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HomeMy WebLinkAboutMIN FC 2018/02/06 2016-2018Committee on Finance 27th Session Hawaii County Building 25 Aupuni Street Hilo, Hawaii February 6, 2018 CALL TO The regular meeting of the Committee on Finance was called to order at ORDER: 10:04 a.m. in the Council Chambers, Hilo, by Ms. Maile Medeiros David, Chair. ROLL CALL: Present: Ms. Maile Medeiros David, Chair Ms. Karen Eoff, Vice Chair Mr. Aaron S. Y. Chung, Member Mr. Dru Mamo Kanuha, Member Ms. Susan L. K. Lee Loy, Member Ms. Eileen O'Hara, Member (came in later) Ms. Valerie T. Poindexter, Member Mr. Herbert M. "Tim" Richards, III, Member Ms. Jennifer Ruggles, Member STATEMENTS The Chair directed the Committee to proceed to the next order of business, FROM THE Statements from the Public on Agenda Items. PUBLIC ON AGENDA ITEMS: The following individuals registered to speak and came forward when called by the Chair: Sally Ancheta: (representing Hawaii Public Health Institute) Abolghassem Abraham Sadegh Michael Wilson: Tina Clothier: Jon Olson: Bill 102 (Comm. 722), in support. Bill 98 (Comm. 712), in support. Bill 102 (Comm. 722), in opposition. Bill 102 (Comm. 722), in support. Res. 488-18 (Comm. 728), comment. Bill 102 (Comm. 722), in support. James Weatherford: Bill 102 (Comm. 722), comment. FC -27 Mary Begier: Patti Pinto: Carol R. Ignacio: (representing Blue Zones Project) Ricky R. Damerville: February 6, 2018 Bill 102 (Comm. 722), comment. Bill 102 (Comm. 722), in support. Bill 102 (Comm. 722), in support. Bill 102 (Comm. 722), in support. CHR. DAVID: Thank you very much for your testimony. I believe that wraps it up for public testimony, and at this point, I will close Statements from the Public. Council Members, before we go on, I'd like to poll you folks and see if we can just take the communications up to Communication 7.2, and possibly Bill 101, because the rest of the items, Bill 102 are very lengthy discussion items and we can have the departments that are waiting for these small items the ability to leave once we finish it up. So, I'm just asking. MS. LEE LOY: Could you repeat that, Chair? CHR. DAVID: The communications five through 12I'm sorry, all the communications, 7.16, 17, 18, 19,15.23, 24, 69.5, and 69.4, 72.2, and the capital budget, Bill 101, I think if we can get through all of these and then spend the rest of the day with the presentation from Finance, on the tax increase, I'm just wanting to know what you folks feel. MR. RICHARDS: Chair? CHR. DAVID: Go ahead, Mr. Richards. MR. RICHARDS: I'm good with that except Communication 11 may take a little bit of time, so you may want to put that at the bottom. CHR. DAVID: You mean, okay, 69.5? MR. RICHARDS: 69.5. CHR. DAVID: Okay, we can put that one at the—with the rest. MS. O'HARA: There may be discussion, Chair, on Communication 72.2 as well. CHR. DAVID: Okay, we'll leave that for last. We'll just take the rest of the communications and Bill 101, if that's okay with everyone. Okay, great. Mr. Clerk, Communication 7.16, please. Page 2 FC -27 February 6, 2018 COMMUNI- The Chair directed the Committee to proceed to the next order of business, CATIONS: Communications. Comm. 7.16: MONTHLY BUDGET STATUS REPORT FOR THE MONTH ENDED SEPTEMBER 30, 2017, FROM THE DEPARTMENT OF FINANCE From Finance Director Deanna Sako, dated January 16, 2018, transmitting the above report pursuant to Hawaii County Charter Section 6-6.3(h). Vote on Comm. 7.16: Ms. O'Hara moved to close file on Comm. 7.16. Seconded Filed by Ms. Poindexter and carried by the following voice vote: Ayes: Committee Members Chung, Eoff, Kanuha, Lee Loy, O'Hara, Poindexter, Richards, and Chair David — 8. Noes: None. Absent: Committee Member Ruggles —1. Excused: None. CHR. DAVID: Mr. Clerk, please, Communication 7.17. Comm. 7.17: MONTHLY BUDGET STATUS REPORT FOR THE MONTH ENDED OCTOBER 31, 2017, FROM THE DEPARTMENT OF FINANCE From Finance Director Deanna Sako, dated January 16, 2018, transmitting the above report pursuant to Hawaii County Charter Section 6-6.3(h). Vote on Comm. 7.17 Filed Ms. O'Hara moved to close file on Comm. 7.17. Seconded by Ms. Poindexter and carried by the following voice vote: Ayes: Committee Members Chung, Eoff, Kanuha, Lee Loy, O'Hara, Poindexter, Richards, and Chair David — 8. Noes: None. Absent: Committee Member Ruggles —1. Excused: None. CHR. DAVID: Mr. Clerk, Communication 7.18. Comm. 7.18: MONTHLY BUDGET STATUS REPORT FOR THE MONTH ENDED NOVEMBER 30, 2017, FROM THE DEPARTMENT OF FINANCE From Finance Director Deanna Sako, dated January 16, 2018, transmitting the above report pursuant to Hawaii County Charter Section 6-6.3(h). Page 3 FC -27 February 6, 2018 Vote on Comm. 7.18: Ms. Eoff moved to close file on Comm. 7.18. Seconded Filed by Ms. Poindexter and carried by the following voice vote: Ayes: Committee Members Chung, Eoff, Kanuha, Lee Loy, O'Hara, Poindexter, Richards, and Chair David — 8. Noes: None. Absent: Committee Member Ruggles —1. Excused: None. CHR. DAVID: Mr. Clerk, Communication 7.19. Comm. 7.19: MONTHLY BUDGET STATUS REPORT FOR THE MONTH ENDED DECEMBER 31, 2017, FROM THE DEPARTMENT OF FINANCE From Finance Director Deanna Sako, dated January 18, 2018, transmitting the above report pursuant to Hawaii County Charter Section 6-6.3(h). Vote on Comm. 7.19 Filed Comm. 15.23 Vote on Comm. 15.23 Filed Ms. O'Hara moved to close file on Comm. 7.19. Seconded by Ms. Poindexter and carried by the following voice vote: Ayes: Committee Members Chung, Eoff, Kanuha, Lee Loy, O'Hara, Poindexter, Richards, and Chair David — 8. Noes: None. Absent: Committee Member Ruggles —1. Excused: None. CHR. DAVID: Mr. Clerk, Communication 15.23 REPORT OF FUND TRANSFERS AUTHORIZED: DECEMBER 16 — 31, 2017 From Controller Kay Oshiro, dated January 5, 2018. Mr. Richards moved to close file on Comm. 15.23. Seconded by Ms. Poindexter and carried by the following voice vote: Ayes: Committee Members Chung, Eoff, Kanuha, Lee Loy, O'Hara, Poindexter, Richards, and Chair David — 8. Noes: None. Absent: Committee Member Ruggles —1. Excused: None. CHR. DAVID: Mr. Clerk, Communication 15.24. Page 4 FC -27 February 6, 2018 Comm. 15.24: REPORT OF FUND TRANSFERS AUTHORIZED: JANUARY 1 – 15, 2018 From Controller Kay Oshiro, dated January 16, 2018. Vote on Comm. 15.24: Ms. O'Hara moved to close file on Comm. 15.24. Filed Seconded by Ms. Poindexter and carried by the following voice vote: Ayes: Committee Members Chung, Eoff, Kanuha, Lee Loy, O'Hara, Poindexter, Richards, and Chair David – 8. Noes: None. Absent: Committee Member Ruggles –1. Excused: None. CHR. DAVID: Okay now, Mr. Clerk, Bill 101, please. Change Order As directed by the Chair and with no objection from the Council Members, the of Business: following item was taken out of order. Bill 101: AMENDS ORDINANCE NO. 17-40, AS AMENDED, RELATING TO PUBLIC IMPROVEMENTS AND FINANCING THEREOF FOR THE FISCAL YEAR JULY 1, 2017, TO JUNE 30, 2018 Adds the Public Works West Hawaii Office of the Prosecuting Attorney project for $8.5 million to the Capital Budget. Funds for this project shall be provided from the General Obligation Bonds, Capital Projects Fund - Fund Balance and/or Other Sources. Reference: Comm. 721 Intr. by: Ms. David (B/R) Motion to Approve: Ms. O'Hara moved to recommend passage of Bill 101 on first reading. Seconded by Ms. Poindexter. CHR. DAVID: Discussion? I believe—is Aaron Brown here? Deanna is here. Council Members, if you have questions, Ms. Sako is here for that. No questions? Ms. Eoff, your light is on. (Note: At this time, Finance Director Deanna Sako came forward to address the members of the Committee.) MS. EOFF: No, I believe we've been continually supporting the funding for the Prosecuting Attorney's Office. This will be located next to the West Hawaii Civic Center, and I know that we're trying to get it built within a certain period of time so that the attorneys can all move there before the judiciary building is, or at the same time the judiciary building is completed. Page 5 FC -27 February 6, 2018 MS. SAKO: That's correct, and you guys all approved the bonds specifically for this project, and we just didn't realize that one of the appropriations had lapsed. So, we're just coming in to reappropriate. So, we request your consideration. Thank you. MS. EOFF: Thank you. Well, I hope everybody continues to support this project. CHR. DAVID: Thank you, Ms. Sako. Alright, all those in favor, please say Ic aye. Vote on Bill 101: The motion to recommend passage of Bill 101 on first Filed reading was carried by the following voice vote: Ayes: Committee Members Chung, Eoff, Kanuha, Lee Loy, O'Hara, Poindexter, Richards, and Chair David — 8. Noes: None. Absent: Committee Member Ruggles —1. Excused: None. CHR. DAVID: Okay now, shall we go with the presentation, Council Members, with Finance, on Bill 102? MS. LEE LOY: Chair? CHR. DAVID: Ms. Lee Loy, go ahead. MS. LEE LOY: Thank you, Chair. Yeah, I think we have a number of people here who are really waiting for that presentation. A lot of them were not able to formalize some comments for us to digest and I know Hamana is here, but maybe we could identify a time for him specifically that we would actually take up his matter, no sooner than or around a particular time so thatI'm just not sure how long CHR. DAVID: It's pretty hard to gauge that, but I want to ask Mr. Hamana if maybe after lunch, if we can give you a call as we know how we're progressing on 102? Okay. I'm so sorry, but we'll have somebody call you folks. Alright, appreciate it. MR. KANUHA: Madam Chair? CHR. DAVID: Thank you, Mr. Kanuha. Page 6 FC -27 February 6, 2018 MR. KANUHA: We also have our two Corporation Counsels here as well for the reconsideration, so, maybe if you would let them know, it might be later on if we do take up 102 as well. CHR. DAVID: Thank you for that, Mr. Kanuha. Yes, and I believe that would be another one that we could probably estimate better after lunch and we can contact you folks. Is that alright? Okay, great. Appreciate it. Unless you want to stay and listen to the presentation. Thank you. Okay, I guess we've got our next—yes. Mr. Clerk, can you please read Bill 102 before we entertain the presentation by Finance? Bill 102: AMENDS CHAPTER 2 OF THE HAWAII COUNTY CODE 1983 (2016 EDITION, AS AMENDED) BY ADDING A NEW ARTICLE RELATING TO TRANSPORTATION SURCHARGE Establishes a one-half percent general excise and use tax surcharge to fund operating or capital costs of public transportation systems within Hawaii County, to be levied beginning January 1, 2019. Reference: Comm. 722 Intr. by: Ms. David (B/R) Motion to Approve: Ms. O'Hara moved to recommend passage of Bill 102 on first reading. Seconded by Ms. Poindexter. CHR. DAVID: Okay, Council Members, I believe—Ms. Sako, do you folks need time to set up? Shall I take a recess or are you ready to go? Okay, we're in recess. Thank you. Recess: At 10:43 a.m., the Chair called for a recess. Reconvene: The meeting reconvened at 10:53 a.m. CHR. DAVID: Okay, Council Members, I'm taking Finance Committee out of recess right now and would like to call on Director Sako. Go ahead please. MS. SAKO: Good morning everyone, thank you for allowing us to make our presentation today, on Bill 102, which is the surcharge on general excise (GE) tax. If you don't mind, we're going to let the Mayor open up with comments. CHR. DAVID: Thank you very much. Welcome, Mayor Kim. Good morning. MAYOR KIM: Stop coming to see you only for taxes. This is a difficult subject for all of us, anytime we talk about increasing taxes. I've said it before, I thank this Council very much because for some of you, in your first few months on the job, our approach to you was a difficult one, asking you to raise the property tax Page 7 FC -27 February 6, 2018 six percent across the board. And as soon as you approved that, because of judgement, this is what we needed to do to meet our expenses, we come right back to you to increase the fuel tax, and there's no better way to be popular with you guys than to do that back to back. I believe, and the public believes that you did the right thing of courage to—we need to do this because the fuel tax was not raised for approximately 30 years and that accounts for how better roads have become. So, thank you again for that and I always will thank you for that. Regards to what I'm here for is regards to something that some of you might have heard that I do not support the excise tax because it is a very regressive tax. It's still in play, so I wish we didn't have to come before you, but the reality of revenues, the reality of expensesI think we all know the difficulty of going back to the—there's only three taxes that we control, the property tax, the fuel tax, and the vehicle weight tax. The