Wholphin in the world, with long time pal Senior Trainer Keana Pugh. Kekaimalu was born at Sea Life Park. Her father was a 1000 pound whale and her mother an Atlantic Bottle nose dolphin. No one knows the life expectancy of a Wholphin since she is the only one in the world to survive over 20 years. In 2004 she gave birth to a calf. The pair has become part of the parks shows and educational programs and has been raised and trained since birth by Keana.

By Daniela Stolfi- Tow – Sea Life Park Hawaii

Two Tax Bills This Year

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Our Legislature has reconvened and has adjourned for the year.  If you blinked and missed it, you probably are not alone.  This year, there was a huge focus on passing only essential items.  As a result, only 86 bills passed the Legislature this year while in a typical year 250-300 bills are sent up.

Source:  Capitol.hawaii.gov reports compiled by Tax Foundation of Hawaii.

If you wanted to see a new exemption or tax credit, it didn’t happen.  If you were shuddering to think that new tax increases were on the table, they didn’t happen either.  Only two of the tax bills made it up to the Governor this year.

One bill that went up changed the renewable energy credit by disallowing it for solar farm projects of 5 MW or more that started in 2020, but providing that tax treatment would be grandfathered for certain projects pending approval as of the end of last year.

The second bill was sponsored by the Department of Taxation.  Every year, the Department prepares a bill to specify which of the many changes to the federal income tax law get reflected in the Hawaii income tax law.  The usual practice is that the federal changes in the previous calendar year, in this case 2019, are considered in the current legislative session.  Indeed, a bill to do just that was introduced at the request of the Administration and was passed out of the Senate.  Then the pandemic hit and lots of things happened, including the passage of the federal CARES Act.  Some testifiers, including the Tax Foundation of Hawaii, urged the Legislature to adopt key provisions of the CARES Act although it became law in 2020.  The Department, in testimony, proposed to adopt a few provisions and leave others on the cutting room floor.  Without much fanfare or public discussion (the Capitol was still closed), the House adopted those provisions and the Senate agreed to them.

As a result, Paycheck Protection Program (PPP) loan forgiveness will not be recognized as income, federal stimulus payments will not be recognized as income, the limits on people taking out retirement plan loans will be relaxed, and the new treatment of charitable deductions will be expanded to the same extent as in the CARES Act.  However, lawmakers did not adopt the provisions of the CARES Act that allowed businesses to monetize their prior net operating losses by allowing them to be applied against other income and by allowing the losses to be carried back to previous taxable years were not adopted.  At the national level, it was thought that those provisions would help struggling businesses to weather the COVID-19 economic shock.

We don’t know why some provisions were adopted while others weren’t.  The Department of Taxation’s testimony was only that it recommended the changes, but it had no discussion or reasoning behind its recommendations.  Public discussion and debate could have brought out the Department’s reasons, which the legislators could then weigh against the concerns of businesses. 

The results of this legislative session for tax bills were perhaps understandable, but the process left something to be desired.  Is this going to be the new normal?  We certainly hope not.

Hanabusa has a history and a lot of it is not nice

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Colleen Hanabusa - Civil Beat

She’s smart. Really smart. Her long political career carries with it a long trail of public records. It would be wrong to underestimate Colleen Hanabusa. She has not survived this long in the dog-eat-dog world of Hawaii inside politics without having a sixth sense for survival.

There is a lot to admire about this savvy legislator but she has made a lot of controversial decisions that have cost her credibility.

She has served in the State Senate as President and Majority Leader, and in the U.S. House of Representatives for the 1st District twice.

She was hand-picked by Sen. Dan Inouye to replace him after his death in 2012, but denied the appointment by then-Governor Neil Abercrombie, who appointed Brian Schatz. She challenged Schatz in the Democratic primary in the 2014 special election – and lost. She then ran to replace US Rep Mark Takai, who passed away in office, winning the election, but leaving her seat to run for governor of Hawaii. She lost to David Ige. And now, she is running for mayor.

Has she passed her political shelf life? Maybe. Or maybe she has too much baggage. Let’s take a close look.

ETHICS COMMISSION

She is a labor lawyer who represented Honolulu City Council Members Ann Kobayashi and Ikaika Anderson and former Council Member Donovan Dela Cruz in a surprise victory over an alleged ethics violation in 2015.