latter two, obviously for transportation expenses. I am coming before you to consider in regard to allowing the County government regards to excise tax of half a percent. The one thing, there was a couple of things that really changed my position on that, number one, is in regard to fairness to the people that we are taxing. I was very surprised and pleasantly surprised because of what percentage was presented to me that the tourist pays for the excise tax, approximately 35 to 40 percent of the amount that we collect. I really did not expect it to be that high, and I have great confidence in it. The State feels that even that may be lower than what reality is. It might even be above 40 percent. I think all governments try to find sources of revenue that are away from taking from their own residents, and the tourist tax is number one on that. That is still high priority to this County and all counties, to get a fair share of that. Right now, I consider it to be a very unfair distribution of funds, especially what was passed last year of $103 million fixed. $103 million with no basis for inflation and with the State having a tremendous source of revenues on that. We will continue to fight for that. There are several bills in the Legislature now, one of which I think we will fully support. I like the ones that obviously has no cap on it and is based on percentage. Even on the lower one in regards to 35 percent to counties, you know, that is, I think, a substantial increase in regards to revenues for Hawaii County from approximately $33 million to $15 million, which is $15 million more than the present. The present one that shows a cap of $103 million to the counties, fixed with no room for inflation, you have to know that it is so unfair to all the counties, especially in light that TAT (Transient Accommodations Tax) was established to help the counties. And initially, you can see it and in writing in the legislative bills, 95 percent of that money was supposed to come to us, to the counties for distribution, and now we're fighting in regards for a cap of, it will give us approximately 15.8 percent or roughly 35 percent to the counties. Page 8 FC -27 February 6, 2018 Regards to going back to the excise tax, I really feel there is one element of it I don't care for. If you approve it, it goes forward. I think we will fight to change it because it dictates that the money be spent only for transportation and nothing else. I feel that the County government, you, the ruling body, should have the determination where our revenues are spent, not the State to say only for transportation. I'm sure they had their reasons, and it had something to do with, I think, regards to the transit system for Oahu, the rail system. But, that's their situation there, they should not pass it on to us. So, I ask this body to please consider approval of the GET (General Excise Tax) for Hawaii County as a source of revenues. I believe a real good point of that is it takes away from constantly only going to only one source of revenue, and that would be the property tax. I believe this is a good distribution of getting revenues from a source outside of the people of this island, and that would be the tourists that will pay more than their fair share. According to the State stats, approximately 40 percent or more of the amount collected will come from the tourists. So, we ask for your kind consideration of this. CHR. DAVID: Thank you, Mayor Kim. Ms. Sako, go ahead. (Note: At this time, Finance Director Deanna Sako came forward and gave a PowerPoint presentation to the members of the Council. For viewing of the subject presentation, see the DVD copy of the meeting proceedings on file in the Clerk's Office. A copy of the PowerPoint presentation is made a part of the record, see Comm. 722.2.) CHR. DAVID: Thank you very much, Director Sako. Ms. Poindexter. MS. POINDEXTER: I have a question. If we don't approve this, what are your plans? MS. SAKO: If it's not approve, we're still finalizing the budget, we're still waiting for final real property tax values, but we have trimmed pretty much everything we can trim and it's getting to the point we're going to have to decide what services we're going to cut. I mean obviously, we're going to try our best to make it happen, but definitely, there's no extra money in next year's budget for any, like transit improvements or things like that. Yes, we did the Mass Transit Master Plan, but I'm not sure how we're going to fund that. MS. POINDEXTER: Okay. I have question for Mayor Kim. (At this time, Mayor Kim came forward to address the members of the Committee.) Page 9 FC -27 February 6, 2018 MS. POINDEXTER: We know how devastating this is because we've, like you said, we've raised the property tax, we've raised the fuel tax, you know, came in the paper about the extravagant contracts, the amount. Now, the salary, you know, we all got increases, everybody got increases. So, the public—well I know my constituents who have been calling, emailing, running in to them, face-to-face meetings, are upset because they're saying now, again, "Here is this government that is the beast and we keep feeding the beast." When are we going to start looking at or how do we start living within our means? We have, like Deanna said, we have parks that needs to be maintained. Those, I agree, money should go there because should we become isolated as communities, we need those places to gather for our people. We had that scare that we can—it was a rude awakening, as we as communities may not be ready to survive on our own, should we become isolated. Should we be looking at a big, extravagant, bus service, or should we be looking at spending money to make sure our communities can survive, should we become isolated? My question to you is, Honolulu City and County went to the State Legislature for a bailout because they did not want to raise their property taxes. They wanted to do an extension of their .5 GE for their rail. State Legislature said, "No, we're not going to let you extend it, and we don't want you to raise your property tax, so let's bail you out and let's tax the visitor industry on the other islands." So, they bailed Honolulu City and County out for their transportation system. Isn't it our turn? Did we approach the Legislature for a bailout like they did for Honolulu, and can't we be afforded that same opportunity? MAYOR KIM: Can we hire you as a lobbyist? Everything you say, obviously, is absolute, is the bottom line there in regard to Oahu -centric on many things. Because the first part of the question as far as our expenditures asked, "Are you going to review it in all budgets?" Anyway, the past year, you can see almost zero increase. I think the whole County government, what was it? Three or four employees and if things are continuing the way it is as far as expenditure, I think Deanna said we have to look at cuts if we don't have any more revenues. We just have to cut and we've done that in the past. I know no one wants to hear this, especially our voters, but cutting is going to be very difficult because I think all of you must have had regular requests for more services of some kind, especially those of Police or Fire, or maintenance of one or the other. I've said it from the very beginning, the distribution of the tax authority is so unfair, except for the three that I've mentioned, and now the fourth, if you approve it for the GET. I consider it a highest priority. I just talked to representative of the Kona-Kohala Chamber of Commerce. The public has to get involved with our legislators in regards to GET, TAT rather, in Page 10 FC -27 February 6, 2018 regards to distribution of that. if just on the lowest percentage of distribution, we wouldn't have had to raise taxes last year. MS. POINDEXTER: Right, and I agree with you that the TAT definitely would have prevented all of this. Definitely. So, as the State legislators tell us, `Be brave, you got to have guts to do this," they got to practice what they preach. But what I want to know is, are we going to approach the State for a bailout? MAYOR KIM: We can approach the State for a bailout, but if you ask me what our chances for success, I don't know how good a lobbyist you are, but we can do that. MS. POINDEXTER: Well, let's do it like Honolulu City and County did. But thank you, Mayor. I just want to say one more thing before I yield. I normally never disagree with Carol Ignacio, but, with no disrespect, I totally disagree with the way this is going at this point. And even with the Health Institute, my background is in health. Social determinance of health is of utmost importance, so I know where you're coming from. But at this point in time, we need time, my constituents need to understand what is going on. Like the special session that they had, we shoved the .5 taxing our tourist industry here. We shoved it down our people's throat without public input. I'm not going to do this again. So, I'm just telling all of you, I'm not supporting it at this time, this bill, as it is. We need to make sure to take it to the public. Mary Begier had a perfect point. Trust. We've raised fuel taxes. We said we were going to do this, we said we're going to do that. People are not seeing anything, so who's to say that this money comes in, that everything, with no disrespect, Deanna, that you said that's going to—the roads in Kona, this, and sidewalks, and all that? Who's to say that really would get done? We don't know. There's no plan for this money yet, on how we're going to roll it out. I mean everything is being rushed and fast -tracked and that's not fair to the people. It may be something that they may want to have happen. Some people have said that. We heard testimony, but I haven't had the opportunity to bring it to the rest of my community for them to understand. They may come back and say, "Hey, Val, this may not be a bad deal." But things that I've been hearing is one guy comes to my office and says he barely has five to 10 dollars left at the end of the month. Barely. With this GE tax increase, will he have the five to 10 dollars left at the end of the month that he so desperately needs? No, he's not going to have that. So, those are the people that I'm fighting for and that I'm listening to right now. I'm not ready to say we need to go ahead with this. This is so unfair to the people. I yield at this time. Page 11 FC -27 February 6, 2018 MAYOR KIM: May I comment on that? MS. POINDEXTER: Sure. MAYOR KIM: What we presented to the Council for review and approval or disapproval or modification, identifies where the money is going. I have no doubt or confidence that the money raised will be identified exactly where it goes. I don't know what Ms. Ignacio said while I was out of here, but I can guess what she said. Everything you say, you know, the difficulty of people is understood. All I can ask is that in the budget review process, we will identify where every dollar goes. In regards to what you said about the fuel tax, the money is going, as collected, to where we said the roads that will be repaired, will be repaired. CHR. DAVID: Thank you, Ms. Poindexter. MS. SAKO: Can I clarify one more thing? CHR. DAVID: Sure, go ahead. MS. SAKO: Act one also requires a public hearing, so, I mean definitely, we will have a public hearing for public input. MS. POINDEXTER: Yeah, and can I just respond to that? I know that would go to a public hearing but that's after the fact, too. So, after the fact of us voting here—what I was saying is MS. SAKO: Today, after today. MS. POINDEXTER: Yeah, today. Yes. So, I really need our people to hear our voices and for me to vote their voices. But, thank you for that, I know it's going to a public hearing. CHR. DAVID: Thank you. Council Members, anyone else? Question for Director Sako? Ms. Lee Loy, go ahead. MS. LEE LOY: Thank you, Chair. I had more of a, I think more process questions. You know, everybody has heard me say, "Good information helps us make good decisions." Are there any plans for the administration to take this out to the community and get some feedback aside from a public hearing? MS. SAKO: You mean like public meetings that we have done in the past? I can't speak for the Mayor, but I'm willing to go if somebody has a community meeting, to kind of do a summary presentation or shortened version. So, I mean, I think we're willing to help get the word out. Page 12 FC -27 February 6, 2018 MS. LEE LOY: I also had a process question. In the past, when we've done increases, like for example the fuel tax increase, there was a process. We notify in the paper and then we take public testimony. I guess I just want to hear from the administration what your understanding is of that process, and how we take up that notification process and allow for public input. I'm hearing you loud and clear, Deanna, we are within a very tight window to make all of this happen, but I've also heard testifiers say they're waiting for this presentation so that they can provide good feedback. So, how do we achieve this within this window so that we have good information to make good decisions? MS. SAKO: I mean yes, we need to get the word out. Yes, we're willing to go out. We could put the presentation on the website, we can talk about things we can do. County Clerk was talking earlier about potential dates, which would be later this month probably for that public hearing. But we can try and get the word out best we can. MS. LEE LOY: Regarding this surcharge, normally, like with TAT, we see the State skimming off Is there an administrative cost or fee that will be taken off of that half percent? What's that number? You gave us an estimate of, a conservative estimate of 25 million. Has that—and I know, Deanna, you smart, so, help lay that out for us. MS. SAKO: So, when the GE surcharge first started with City and County of Honolulu, I believe the State was taking 10 percent. They have reduced it to I think it's one percent now to try and help City and County. It really is just a processing fee for collecting the funds and remitting them to the various counties. So, the 25 million I believe is net of that one percent. Yes. MS. LEE LOY: So, justas I look through your presentation, the various graphs as far as distribution and our fund balance and then our expenditures, we've taken into consideration that one percent being taken out and we're really looking at real dollars on the table for Hawaii County. MS. SAKO: The 25 million should be net, but I was using 2018 numbers, so now it may be a little bit over or a little bit under. MS. LEE LOY: Okay, and then, I'm going to ask the hard question. Looking at the fund balance trend in that tiny, almost nonexistent—how short are we? MS. SAKO: We're several million dollars short for next year. We're roughly six to eight million short. We're still waiting for finalized cost. We're still waiting for real property tax values. So, we're by no means, this was not an easy year to balance. We've already done some things to help bring that down. So, we're continuing to work on it. We haven't stopped. We haven't given up. Page 13 FC -27 February 6, 2018 We haven't put all of our eggs in one basket, but we are waiting to see how today goes before we decide which path we take next. MS. LEE LOY: And maybe a question looking ahead, you know, I raised this issue last time about how we diversify our revenue source outside of our real property tax, this, and the fuel tax. I mean we even did tipping fees. MS. SAKO: You did. MS. LEE LOY: What are we looking at, or what forecast are we going to need to get ready so that we can look at other ways of generating revenues? One, cutting our expenditures. I hear you guys saying it. I mean we got to get more creative, so help me answer those two things. MAYOR KIM: Word comes out regularly is for the County government to consider user fees. I know we have to do that. I know it's up to the Council to approve or disapprove, but I've said personally on certain type of user fees, I hate to consider it, but sometimes you have to do things you don't like. I love bragging about Hawaii where all the swimming pools and tennis courts and those things are free. I realize some of you may have worked or been raised in other states where there's user fees for almost everything you do. I have a son that tells me about going to a swimming pool and how much they have to pay to just to go in the swimming pool, and that's $10. That's not an exaggeration, that's what he pays. I know there's been mention about the one that's regularly mentioned is regards to the zoo because there are no fees for that, and that's an easy thing to charge and say our visitors this and that. It would be up to us to make recommendations if we have to come to that and obviously to the authority to the Council to say yea or nay. I'm just relaying here that on a personal basis, I would care not to do that of certain services. Other services that are easier to consider, we've done it before, I've done it before, is raise the golf course fees and those things, but there are many user fees that I consider that is very difficult to do. I understand it's strictly an attitude of a role of government, and that's why I state that it is a role of government and philosophy of what is the role of government and the money to be spent. I'm born and raised here, I'm just used to that and I think it's great. MS. SAKO: You know, and we continue to look at all the fees including like sewer and other user charges as well. MS. LEE LOY: Mayor, I know you started off saying something you didn't want to do, but clearly, you've had an opportunity to reconsider putting this forward, and I appreciate that. Would this administration consider looking at public, private partnerships to enhance our aging County facilities and coming Page 14 FC -27 February 6, 2018 up with a frame work that would invite capital investment to help with our aging assets? Is that something this administration would consider. MAYOR KIM: I don't think there's anything, Ms. Lee Loy, that we would not consider. We alreadyI think we have to look at everything, even if we don't want to. And a private partnership or public -type of partnership obviously, had been, like the last one was in Maui, the hospital for example, you know, those kinds of things. Anything to cut down expenses or take away responsibilities of government or from things. I would say yes, we have to be open to all of that, but I will say this also, there are a lot of private partnerships that are going on that we don't recognize. Like, it was just brought forth to me, the beautiful people of Ka`u, in the land that was just bought, the work that they do in just cleaning it and they don't even tell us about it except to ask Parks for assistance in getting rid of the garbage or equipment, things like that. This island is still 200,000, small-town people. I look at the zoo that does cost a lot of money, but look at the total cost and how many of it is free. There is a partnership there. The zoo would not be here if it wasn't for a private, public partnership. They saved it, and so with a lot of other things. Look at Ms. Eoff now, Kohanaiki. If it weren't for partnerships there, we wouldn't have nearly what the public asked of that near two miles of coastline of facilities and improvements. So, I think the public should be aware. We're grateful, we're aware of it, and there are a lot of partnerships that services would not be possible today to the degree it is if it weren't for their help, including Police Officers, including Firemen. MS. LEE LOY: Deanna, you mentioned about 35 to 40 percent of this GE would come from our tourists. Do you have any data as far as what the forecast is for our tourism industry and the trajectory of what Hawaii Visitors Bureau or Hawaii Tourism Authority is projecting going forward over the next five or maybe even 10 years? Do you have any of that information? MS. SAKO: It's been several months since we've looked at it. We looked at it when we were doing our bond rating presentations, but we can pull out the information. The last several years, it's been increasing very steadily. We had 24 percent growth, I think, over a three or four-year period on visitor spending on Hawaii island, so, we're up over $2 billion in spending each year now by the visitors. But I can get you better numbers. I think that's the sheet of paper I left in my printer. MS. LEE LOY: I think that's all I have for right now, I yield. CHR. DAVID: Thank you, Ms. Lee Loy. Was it you, Mr. Richards who had your light on? Thank you, go ahead. Page 15 FC -27 February 6, 2018 MR. RICHARDS: Okay, thank you, Chair. Thanks Mayor, and thanks Director for being here. I'm going to echo a lot of what Council Member Lee Loy has put on the table so far. We're talking about the upcoming budget side and I do commend Finance and the Mayor for coming now. I don't want the public to think we're in crisis at this point because we're not. We're actually discussing this well before we're in crisis, which is the way we should be doing things. So again, thanks for coming forward. Deanna, we've been talking about the real property tax values coming forth. Do you haveI'm sure you have an indication of what you're seeing, are we going to be similar to last year? Little bit higher or little bit lower? What's your sense in coming forward? MS. SAKO: We should be a little bit higher than last year, but they're still processing exemptions. They're still doing all the work so we are expecting it to increase slightly, but not as significantly as last year. MR. RICHARDS: Okay, I won't say it's on the record, but you know it's on the record. I won't hold you to that. Again, echoing something that Councilwoman Lee Loy said was the public has to have good, solid input on this and essentially, for the lack of a better term, a travelling road show and taking it to the communities and presenting it and listening to what the communities says. We had testimony, we have emails, we have all that stuff, but that's not community. That's communication, but that's not community. And so, I don't disagree with the Council Chair saying it's got to go to the community and it's not to sell this program, it's to inform the community of what's actually going to go on. I have run through the metrics of this, and I've had long conversations with the Director, and looked at this and discussed with other jurisdictions concerning this half percent. What has worked in other places, and has been done in Kauai, was they did increase the half percent, but they gave back some in real property and the fuel. I think we have to be really mindful. We've heard some testimonies that we are one of the highest tax burdens in the nation, and I don't like when people put our legislation in silos and say we have low real property tax rate so whereby, we should increase it. That's looking at just the real property and not looking at the whole tax burden and that's not fair. We need to look at the whole tax burden. So, though I can see this as a possibility, and Deanna, you and I have discussed this. Right now, help me with these numbers, about two-thirds of our income stream for the County comes from real property tax. Is that a fair number? MS. SAKO: That may be true for the entire budget, it's more like three- quarters or a little more now that represents the income to General Fund only. Page 16 FC -27 February 6, 2018 MR. RICHARDS: For the nuances and for me, I talk about the whole because we're talking about all of expenditures and all our income. So when we do that, when we talk about the sourcing outside income, I do like that because if we can source a different pot of finances for our County, that does potentially reduce the tax burden on our constituency, if we give something back. And again, the Director and I have had conversations about this. I understand the tax concern but the bigger picture, we also have to be very mindful of our budget and cost control and that is the message I'm getting from my constituency. So, like I said, I'm on the fence on this for a lot of different reasons. I'm not going to raise more taxes. Last year, I did not vote for the fuel tax. 30 years, I got it, and my question was, what's one more year? We have to be mindful of what we're doing to our constituency and I'm notI understand we have to make budget, but we have to also live within our means. So, we've got to communicate to our public and we have to consider, and I'm bringing something forward to consider giving back to our constituency. If we look at this and our growth is good in our visitor profile, and I believe it is, this is actually going to give a good bonus to our County, if we give back to the constituency first. So, I'm on the fence. I'm listening to the conversation and I appreciate what the public has said so far. I fully appreciate the email that we are receiving. It's very important that we have this conversation. I'm very thankful, Mayor, you brought this forth because if we don't have this conversation, again, we're not in crisis, but we need to have this conversation. So, I'm going to yield at this point. Thank you. CHR. DAVID: Thank you, Mr. Richards. Ms. Ruggles. MS. RUGGLES: Thank you. I wanted to ask those questions that a testifier brought up that I think are very important. The first one, if you can answer this, either Mayor Kim or Deanna, how does this affect the poorest of the poor? MS. SAKO: Like I said, it's hard to know how everyone is impacted, it depends on everybody's situation. Some people have Section eight, some people have food stamps, you know, that would be lesser impacted than other people who maybe pay rent on their own. So, I don't have specific figures in terms of how every individual is going to be impacted, but what I shared earlier is it's basically five dollars per thousand dollars that they spend that's subject to GE tax, and I don't know each individual's situation. MAYOR KIM: I wish we could give you better figures. I think that five dollars per thousand—when they compare what income group pays more for excise tax like regressive tax is because the poor spends most of their money on transportation, food, clothing, the basics of life, fuel. And the rich, because they have so much more, spend a lessor percentage on the necessities. Page 17 FC -27 February 6, 2018 I think it's common knowledge, but every study says excise tax does tax the poor the most. There's no denying that in regards to this amount. But in, not in balance, but I want to say that I think two of the Council people here are trying to see how we can increase our revenues and make our taxes something better on our vacation rentals. I think that's going to be introduced soon, if it hasn't already. I'm a little behind the ball on that one. I think that's going to help on the fairness. I'm not saying it's going to collect that much more revenue, but it will, but it does balance the fairness of it. In regards to the values of principals of taxation, I'm very proud to brag to other people, other counties that this County in regards to programs for Senior Citizens, you know, in regards even the property tax on your house. The older you get, the more deductions you have. I think this island have tremendous benefits to agricultural taxation. I don't think there's a farmer that can, if they review their taxes, how much this Council has provided tax breaks to them and continue to do so. This is the balance we face when we come towards you because of what the proposed cuts or increases. At this I will say, now, I stand with those values that were established well before me in regards to breaks on ag, breaks on seniors, and careful consideration on user fees to make as much free as possible, especially for those that cannot pay for it. If you go to the zoo at any weekend, you will see a lot of families there that every one of them can go in free. But, I will say this while I have the podium, the greatest unfairness in this state of taxation where we have to come to the public and to you of increase is a State unfairness and the distribution of the TAT. Had they done what they said they would do, we would not have to come to you last year. If they look at us and say, "Well, you can do this," ask them, when was the last time they increased their fuel tax? Ask them when the last time they increased the income tax. They're great in passing the buck down to the County because they don't want to face their constituents and increase their taxes. So, they force it back on us. That's the greatest unfairness of our tax system. There's no if s or but's about that. I am proud of the fact that property tax in the island of Hawaii is low in comparison, but people don't look at it that way, they say the tax in Hawaii is so high, and it's true. But, if you come down to the microlevel of County government and take a look at only your property tax, you will see that it is not and we're trying to make do with that. If the State would stop looking at the TAT as a cash cow, I wouldn't be here before you, last year or this year. MS. RUGGLES: Alright, thank you. The second question is, do we have any estimate on what would be spent on Mass Transit compared to what is being spent now if we do go forward with this increase? Page 18 FC -27 February 6, 2018 MS. SAKO: So, I think when I calculated the cost of those new buses she needs in the next year or two, that alone was over six million dollars, and then the additional cost, I don't have an estimate right now. I think our new Transit Administrator gets onboard February 16th and I'm sure that's one of the first things we'll be talking with her about as soon as she gets to see the system. But, you know, one of the more immediate needs and then a little bit longer term needs MS. RUGGLES: Thank you. My question was how much would be spent on Mass Transit compared to what is being spent now, if we do move forward with this increase. MS. SAKO: Right, and I said I know for sure that we need to spend six million on buses but the rest I need to sit down with the Transit Administrator. We've been trying to work on those numbers, but it's hard when that department's kind of in transition. So, I guess what I'm saying is as soon as the new Transit Administrator gets here before the next reading, we'll hopefully have her input and kind of be able to prioritize some of the things and get better costs. MS. RUGGLES: Thank you. I understand what you're saying as far as what we need to spend funds on and from what I'm understanding, that's not what I'm asking. I know that we need more buses and I know that we have costs associated with specific improvements that we need, what I'm asking is what are we estimated to bring in now for these projects that we're currently not spending? And if you don't know, that's okay. MS. SAKO: Well, I mean the estimate to bring in is $25 million. I'm just not sure what portion of that will need, like will we need the whole thing for transit? That's what I'm not sure about yet because there's different factors, some is greatly improving the system and some of it is just getting it back up into a more reliable operating system so we don't have to keep renting buses. MS. RUGGLES: Thanks. So, the estimate would be $25 million? MS. SAKO: Is what this is going to bring in, yes. MS. RUGGLES: Okay, thank you. And regards to it being a temporary tax, have we ever gone through with a temporary tax to your knowledge? MS. SAKO: Something that sunsets, like this? MS. RUGGLES: Yeah. MS. SAKO: I don't know that we've had that opportunity before. I'm not aware of any, but that's been the time I've been here. Page 19 FC -27 February 6, 2018 MS. RUGGLES: And now to my own question, do we have a, sort of, a rainy - day fund or savings that the County has? MS. SAKO: We do, that's one of the funds I talked about that we haven't been funding. It has, I think, a little over five million dollars in it. MS. RUGGLES: Thank you. And my next question is you say that currently, visitors do not contribute taxes directly to the County. Would they be contributing taxes directly to the County under the GE tax? MS. SAKO: Right. Whatever GE tax they pay at the stores would go directly to the County. This five percent surcharge is only on purchases, sales or goods and services on the Big Island, and whatever is collected, less the one percent the State keeps, comes directly to us. MS. RUGGLES: Thank you. So, that confuses me because visitors also pay hotels and resorts, and those in turn, pay property taxes go to us. MS. SAKO: They do. They pay the hotel, the hotel pays us, but the visitors are not paying us directly. I'm not saying they don't contribute anything, but there's not a tax that we collect specifically from them. And then whatever they pay in like TAT, they pay directly to the State and the State manages that pool of funds. MS. RUGGLES: That sort of, it feels a little bit misleading to me because we can collect monies from visitors directly through increasing taxing on the hotel and resort industry, which mainly serves visitors. MS. SAKO: I would, maybe it's just a semantics thing, but I guess I would say we weren't collecting directly from the visitors that we would be increasing the taxes on the hotels and the resorts, and it's their decision whether they pass it on to the visitors or not. MS. RUGGLES: I just want to say, just for the record that I agree that we need to prioritize complete streets, pedestrian walkways, bike paths, and Mass Transit, and how that all adds up to sustainability and those are all really important. My concern is, and I think Harry Kim, he also shared this concern, that this is regressive and we will be taxing food and medicine. I personally believe that there are better ways to bring in revenue. United Way ALICE (Asset Limited, Income Constrained, Employed) Report reported that 50 percent of our residents are living paycheck to paycheck, and the more appropriate way to raise funds would be to tax those who can most afford it, and there are many options for that. I know I introduced a scenario where we would increase taxes on hotels and resorts, residential second homes, Page 20 FC -27 February 6, 2018 and commercial industrial businesses whose property values were above a certain value assessment, and then we would provide exemptions to exempt the majority of the population of those who cannot afford it. That's just one option. On Oahu, they created a residential A class where they taxed million dollar second homes at a higher rate, and just in one year, this has brought in $39 million. This would more than cover, I'm not saying this is what we would cover, but we do have a lot of wealth on this island and we need to be taxing those who have it. When we talk about five dollars to every thousand spent, that confuses me because you look at EBT (Electronic Benefit Transfer), somebody who qualifies for EBT. They get about $320 a month that they can use and as one testifier noted, that most of the time only lasts for the first three months. May I have more time to finish my point? CHR. DAVID: Okay, just finish your thought and then we'll move on to the next and we can come back to you. Thanks. MS. RUGGLES: Okay, thanks. Thank you. You know, I'll just leave it right there because this is kind of a lot of math I'm going to throw in here and I'll wait until my next turn. Thank you. MS. SAKO: Can I just ask one clarifying question? When you said the residential A brought in $39 million, that's what brought into Oahu? MS. RUGGLES: Oahu County, or Honolulu County. CHR. DAVID: Thank you, Ms. Ruggles. Now we go to Ms. O'Hara. Go ahead. MS. O'HARA: Okay, I'm just going to start. Thank you, Mayor and thank you, Director for being here. This is a very serious subject and I just want to go back on some history so we are all clear why we're here today and how we got here. Last year when we had the budget, the initial first draft of the budget was presented to us, and then our second version of the budget, there was a difference between projected revenues and projected expenses thata gap that we had to close and was that gap around 18 to 20 million? Wasn't that right, Deanna? MS. SAKO: That was the gap that continued to grow every time the Legislature met, yes. 18 to 20 million, yes. MS. O'HARA: 18 to 20 million. Okay, so currently, we're getting 19 million from the TAT and you have repeatedly estimated that our direct impacts from Page 21 FC -27 February 6, 2018 the visitor industry on our island is between 30 and 40 million. Yes, we seem to be right in demanding more, but as we note, finger pointing has not gotten us anywhere and at this point, I hate to use this analogy, but it's almost like picking at a scab. I don't know that this is really going to change. The only bill that is getting me some traction with reconsideration of the TAT right now will not put 18 to 20 million dollars back in our pocket. It may increase our share by as much as 10 million. These are the parameters that we have to work with today. This is the information that we have to work with today. Now, the Legislature is in session, things can always change, but what we have seen, at least historically, is a lack of will to give back more than that to the counties. I also support alternative revenues and you talk about user fees. User fees can be established such that they rest mostly on the shoulders of our visitor industry, since we're not getting our share of the TAT. We need to do this locally and that's through exercising kama`aina discounts or free entry. I continue to encourage you to consider charging for visitor parking at the lava viewing site. It's a gold mine that we're just ignoring. The zoo you're talking about, that could maybe be free to local residents but visitors pay. There are ways to do this such that it doesn't negatively impact our residents, but it does increase revenues, and each little piece helps. Each little piece adds to the millions that we need to close the gaps here. So, we currently, if I'm right, Deanna, subsidize Mass Transit from our General Fund this year, to the tune of about seven million. Is that correct? MS. SAKO: Yeah, it's just