Kobayashi, who has been elevated since then to Vice Chair of the Council, was then Chair of the powerful Budget Committee; Anderson chaired Zoning and Planning; Dela Cruz was council chair for over three years until he was elected to the Hawaii State Senate in 2010.

The three were said to have received unreported gifts from people with business before the council. The dismissal of the ethics charges followed three days of closed hearings. The charges, if the ethics violations were upheld, would have made a series of rail votes on the council declared null and void.

And guess who was named to a seat on the HART Board by Mayor Kirk Caldwell? That’s right. Colleen Hanabusa.

(At the time, she was also representing the State Teachers’ Association in two State Ethics Commission allegations. She has been endorsed by them in this race.)

Well, anyhow, after the closed-door meetings, she filed a motion for summary judgement to ask that the ethics commission find no basis for the council members’ charges. All but one of them was dropped. That was determined to be outside the commission’s jurisdiction. Nothing happened. No public disclosure. It was over.

Though the charges were filed with over 1,000 pages of supporting documents, this savvy lawyer threw everything she could think of at them to make them go away and two of those council members are now chair (Anderson) and Vice Chair (Kobayashi). Her argument was that “prohibited gifts” to council members are not specifically articulated. “This is simply Complainant’s interpretation of the laws,” she said. She questioned the value of meals and drinks in the absence of itemized receipts. And she argued that gifts associated with campaigns were the jurisdiction of the State Campaign Spending Committee, not Ethics.

Essentially, with her arguments, she nullified any restrictions on gifts.

At the same time, the then-Ethics Commission Director and chief legal counsel Chuck Totto was under tremendous pressure from Mayor Caldwell not to do his job. Recall, Totto was also being pressured by Chief of Police Louis Kealoha and Deputy Prosecutor Katherine Kealoha, who claimed that they were being harassed by Totto. He was the object of several lawsuits she filed against him for his investigation into the discrepancies between the two Kealohas’ financial disclosure reports. Rather than correct the differences, they sued.

Caldwell did not want the Bishop Estate or the Kealohas to be investigated.

According to Civil Beat, Caldwell “had been squeezing the agency’s budget, refusing to cooperate with ethics investigations and challenging the commission’s primary authority to pursue ethics complaints involving city agencies and employees.”

“Totto and the commission continued to aggressively investigate matters important to the Caldwell administration, pursuing cases against members of the Honolulu City Council for violating ethics laws by accepting thousands of dollars of gifts from lobbyists trying to influence votes on key issues, including the city’s controversial rail project.”

Caldwell’s Chief Corporation Counsel Donna Leong received a target letter from the Feds regarding both her $250,000 payout to ex-Chief Kealoha and the firing of Totto. She is still on paid leave. City Prosecutor Keith Kaneshiro is in the same boat and both remain on paid administrative leave.

HART

Hanabusa has dismissed her time on the HART Board as being insignificant. She claims she had nothing to do with the scandals that have rocked the city coming out of HART. But she was appointed by Caldwell and elected chair in 2016. She was there when everything was going south. She says the HART Board had no power to do anything about it.

At that time, the HART Board handed out contracts before they had a complete EIR. Placement of the structures was rendered too close to utilities and they spent millions for utility relocation after the fact. Documents have gone missing, budgets have been ignored and no one has been held accountable. The FBI is currently investigating several HART associates.

While she was on the board Colbert Matsumoto was appointed to HART. Matsumoto is Chairman and President of Island Holdings and Chairman of the Board of Island Insurance Company.

Does that sound familiar? It should. Island Insurance – Keith Amemiya is the Senior Vice President of Island Holdings and Tyler Tokioka is the president of Island Insurance Foundation – Tyler is a huge supporter of Keith Amemiya for Mayor.

It would seem that Caldwell and crew are covering their bases by keeping their fingers in almost everyone’s pie.

UPW

In another incident that took place in 2012, two United Public Workers employees alleged that they were fired because they would not accede to a UPW mandate to phone bank, sign wave, contribute and canvass for Hanabusa. In other words, their jobs depended on going out there and sign waving, walking precincts and donating part of their hard-earned money to the candidate selected by their union, Colleen Hanabusa, not necessarily the candidate they supported. Do you get that? They had no first amendment rights to free speech because they were union members. They probably couldn’t have gotten the job if they did not join the union.