under seven million. MS. O'HARA: Okay, so that's what we're currently subsidizing out of our General Fund. Now, we have gotten a really good movement on this Mass Transit Plan. It's an excellent plan as it's emerging, and I don't see this as our path to something extravagant. I see this as our path to a real bus service. We don't have one now and I'm going to just state that publicly. It's an embarrassment, but providing a real bus service that's basically functional, on time, and a reliable service would be of such advantage to those who are the lower income or more challenged economically than others in our community. It will be a great benefit to them and there are ways to do offsets. Reducing increases in fuel tax that are supposed to kick in is one way to do an offset. Now, that may not go into the pocket of the poorest of the poor, but there's other ways we could do that. We can set the bus rate for those at 50 percent of whatever the bus rate is and that would be for disabled, elderly, students carrying an ID. This would help a lot to put some money back in the right pocket while we're taking $5 out of the left every month. This is offsets. Page 22 FC -27 February 6, 2018 So, I see a way through this. I'm sorry that we're rushed. I'm sorry, Mayor, that you waited to the last possible minute to introduce this because I agree with my colleagues, this needs public debate. It needs to be taken to the public. Having talked to many in my district and my constituents, the demand for a reliable, efficient, public, transport system overrides their concern about this increase, and that's what I'm hearing from my constituents. Thank you. CHR. DAVID: Thank you, Ms. O'Hara. I'm going to go to Ms. Eoff Mr. Chung. MR. CHUNG: Just a point of personal privilege. We had to cut Ms. Ruggles because of this five-minute time limit and Ms. O'Hara did the same just now. Given the importance of this matter, I would ask the Chair to just entertain the possibility of letting each of the Council Members talk for as long asI mean nobody's going to talk for 30 minutes. We're not looking at any filibuster or anything like that, but just to allow them the latitude of giving all of their thoughts. Of course, they can speak later, but it's going to be difficult because there's a lot to be said on this issue. CHR. DAVID: I agree and thank you for noting that. And what I do also have to consider is that some people have already spoken twice and that's why I was going to go to Ms. Eoff because she hasn't spoken at all. Then I will certainly entertain allowing at least the Council Members to finish their thought. Thank you. Ms. Eoff and then I'll go to Ms. Ruggles and then Mr. Richards, if that's okay. MR. MAEDA: So Chair, we're still timing Council Members? CHR. DAVID: Well we can, but I will just allow them latitude, just so that we know when the five minutes is up, please. Thank you. MS. EOFF: Thank you, Madam Chair. There's a lot—Mr. Chung is right, there's so much to be said and a lot has been said already and we've had some very good testimony from community members as well as department heads and the Mayor and Council Members. So, it hasn't helped me too much yet because I'm completely going back and forth in my mind, whether this is the right thing to do and if this is the right time to do it. Unfortunately, we are looking at the deadline of March 31st and if we don't continue to move this particular bill along, we won't be able to make that deadline. But, I have a question. So, in the—the Legislature gave us the ability to add a surcharge to the GET, we have until March 31st to decide if we want to be able to do that, but does that mean that we do it right away? Or can we wait to impose that surcharge any time between then and the 2030 sunset date? Page 23 FC -27 February 6, 2018 MS. SAKO: The way it's written, it says when the ordinance is adopted, it shall go into effect, I think, January 1, 2019. MS. EOFF: Right, that's the soonest we can impose it. MS. SAKO: Yes, but we can have Corporation Counsel look at it and see if that means if we could defer it or what. But, we have talked before about at least passing it so we have the opportunity and then being able to change our minds later, whereas, the other way, we wouldn't be able to do that. But Joe is listening I'm sure, and hopefully reading act one and I'll go hand it to him in a minute. But yeah, I think if he could give us an opinion if it's any place in between. MS. EOFF: Right, just trying to get all the information on the table to help us because as you can tell, we all do support the public transportation system. We know we need to improve it. I'm sure we will improve it whether we do it quickly with this excess surcharge, or if we do it slower, or if we find other means to do it because definitely, we all want to improve our Mass Transit system. We also want trails and road improvements. You know, verybody wants the same thing. I was just wondering if that would be something to consider, to factor into our decision making is whether we have to raise it right away or whether we give ourselves this opportunity and then wait and see how we—and really try and find other ways to cover our budget. I know speaking with Finance yesterday, we have to be cognizant of the fact that we're going to have a difficult time balancing the budget when it comes before us without this, but yet, we can dig deeper and, as someone else has mentioned, let's see what other options are out there for us. So, I don't know if Joe wants to wait, I can just put off the answer for a while, it's no rush, I just—well, if you have an opinion on that time— (Note: At this time, Corporation Counsel Joseph Kamelamela came forward to address the members of the Committee.) MR. KAMELAMELA: If the ordinance gets passed and approved, it cannot be levied prior to January first. MS. EOFF: Right. MR. KAMELAMELA: Yeah, so it's only from January first of next year and then it goes on until—and it cannot go after December 31 to Page 24 FC -27 February 6, 2018 MS. EOFF: I understood that, but I just wondered if you have to levy it in January? Or can you postpone that for a year even? MR. KAMELAMELA: No, because once you hit January 1, 2019, then the State is starting to levy, so they're going to—so, you can't put it off like one year, it just starts on the first. MS. EOFF: Okay. MR. KAMELAMELA: Any other questions? MS. EOFF: I wasn't sure. Thank you. MR. KAMELAMELA: Thank you. MS. EOFF: I'm going to yield right now. I'm just really interested in listening to everybody. CHR. DAVID: Okay, Mr. Kamelamela, Ms. O'Hara has a question for you, please. MS. O'HARA: Okay, this is actually a question that came through a constituent and I think I may know the answer, but I want it confirmed. As it stands right now, if the Council were to pass this surcharge, it can only be used to fund highways, which includes Mass Transit, on all types of highways, traffic signage, sidewalks, etcetera. MR. KAMELAMELA: Not all types of highways. MS. O'HARA: Well, not all types of highways. County. MR. KAMELAMELA: Yeah, County. MS. O'HARA: If the State Legislature, which is currently considering amending this act to allow counties to expend it on other things, I know affordable housing's been thrown out as a possibility and some other things. If that flexibility were included down the road, if we were to pass it now, in this action, we would be held to only funding our County highway fund. It would take further action by the Council to extend uses of that collection. Am I correct? MR. KAMELAMELA: Well, like right now, it's hypothetical, so not knowing what the bill is going to actually end up to be, you know, I really don't want to say anything because I also know the Legislature, too, you give them a bill and then it turns ugly sometimes. Page 25 FC -27 February 6, 2018 MS. O'HARA: So, it would not, in your opinion, if they extend the allowable uses of the funds, you think that it may not require additional Council action? MR. KAMELAMELA: It all depends on how they structure the bill because like right now, we're only faced with what we have in the HRS (Hawai`i Revised Statutes). So, anything else, it would be pure speculation. Sorry. MS. O'HARA: Thank you. CHR. DAVID: Thank you, Ms. O'Hara. Ms. Ruggles, you can continue. MS. RUGGLES: Thank you. So, as I was saying, people who qualify for EBT, they get about $320 a month, and it's common knowledge that isn't enough. It runs out about the third or fourth week of the month. So, let's just say a person struggling, $400 a month on groceriescurrently, for a family of four, in GET, they would be paying $64 a month. CHR. DAVID: Is that a question for? MS. RUGGLES: No, so it MS. SAKO: Just a second. I was following you so far. But can I just stop you a second? I got up the $400 per month on groceries, but then what was the part you said next because— MS. RUGGLES: So, if you—in order to calculate how much a person is paying in GE, you would times their bill, or multiply their bill by .04, correct? MS. SAKO: Yes, I follow you so far. MS. RUGGLES: So, a family of four, paying $400 for each person, that would be $1,600. MS. SAKO: Oh, per person, sorry, got it. Okay, thank you. MS. RUGGLES: So, that family would be paying $64 a month in general excise tax. So, with the increase, they would be 72, so that is about an $8 increase, and this is a family that's already struggling. So, in addition to the property tax increases, doubling the minimum tax, almost tripling the fuel tax, tripling the tipping fees, we are greatly increasing the cost of living and decreasing the quality of life for our struggling populations. It's not for us to decide, "Oh yeah, it's only five or 10 dollars a month, he can handle that." But we've been adding it on so much, and who are we to say that somebody struggling on a fixed income can afford these things? Page 26 FC -27 February 6, 2018 Ms. Poindexter is concerned about her constituent who barely has five or 10 dollars extra a month on a fixed income. Will he have an extra five to 10 dollars after this increase? No, he will not. Every dollar makes a difference, especially when we're considering that it isn't necessarily needed and we have other options that are working. We need to do the work and we need to think creatively. The GE tax is an easy vote, but it's our job to get creative on how we can actually tax—balance our budget without putting the burden on people who can least afford it and people who are already struggling and put the tax on people who can afford it. Yes, visitors are only paying, or are currently paying TAT, and we only get a small portion of that, but we have options. We can create the different classes of taxing that other places have done. So, with that, I think it's clear that I will not be supporting this, especially in that my district is the poorest district in the entire State, and that we need to look at alternatives and the alternatives are out there, we need to do the work. Thank you. CHR. DAVID: Thank you, Ms. Ruggles. Ms. Poindexter. MS. POINDEXTER: Yeah, I have a—maybe need some clarification. On Section 2, Use of Funds, because I know we keep saying it's only for County roads because I know our bus transportation system is on State highways as well. A lot of the sidewalks are that, you know, we use are onI mean the roads that we use that need sidewalks are on State roads. I know in my Hamakua, Honoka`a town too because going through Honoka`a town is a State highway. It's a little weird. But anyway, it says on one, "operating of capital cost of public transportation within the County for systems including public roadways or highways," so, it's kind of open. I'm concerned about that because public transportation already, I don't know during the discussion how much it was going to cost and then now, if we're going to include, allow ourselves to use it for some highways, so, what doesI mean you're saying County roads only, but it really doesn't say that. MAYOR KIM: I'm seeing the semantics here but I cannot see any situation where the County would pay to repair State highways, but it allows itI just can't visualize us paying for a State highway. MS. POINDEXTER: Okay, so maybe we should just make it more clear here, about it being only for County -owned roads. MS. SAKO: So, instead of saying "within the county for systems," just "for county -owned roads"? MS. POINDEXTER: Yeah, however you guys want to Page 27 FC -27 February 6, 2018 MS. SAKO: Or something like that. MAYOR KIM: And I think Deanna talked about the controversy of that 400 plus miles of what we used to call roads in limbo, where the State pulled a fast one on us and said all roads in limbo are now the responsibility to have the County government to maintain. And, I don't want to sit here like I'm jumping on the State government, but I guess I am because we are still, you know, responsible for that and technically, those are roads built on State land, but we are maintaining that. MS. POINDEXTER: Right, so the GErealistically, the GE tax, all of it, could just go to pay for roads in limbo? I mean, you know what I mean? So again, when the public is saying the trust of where, who's deciding where the money goes, how do we know where it's going to go, or what it's going to be used for? So, I think it's just a little hard for me to grasp or wrap my head around all of that to approve something that we're still ourselves in limbo, not just the roads. MAYOR KIM: I'll address that in regards toI think we're quite open in presenting to the County Council. I'm not putting the burden on you, I'm just saying we're open to, you know, present you where the monies are going. I don't think we'll ever sway from that, you know, whatever you request because where this money is going will be presented to you. MS. POINDEXTER: And I think once we present it to the public, they'll make—you know, I've heard that too, who's going to get the money? Is it really going back to the State or are we going to use it, really, for our roads? So, questions like that will come up probably in the community meetings as well, but I think we need to be real clear because when we say, "Yes, it's only for County roads," it doesn't say it here. So, thank you. I yield. CHR. DAVID: Thank you, Ms. Poindexter. Mr. Richards. MR. RICHARDS: Thank you, Chair. It kind of goes back to a smaller problem with how Council works. Back to something that Councilwoman Ruggles was discussing concerning the Mass Transit system, Deanna, my numbers, looking at the Plan here, was in just adding together, are you pretty familiar with the financials and the Mass Transit Plan? Have you reviewed that recently and closely? MS. SAKO: No, I don't have that memorized or anything, but I've seen the plan, but just not reviewed all the numbers carefully. MR. RICHARDS: And I'm not going to belabor that point. It's just that when I ran through the numbers, just looking at the total operating cost, including the capitalization, we're looking at about $200 million over 10 years. So, that's Page 28 FC -27 February 6, 2018 roughly speaking amortized $20 million a year. And I know that the—when we talked about what the income of a GE tax, our surcharge, that could bring in $250 million as a MS. SAKO: Over the 10 years. MR. RICHARDS: Over the 10 years, correct. Okay, so, I understand the justification for that. Chair, little bit of a procedural question. We're in a presentation and question and answer, I know we have some amendments that are being proposed, put forth and they haven't come up, are we in a situation where we're going to get there, or is this still the question and answer? CHR. DAVID: As soon as everyone is done answering questions regarding the presentation and of Mayor Kim and Deanna, then we can move forward and then get into the discussion that you're speaking of. Just want to make sure everybody has a chance to MR. RICHARDS: Okay. And that's why I just wanted to see where we were. And very similar with the Director's numbers and projections, I came at it from a different angle and I got very similar numbers, which makes me feel good because my projections matched the Director, who's far more savvy with the finances, but I do appreciate that. So, in looking at that, I feel very good about the numbers that we're being presented with going forward. The question is, how do we put all this metrics together? I look forward to further discussing that, so, I yield at this point. CHR. DAVID: Thank you, Mr. Richards. Council Members? Ms. O'Hara. MS. O'HARA: I do have another question. There are alternative ways to possibly go with this, and one of the ways that I have been thinking about and pursuing would be setting up a new class in our property tax regime. I know that we have our internal working group working to come up with recommendations on revisions to our tax code and tax classes, and rates, et cetera. But, in order to bring money in the door for the next fiscal year, we will not be able to wait for that because it's probably a year away from coming back to Council. Director, in your opinion, and I know our real property tax folks might be better able to answer the question, but in your opinion, would that be a difficult thing to do if we were to create a tax class that captured Airbnb and short-term vacation rentals? Something that's been under discussion for a while. Would that be something that we could consider implementing asap (as soon as possible)? Page 29 FC -27 February 6, 2018 MS. SAKO: No. The values are set on January first of each year and the classification. So, I think we would have had to have given notice prior to January first to be fair to the tax payers. There may be another way, just not a separate classification. MS. O'HARA: So, if we were to go down that road, it would be something that wouldn't take effect in the next fiscal year, but the MS. SAKO: The following. MS. O'HARA: Following fiscal year? Okay, that was one question. And then, I'm a bit concerned here about scenarios being presented because we do have people who are very poor. We also have people who are very wealthy, and it is the average person who often gets ignored in these scenarios. I would like to present that scenario, just off the top of my head. MS. SAKO: Sure. MS. O'HARA: And that is, the average household expending $2,000 a month on goods and services. This is assuming they're not renting, okay? So, this is assuming they're not renting. You have to make assumptions here. $2,000, what's that? $10 in extra GE tax, additional GE tax? I know they're already paying the four percent. We've been living with that ever since I came to Hawaii, so, not unusual. But, that would be an additional $10 out of pocket. And if that household has, as most households here do, an average of two vehicles, and they're buying gas for those two vehicles, they could be purchasing up to 100 gallons of gas in a month, to run those two vehicles. If we gave them back a reduction in future fuel tax, they could be saving, you know— we have future fuel taxes coming up next year is four cents, and the following year, another four cents, so, let me state that eight cents is coming at us. That would put eight dollars back in their pocket? Now, this is offset. I've already talked about bus fares as another type of offset. This is important to kind of understand where the money goes in, where it comes out. we've got seven million that we're subsidizing the, I'm going to use the word funky, transport system that we currently have, and we're actually subsidizing it by seven million. If we had this GE tax revenue, we wouldn't have to take that subsidy out of the General Fund. Are we going to get a reliable, on time bus service? Not unless we come up with new money, and it's not something we can scrape off the top of the other departments. We have squeezed, and squeezed, and squeezed, so we're looking an additional five to six million dollars a year over the next 10 years, each year. That still doesn't exhaust that estimated 25 million, which I appreciate, we're being conservative and using the low number. It has been said that it could be Page 30 FC -27 February 6, 2018 as high as 40 million. So anyway, I'm just trying to make people understand the math. If we want to stay and keep the Big Island in something of a poverty cycle, which is what is happening in my district, not doing anything is the best way to perpetuate that. This would help. This would allow people transport, to get them to their jobs, and we do have jobs here on the Big Island. It's not like our unemployment is really high. We have jobs, people can't get to them right now because they don't have reliable vehicles and that sort of thing. So, I see this as an economic driver for the Big Island and I, at this point, am going to say that I do support it, provided this Council will consider offsets that I have in the works that are coming up at the next Council meetings. Thank you. CHR. DAVID: Thank you, Ms. O'Hara. Go ahead. Sure. MR. CHUNG: Is this portion of the meeting just to ask questions or to actually speak on the bill? Because I have no questions, really, but CHR. DAVID: Right. We're actually doing both because after the presentation, if anyone has questions, which everybody did, seeing what was presented. Now, we have a motion on the floor that has been seconded and if we're ready to discuss that— MR. CHUNG: We always had the motion on the floor CHR. DAVID: Right, but we can discuss that if you're ready. MR. CHUNG: Okay, so it's not just asking questions, then? CHR. DAVID: No, we're discussing the whole proposal. MR. CHUNG: Okay. CHR. DAVID: Ms. Lee Loy, were you going to press your button, or are we going to consider lunch hour pretty soon? MS. LEE LOY: This clearly is a very complex conversation and I'm left with even more questions. Unfortunately, because of the Sunshine Law, we have a hard time getting out all our options, and a whole bunch of people who are incredibly smart and talented in our business community, in communities, just stepped out. I almost feel that if we had taken this presentation to them, where they could have provided other scenarios or other options or vetted it, we would have something before us that actually was driven by community, where we could look at different scenarios of rolling back our fuel tax or our weight tax and I don't want to say it, it's that two percent open space fund. It's all of it. Page 31 FC -27 February 6, 2018 That's something that Mr. Richards talked about, is we look at these things, silos, and we need to look at the way we generate revenues across the board. It's really challenging for us because of the Sunshine Law and I almost feel that if we had taken it to Hawaii Island Chamber, Japanese Chamber, out to Kea`au School, out to Pahoa to listen to what the community wants, and then develop a priority list that is driven by community, we would know what to do. It's rather unfortunate, you know, I feel torn and on the fence because I get the dollars and cents. I get the data, but I also hear the concern of trust and whether we're going to get what we pay for. The question always is when we raise taxes, what are we going to get? And just like we did with the fuel tax, we created a priority list. I heard Ms. Ruggles ask, very pointed, how much of that money is going to go into transit, right? What does—of the 25 million, what are we going to get in transit? And if we came up with some level of frame work, I think a lot of us on this Council would better understand what our community needs and it's being driven by the community. That being said, Deanna, Mayor, can you please go get with the rotary clubs and the chambers, and the different organizations, the community associations, and shop this around and don't develop a priority list based on our budget. Let's develop a priority list that we know is going to move the needle for the people in our communities. That's where I stand right now. I know there's a number of other things on the table, or soon to be coming up on the table, and we got to have those discussions also. That's just my food for thought right now and I don't mind moving this conversation forward and voting in favor of it so that we can have the administration take this out and go get what Ms. Poindexter is asking for, you know, get community input. But, to basically say no at this point, just because of what's being presented right here, I think, really is a disservice. I think there's plenty more voices to be heard. Plenty more options out there and I just hope we can have a better, more robust conversation, and a public hearing that presents options and not only what's being presented here. So, thank you, I yield. CHR. DAVID: Thank you, Ms. Lee Loy. Mr. Chung. MR. CHUNG: I just haveI thought of a question. This is to the Mayor. In your closing remark, you asked us to please consider approval of this measure, and I guess it could be interpreted to mean that you're asking for us to pass it. I'm thinking anyway, but I just want to know, I mean because Harry, I have to admit, you've demonstrated a lot of conflicted emotions on this matter. You prefaced your presentation by saying it's a regressive tax and there are some elements of it that you don't like, maybe one in particular. You've stated in the paper, as recently as November, that you don't like this thing. Then, when you Page 32 FC -27 February 6, 2018 submitted it to the Council, I looked at the newspaper