Three GOP commissioners found that the law did not prohibit employers from requiring participation; three Democratic FEC commissioners argued that the UPW did, in fact, coerce the employees to participate in political activities in violation of the Federal Campaign Act of 1971.

A Statement of Reasons memorandum said that the UPW was legally allowed to compel employees to support Colleen Hanabusa. Eventually, the UPW was fined $5,500 for a civil penalty, not for firing them, but for failure to report independent expenditures.

Matsumoto was also a player at Bishop Estate as the Court Master during the Broken Trust – which has eventually led to Micah Kane going from DHHL to Kamehameha Schools.

THE BISHOP ESTATE AND MARJORIE BRONSTER

So, when Hanabusa first took her seat in the State Senate in 1999, her first action was to pair with Larry Mehau to reject the appointment of Marjorie Bronster as Attorney General – the woman who took down the corrupt Bishop Estate Trustees in Broken Trust.

That vote was close – to reappoint Bronster – but she won. The opposition was said to be influenced by members of the Bishop Estate. At the time, there were questions regarding Hanabusa’s relationship to Trustee Henry Peters, whom she denied knowing well.

These allegations can be found in former Governor Ben Cayetano‘s book “Ben: A Memoir from Street Kid to Governor,” which received mixed reviews from David Shapiro. (The memoir is actually a point-in-time snapshot of the genesis of some of today’s most pressing issues in Hawaii and a historical record.)

According to Cayetano, Hanabusa was knee deep. KSBE trustee Peters and his mother, Hoaliku Drake, lived in her district and organized public demonstrations in opposition to Bronster’s reappointment. Hanabusa failed to block the reappointment of Bronster and, by the end of that year, the multi-billion dollar “Broken Trust” would see all five trustees gone.

Meanwhile, Hanabusa was close to Kapolei resort developer Jeff Stone, whose sister was married to Bishop Estate trustee Dickie Wong. Wong and Peters had been indicted by a Grand Jury convened by Bronster. Prior to the confirmation hearing, according to the attorney general’s investigation, Wong and Hanabusa met with Larry Mehau. She later told a reporter that she did not recall what was discussed.

Wong’s wife, Mari Stone Wong, and his brother-in-law Jeff Stone, pleaded not guilty to all charges relating to the estate’s sale of it’s fee interest in the 219-unit Kalele Kai condo project. Wong, a former state Senate president, Stone and Mari Stone Wong appeared in court before Circuit Court Judge Michael Town.

The deal, as reported in the Star Advertiser, “was a lease-to-fee conversion,” that “resulted in criminal theft charges against two of the most powerful members of the estate’s board – Chairman Wong and Trustee Peters,” and “contributed to the commercial bribery and conspiracy charges against a local estate partner, developer Jeffrey Stone.”

In the 1990s real estate slump, Kapalele couldn’t sell the units. They sold the entire leasehold interest to a partnership that included Stone’s Northwest Ltd and National Housing Corp for $36.5 million in 1995. The partnership, One Keahole Partners, acquired the fee interest for $21.9 million by acquiring Kapelele’s bank note.

The Bishop Estate rewrote the original terms of the Kapalele deal for One Keahole Partners by reducing the amount due on th loan, lowering the amount of collateral needed and setting the note’s interest rate at 2.9 percent. The state alleged that this gave Stone and his partner “millions of dollars in profits” at the expense of the trust’s interest.

In exchange, according to the attorney general, “Stone offered kickbacks worth more than $100,000 each to Peters and Wong when he bought their Makiki condos for inflated prices.”

TOWN, MOTTA and SOUZA

Town eventually dismissed the charges, saying that the grand jury’s decision was “tainted by testimony of Stone’s former attorney, Richard Frunzi, who had been convicted on unrelated federal money laundering charges.”

In 2009, Town was targeted by the FBI for investigation of possible corruption in 2004 in the racketeering and murder trial of Ethan Make Motta – the Pali shooting case.

To refresh, some Democrat legislators were trying to block Gov. Linda Lingle’s judicial nominee Ed Kubo to the First Circuit Court. The opposition was really coming from former State Sheriff John F. Souza III – Hanabusa’s then-fiance. Souza had business ties to two convicted felons; a former police officer and a Leeward Coast parolee named Jonnaven Monalim, cousin of crime figure Rodney Joseph Jr. convicted in the Pali golf course shooting. Monalim and Joseph were convicted of burglary and terroristic threatening in 1994. Souza sold Monalim a Makaha property. Monalim also served time for assaulting a Wai’anae teenager a few years later and was sentenced to 10 years. He was released two years later and “turned” FBI informant two years later – on his cousin, Ethan Malu Motta. Motta is currently serving a life sentence for the Pali killing of two people.

The other business associate is former police officer George Buddy” DeRamos Jr., who was convicted for his role in the 1995 beating of prisoner Richard Doolin in the police station cellblock. DeRamos ran Souza’s trucking company when Souza became Sheriff Administrator and they were trucking things to the Ko Olina construction site.

KO OLINA 2

And then there is the Ko Olina tax credit. Then State Sen. Colleen Hanabusa introduced a bill for a $75 million tax credit program for Ko Olina resort developer Jeff Stone. The deal was tied to a proposed world class aquarium, which has never materialized.

Stone meets Souza while he is working on the construction site with Souza’s Pueo Trucking firm  in 2001 at Kai Lani. At the time Stone was leasing office space at 1157 Fort Street Mall. He moves out in 2001. Souza leases commercial space at Stone’s Fort Street mall in January 2002. Hanabusa introduces the $75 million tax credit on Jan. 25, 2001. It passes in the legislature on May 7 and Cayetano vetos it on Jun. 25. July 2002 Hanabusa moves in to Fort Street Mall. On July 25, she sues Cayetano over the tax credit and she reintroduces the bill in Jan. 2003. She sues the city on behalf of the Ko Olina Community Associate on March 3.

On Mar. 14, Stone’s company, Hawaii Land Development, purchases six townhouses in Kai Lani, for $550, 564 per unit ($3.3 million). The tax credit passes May 2. Lingle signs it into law on May 29.

Stone sells a Kai Lani unit to Souza Jun. 23 for $569,000, with a mortgage loan from Stone’s Hawaii Land Development for $405,773. Stone sells another identical unit to Ralph Stone, his father, for $601,430 on Jul. 23, with a loan from Stone’s company One Keahole Partners, for $443,678. Two other units are sold to business partners on Apr. 16 for $542,600 and Apr. 18 for $540,600; the second units is resold on the same day for $630,600.

A few months later, Feb. 2, 2004, another of Stone’s units sells for $775,000, to an independent buyer.

In August, Lingle appoints Souza administrator of the State Sheriff Division.

“Souza originally said he had made a $50,000 cash down payment and financed the balance of the purchase price with the mortgage loan from Hawaii Land Development. But the difference between the purchase price and Souza’s mortgage is $163,227, not $50,000,” according to the Star Bulletin.

Colleen Hanabusa has a history of union support. She has a lot of experience. She has been in Washington, D.C. – and maybe that is where she should have remained.

With all the corruption currently swirling around HART and the Kealoha’s, it is hard to feel positive about Hanabusa bringing more baggage to Honolulu Hale.

Electric Vehicle Sweeteners Running Out?

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If you are one of the lucky people who have managed to buy an electric vehicle and get a special plate for it, you probably know that several benefits came with that special plate, including the ability to park at government parking lots (including at the airport!) and street spaces for free, and the ability to jump into carpool lanes even though there is just one person in the car.  You also might have gotten a federal tax credit for your car purchase.

Sadly, good things don’t last forever.  The free parking benefit and the carpool lane benefit expired on June 30, 2020, according to the terms of the 2012 law that spawned them.

For tax benefits, the pendulum has started swinging in the other direction as well.  The federal credit is up to $7,500 per qualified vehicle, depending on battery size.  But a phase-out clock starts ticking on the federal credit given for a car manufacturer once the manufacturer has sold 200,000 units.  Tesla was the first to hit the milestone, followed by GM, both in the second half of 2018.  As a result, electric vehicle credits are no longer available for new purchases from these manufacturers…but there are plenty of other manufacturers.  Here is a list of qualifying vehicles from the IRS.