over and over again, and it was really, your statements were ambiguous as to whether you supported it. You said, "I don't know if I'm going to support it or not, I'm still open on it." I'd like to know. I don't know about anybody else here, but I want to know. Are you in support of this measure? If so, are you asking us, in no uncertain terms, to pass it? MAYOR KIM: First of all, my position on excise tax has not changed because of the regressiveness to the tax. Secondly, my position in regards to revenues have not changed. From day one, and even before that, trying to work with the governor and the legislators, the importance of following through on their commitment in regard to the purpose of the TAT. I've said it today and I've said it many times over, had the State come through with their commitment, their commitment, not ours, the purpose of the TAT and the distribution of the TAT, this presentation would not be necessary. Our problem here is the failure on that, but I'm still going to work very hard on that, there's a proposal in there which I'm hoping for, and if that passes through, then it will more than compensate the amount of money that this will raise, that we don't need this. I'm not going to bring any light or darkness in regards to our chances of passing the other TAT being distributed more fairly, but we will keep trying. All four County Mayors have put that as priority in regards to what we would settle for. The worst thing happened last year. I still can't believe, sir, that they passed it on the TAT. The worst thing that happened is they fixed us at $103 million in perpetuity. If you were to tell me to come up with something that's unfair, I wouldn't even come up with that. That is so unfair. We needI just spoke to the representative of the Kona-Kohala Chamber of Commerce and I told him the very same thing, that we need the public support in regards to writing to all of the legislators for just fair distribution of the TAT. Now, in regards to Ms. Ruggles' question in regards toI did catch the word, they did put in direct payment from tourist to Hawaii County government. This will be the only one. All the rest are indirect and nobody questioned the fact that they spent a lot of money on the island, including the TAT. I support this because of the very difficult task, Mr. Chung, of knowing what are all of our alternatives? I hope the Council and the public trust us that we are trying to really minimize our expenditures of revenues, but I think you know, Mr. Chung, that I'm sure you have the same request in regards to increase in services, especially of transit and there's no denying that transit system is an embarrassment, as far as the conditions of the buses and other problems. We'll need time to fix it, and we will fix, we are addressing it. Page 33 FC -27 February 6, 2018 I support this because at this time, over 70 percent of our revenues come from property tax, over 70 percent. I think it's 72 or 73 percent. I was talking to Mayor Carvalho because he said, "I'm over 80 percent." Because we are hamstrung, sir, by the State government that has 14 tax bases. They control 11 of them. They relegate to us only that a property tax, which I said, 70 percent plus of revenues come from that. The rest is fuel and weight tax. I have to look at other revenues. All the comments in regards to look at user fees, we are using it, and I know it's difficult to believe, but we are trying to cut our expenditures. I support this because of a limited choice. I support this because the deadline, and I do understand you wish we would have brought it sooner. I support the fact that there needs to be discussion and supported and to bring it towards you and explain why I support this very difficult thing to do because I want to believe in this tax. But right now, sir, I think I'm comfortable to say, about 71 or 72 percent of our income comes from property tax. I have no other choice outside of this on the table to ask you to support. Because of that, I support this, of a half a percent in excise tax. MR. CHUNG: And with all due respect, that was a kind of circuitous way of answering my question. I'm not trying to be cute or anything like that, but I'm just going toI think you said the word "support" about eight times, so, I'm going to take it that you support it. And, you know, the reason why I ask you that, Mayor, is because if you're ambiguous on your position on this matter, it projects to all of us. You got to be strong about this. One way or the other, you're the person who taught me many years ago, you are a black and white kind of guy and I'm a gray area. You're either here or there. But, I take it that you are in support. I'm just going to surmise already. How strong, I do not know, but having said that, let me give you my position. MAYOR KIM: I don't know how else I can say it, Mr. Chung. I support this because the choices are limited. I support this because the way the tax system is established for the State control. I wish I did not have to come before you all the time in regards to taxes, whether it be fuel, property, or now, excise tax. If that sounds ambiguous, I don't know what I need to say. Members of the Council, I support this. MR. CHUNG: Alright. You know, it's probably going to take two parts in this, okay? And being tactful has never been one of my strong suits, so I'm really going toI mean I'm going to be, try to be as tactful as I can. But, given the severity of this measure and the ramifications that it has to all of us, not just now, but going forward, I got to lay a lot of cards on the table, okay? But, I'm going try to do it as nicely as I can. You touched upon it and several others here Page 34 FC -27 February 6, 2018 touched upon it. The timing of bringing this up, none of us expected it to come before the Council. There was a newspaper article that was written in the Hawaii Tribune Herald or West Hawaii Today a few weeks ago, well actually maybe more than a few weeks ago, and the writer, Nancy Cook Lauer asked me if I was going to introduce this bill and I said, "No, I'm not going to waste my time, unless I get a clear picture from both the administration and the leadership of our Council that they are in support of this." If not, and I think my words were, "I'm not going to waste my time." And this is coming from a guy who supports the measure, okay? And I'm going to explain why I support it later on, but right now, I just got to get a lot of stuff off my chest. The timing of this was horrible, okay? Look, I'm not trying to bash you because I'm going to bash some of the members of the Council too. But, think about it this way, about a year and a half ago, Fresh Onishi introduced this same bill. I supported it. He and I were the only two guys to support it. But think of the beauty, this is what Mr. Onishi said at that time. If we had approved it, we would have had a long time to vet this thing and further work with the Legislature in expanding the uses that, right now, is limited to transportation. I had a conversation with Senate President Ron Kochi last session, "Hey, Ron, is it possible that we can expand the uses to maybe public safety and recreation? Because we don't have a big-ticket item like the rail here on this island. We have a lot of roads that needs to be addressed. We have a Mass Transit that is in really bad shape." Quite frankly, we all didn't need the study to tell us that we have a really bad Mass Transit system. Is my time up? And if we had done that, if we had just passed it at that time, we would have had time to repeal it if a needs assessment showed that it was not feasible, we didn't need it. But we lost that chance and I actually, I'm looking at some of you guys in here. There were a lot of options that were available to us at that time, but now, we're coming up with only a month and a half before our deadline, and there's no assurances that deadline is going to be extended. And quite frankly, who cares if it's extended already? I'm not going to even rely on something like that. It's either now or never. What I'm hearing from my colleagues is, Ms. Lee Loy, Ms. Poindexter, they need more time to talk to their constituents. Quite frankly, I don't think we need that much time because it's too much of a burden already to talk to all of these people, it's impossible. You got to use the media. You have to utilize the media or television, or whatever to get it out quickly. I did have a meeting with the Chamber of Commerce, incidentally, two weeks ago, right after our last Kona meeting and I gave them my position. So, Gordon is here, and he knows how I feel about this thing. Page 35 FC -27 February 6, 2018 But, you know, with all indications, Harry, that you didn't like it, and to just spring it up on us, that's kind of unfair. It's almost like the real property tax thing, which was, I think talked about by someone over here, where during the initial submission to us, no tax increase. You had stated on numerous occasions that you're not going to raise the taxes. Boom, we have one month to try to work out something when we get the amended budget back, to deal with a real property tax increase that wasn't on the radar. I mean I hope you can understand. You've come and apologized to us on numerous occasions for putting us in that position, but I don't think you've really understood the kind of position you put us in. We passed it. That's no problem, it's just working through all of these things in such a short amount of time. It's very difficult, especially when we don't have any idea that it's coming. If we had the idea that it's coming, fine, but we had no idea that it was coming. But actually, I will say this, when I saw that it was coming, I said, "Hey, I give Harry credit." Even if the timing was kind of off because I support it, okay? Now, maybe somebody else wants to—if I still have time, now I have criticized some members over here. Or not yet? CHR. DAVID: Well, you know what? I'll let you go, only because you brought up the subject that this is an important issue and each Council Member should be allowed to say their peace. So, I'm going to let you go. MAYOR KIM: I really would like to respond to him. CHR. DAVID: Yes, go ahead MR. CHUNG: Well, a lot of guys are going to want to respond to me after I say this. See, you and some of you guys talk about the TAT, you guys are fixated on this TAT matter. You spend more than half of your response to me talking about the TAT and how it was unfair and how these guys took it away. I told you guys on numerous occasions over the last three years, some of you weren't here, never mind about the TAT. We don't have any control over that. The State Legislature has control over it whether we like it or not. If we keep on fixating on this matter, we're going to be talking until we're blue in the face, okay? Now you, Harry, I'm going to get to them. You go to Honolulu, I think we had a travel article in the paper saying that you go to Honolulu twice maybe a year. You got to be going there more. The word we get from the Legislature is they don't see you over there. They want to see you. You are the Mayor of the County of Hawaii, you got to spend time there. You have to be—you are our point man. Page 36 FC -27 February 6, 2018 Val, no offense to you, but your relationship with the House isn't all that good, with the House leadership. Other guys over hereDru is our number one guy for the Legislature, Sue number two, me number three, you know? And you know, we try our best but really, if our leadership, Chairman and Mayor is not making the effort to build bridges over there, we're going to get a really hard time, so no sense even talk about the TAT already. I mean, really, let's not even talk about it and let's move forward. Now, I know I'm going to get blasted, but that's alright, that's my thoughts on this thing. Yeah, we keep on talking about TAT and unfairness and it's really nonsense already. I'm going to talk later on about why I support this bill. CHR. DAVID: Are you yielding? I believe, Mayor, you wanted todid you want to respond before I go? MAYOR KIM: I'm going to curb my reaction. I don't need you, Mr. Chung, to tell me how I should spend my time. I don't tell you how to spend your time. I don't tell you you're wasting your time. I don't need you to tell me how to waste my time. We set our priorities based on what we believe in. I've never criticized any of you on how you spend your time. I'm proud of the way I spend my time working for Hawaii. Know that. In regards to TAT, I will keep harping on that. The excise tax—the whole tax system is controlled by the State. It should be told of their unfairness. That tax was made for the County governments of Hawaii. They violated