From the State of Hawaii, electric vehicle owners now can expect a $50 surcharge on their annual vehicle registration fees, thanks to a 2019 law that went into effect on January 1, 2020.  More is yet to come; the Department of Transportation has been pursuing the idea of funding improvements to highways and bridges with a Road Usage Charge, now called HiRUC, that will charge citizens per mile driven instead of (well, we think it’s instead of, but our lawmakers may have other ideas) charging for fuel purchases through our current fuel tax.  Owners of hybrids, electric vehicles, and alternative fuel vehicles can expect to pay quite a bit more under HiRUC than they are now paying under the fuel tax system.  We have written about it in more detail here. 

Electric vehicles also benefit from laws such as HRS section 291-71 requiring places of public accommodation (shopping centers, for example) to dedicate some parking stalls for electric vehicle charging.  These laws don’t seem to be going away any time soon.  Instead, the momentum seems to be toward requiring more electric vehicle infrastructure such as chargers.  The City & County of Honolulu, for example, recently adopted Ordinance 20-10 mandating that builders of new residential or commercial buildings follow new “electric vehicle readiness compliance pathways.”  See section C406.8, Electric Vehicle Infrastructure, beginning on page 8 of the bill.  (We had written about a previous incarnation of that bill as well.)  For residential buildings, for example, if new construction or renovation adds eight or more new parking stalls, then at least 25% of the new stalls must be electric vehicle charger ready.  If new construction or renovation of commercial buildings adds 12 or more new parking stalls, at least 25% of the newly added parking stalls must be electric vehicle charger ready.  There are some exceptions and reductions in the requirements for cases such as retail establishments and affordable housing.

Government benefits for electric vehicles, then, appear to be past their peak.  Some of them are starting to erode.  Those who are in the market for a new vehicle now and are banking on government benefits should definitely do their homework to see if the benefits they are counting on still exist or are on their way out.

Future of Unemployment Insurance

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Multiple readers have asked about unemployment insurance and how it is going to fare after the pandemic.  This will give you an idea of how the system works.

State unemployment insurance (SUI) is largely funded by employers.  Most employers are charged tax that depends on two things:  the overall health of the fund into which SUI tax is collected, and the claims history of the employer.  So, an employer with a long history of chargeable claims, for example, will pay more than others.  Also, if there is lots of money built up in the fund then the tax rate goes down for everyone.

The health of the fund determines the proper tax rate schedule.  The schedules are named after a letter of the alphabet, with A the least costly schedule and H the most expensive.  The fund health is measured at the end of the year, and that measurement is used to set the rate for the following year.  Here is a chart of the SUI rate schedule for the past 20 years:

Source:  DLIR Reports compiled by Tax Foundation of Hawaii.

Although the Great Recession of 2008 and related events caused the fund to run out of money and we needed to borrow around $180 million from Uncle Sam, employers were not subjected to the dreaded Schedule H because our lawmakers passed special legislation to control the SUI rates and override the normal formulas for the years 2010 through 2012 (the orange bars in the diagram). 

What can we expect once the year ends?  Lately, the volume of unemployment claims has been so great that the authorities set up a processing center at the Hawaii Convention Center.  Our fund started off the year at nearly $600 million but has been draining rapidly.  A news release dated July 2, 2020, said that the Department of Labor and Industrial Relations already has paid out $1.85 billion in benefits.  Fortunately, federally funded benefits such as the extra $600 per week paid to those on unemployment are not charged to employers because that money does not come from our fund.  The State’s budget bill, Senate Bill 126, section 38, appropriates federal CARES act money to fund an additional weekly unemployment benefit of $100 per week once the federal $600 per week runs out.  Those benefits will not affect the SUI fund either and should not count against employers for the same reason.

Nevertheless, with an unemployment rate peaking at 23.8% in April, a tremendous strain has been placed on the fund.  There will be a spike in SUI rates next year unless our government does something to prevent it, as it did for the years 2010‑12.  Is our government simply going to wait around for the automatic increases to take effect from the beginning of 2021?  Some businesses might not survive another hit at that time.  Perhaps some thought should be given sooner rather than later to the impact of elevated SUI rates.