their commitment to us. They're the ones that limit our taxation policies and ability. I explained that. You think it's easy? And I did not say I will not raise taxes, I just said what every politician knows, you don't want to. I explained today what our—such a limitation on what we can and cannot do and that's why I'm here. Please remember I took office in 2017, December. Our first job was to pay the bills that we didn't create. Maybe you had a part in it. I didn't criticize you, how to spend your money, or our money. Our job was to pay the bill. That's what we did in regard to find out—you talk to Deanna here. She had the responsibility, also, to present to me what the bills were. You think I knew on December 5 what the bills were? That's when I was inaugurated. Ask her our in-house joke of what is it this time? Because the more we uncovered, the more we uncovered a debt of what we had to pay, from five million the first estimate, to near 20 million before we came out with a final budget. It was not an easy task, but we did it because that's what we had to do in time to get information on what was out there. That's why it came in at that time. And I'm not going beyond that because I resent some of the things you insinuated about me. So be it. I will continue to do my job and be open with the community and this Page 37 FC -27 February 6, 2018 Council on what we do. If you're critical of my time and how I spend it, that is your right. CHR. DAVID: I'll just go—keep it short. I'll have to go to Ms. Poindexter too. MS. POINDEXTER: I'm just going to respond, too, because I know when the public hears that the House leadership doesn't take too kindly to me or they don't like me, and maybe—so be it, because I went up on the special session and I stood up for the people and the people's voice of saying, "Hey, don't shove this down our throat." However, with that said, I thought we could move beyond that. I had conversations with them. I'm hoping that they're big enough to put that aside now and to work on what's best for the people. So, if we're going to be held hostage because the State is going to shove something down our throat, we need to stand up against them. I'm not saying that we're going to bend backwards and goI'm not going to fight them because I'm afraid that they're going to hate me and I need a good relationship with them. That's the whole problem right now with politics, and I'll leave it at that. Thank you. CHR. DAVID: Thank you, Ms. Poindexter. Before I go to Mr. Richards—yes, you may. Thank you. MR. CHUNG: Well, you know, you can feel however you like, Harry, but sorry you resent—oh no, I'm happy. I like to be criticized. I open myself to really, I do. And, you know, this actually should be viewed as a very refreshing conversation where everybody just throws their cards on the table instead of just bull shitting their way here and there and not telling the truth and trying to just make things nice. Hey, whatever, just throw it on the table. I'm not criticizing Ms. Poindexter. She did what she felt she had to do. I'm just stating a fact, and you know that is right, there's no love lost between you and the House leadership, for better or for worse. But, the reason why I bring those things up is because you guys keep on talking about the TAT. We should be just talking about the GET, but everything goes back to the TAT. We may get it, we may not get it. I don't know and it's getting worse and worse each year. But if we keep on talking about it, you either do something about it or don't talk about it anymore. You can make your nice presentation to the Legislature and give your position or whatever it is, but let's not really get any false expectations about that thing ever coming back until effective lobbying is done. That's my point. I think, Harry, you didn't really get—you didn't address that other part. I mean you talked about what kind of position you're in, but you never really did empathize with what kind of position we were put in. Never once during that rebuttal that you brought up about well, you know, I don't question what you're Page 38 FC -27 February 6, 2018 doing with your time and don't question mine. But never once did you show any empathy towards us. Thank you. CHR. DAVID: Thank you, Mr. Chung. Mr. Richards, is your light still? You're good? Alright, Ms. O'Hara. MS. O'HARA: Sorry, I thought Mr. Richards was going ahead. Thank you for all this discussion today, I mean that we've had so far today. It's an important topic and I think we also have to realize that while TAT has been an issue that we batted back and forth, and it doesn't seem to be getting any better. If it does get better this year, it's not going to be to the tune of what it once was and this is just something that we have to accept. We have to accept that and we have to act in a fiscally responsible manner. And I agree with Mr. Chung that our discussion here today is about the GET, but it is also about other forms of revenue support that we get here at the County. We know for a fact that federal monies for roads and infrastructure is declining, and under the current administration, we could see it decline significantly. So, that puts us in harm's way. Further, we know that fuel tax is declining in terms of the consumption numbers. I had a discussion with Mr. Brown from DPW (Department of Public Works) yesterday and this is a fact that we discussed last year at budget, that our fuel tax revenues are going to diminish, thanks to the fact that we have more fuel-efficient cars and more electric cars, et cetera. And if we get a functional, reliable bus service, that could go down even further. So, relying on fuel tax moving forward is going to get increasingly more dicey. So, we've got to look at the writing on the wall here and we can't keep pointing fingers and making excuses. We have to be fiscally responsible for pulling this County up to a level that its citizens would like, in terms of our quality of life. We're already hard hit at our parks in terms of having enough personnel. We can't cut any further and have good parks and recreation. We can't cut any further in virtually any of our departments, and we need more Police Officers in Puna, and we need more facilities in Puna. Puna is now 25 percent of this island's population and we have totally inadequate facilities in my district. So, this has got to stop. We've got to start addressing the needs of our communities, as Ms. Lee Loy pointed out, instead of ruling from Hilo town. And so, I'm not pointing fingers at anybody, I'm just saying we've got to start thinking a little bit differently, look at the handwriting on the wall, revenues from the federal government declining, revenues from fuel tax declining. We got to have a more diversified portfolio in terms of the revenue coming into this County. Page 39 FC -27 February 6, 2018 And it's not about necessarily relationships with the Legislature. I mean I have a good relationship with my local representatives. Our Senator submitted a testimony in support of this bill, Senator Ruderman, and we've seen other communications from other Senators. So, it's not that I want to point fingers at anybody. This is a difficult issue that we all collectively have to solve, and I, at this point, am willing to move this forward, continue the discussion, and see if the Council is willing to support offsets that I will bring to the Council in the future, because I don't want to see our citizens harmed unnecessarily. I think there's ways to prevent that from happening. So, that's what I want to see happen in the future, but I want a commitment from this administration that money freed up, if we were to go down this road and adopt this surcharge, is going to be spent on the services that are needed in the community, that are needed in my community. That's what I want as a way of commitment from the administration. Thank you. CHR. DAVID: Thank you, Ms. O'Hara. Okay, Council Members Mr. Chung, I'm going to allow you two minutes. MR. CHUNG: No, I was going to give my position on this now. CHR. DAVID: Okay, go ahead and then—because I'd like to say something before we even decide on whether to break for lunch. Mr. Kanuha wants to say something too. So, go ahead. MR. CHUNG: This is going to be long time though. You want me to wait until after lunch? CHR. DAVID: Yeah, let me MR. CHUNG: Do we have to break for lunch? CHR. DAVID: Well, I think if not, we can take a recess. We need a recess for a few minutes and then we can come back because right now, we've been going for several hours and we need to have a break, at least 15 minutes to regroup, okay? And then I'll call him first and then you when we come back. So, we need to take a recess and I want to thank—before you go, can I say something? Okay. Before we take this recess, listening to everybody, I cannot agree more with my Council Members. What I can agree on, right now, in my own mind, is the decision that we are faced to make here. It is not about the TAT. We are placed in this position because of the results of that decision on the TAT so regardless, we have to face what we have to face. But for me, one of the things that Page 40 FC -27 February 6, 2018 Mr. Chung said, I can agree with totally, and that's the fact that we are such we're under such a time crunch to get this talked about, flushed out, and decided because we as a Council have our own Sunshine deadlines. So, at the rate we're going, we're going to barely make the March 31 deadline, and that's very concerning to me because I was asked to waive this out of Finance and I refused. The reason I refused is because this is such an important matter, like Mr. Chung has said, that it deserves the full input from the community and the department and our discussion. They set aside a whole day for this and so—for Finance committee and I appreciate that. But, I had just one question, Ms. Sako, before we go. Is $25 million the total that the increase in the GE—is that the total revenue? MS. SAKO: That is the expected total revenue for a full fiscal year. The first year would only be half a fiscal year, so 12 and a half or so. But, that's the expected based on the numbers the State has on their website. The last time it got considered when Mr. Onishi was still here, they said they thought it would be higher, up to like $40 million. CHR. DAVID: That's where that number is coming from? MS. SAKO: Yes. CHR. DAVID: Because I'm remembering a $40 million number. MS. SAKO: But, they don't show us those numbers, they just guess at those numbers and it's the way they track their revenues. So, for me, I have to go with what I can see and feel and touch, and that's the information they report. CHR. DAVID: Okay, I just wanted to clarify that. So, we're going to go into recess right now. MS. LEE LOY: Chair? Just a point of personal privilege. I know we're going to recess, but this is the only opportunity that we're going to have with the Mayor and Finance Director, and I would just humbly ask if they could come back and sit with us because we are constrained by the Sunshine Law. This is the only opportunity for us to have this kind of conversation, so, could you folks please come back after we recess? That would be my only request. Thank you. CHR. DAVID: Thank you. That's a good suggestion and I would ask if that could be done, we'd be grateful. I'm going to take a half an hour recess and we'll be back here at one thirty, okay? Thank you. We're in recess. Recess: At 1:02 p.m., the Chair called for a recess. Reconvene: The meeting reconvened at 1:40 p.m. Page 41 FC -27 February 6, 2018 CHR. DAVID: Okay, Council Members, I am taking Finance Committee out of recess and we shall continue. So, who wants to start? Oh yes, Mr. Kanuha, you wanted to say something, right? MR. KANUHA: Sure, I'll say a few things. Thank you, Madam Chair and Deanna, thank you, mahalo for the presentation. I'm really going to ditto a lot of what my fellow Council Members said about the timing of this and it wasn't fun to read about it in the newspaper. I got to repeat it again because it was tough. I didn't vote for the tax increase for the real property. I didn't feel we did enough to reduce the amount that we were spending to justify that. I did vote for the fuel because I really knew that our County needed the extra funds to pay for the badly needed roads. My whole thing was public safety, getting people from their house to work, the kids to their school as safely as possible. That was my main reason and only reason why I voted for the tax increase for the fuel tax. Looking at the GET, I wasn't too fond of what happened at the special session, but being that we're in the situation to deal with it, again, the timing for it to come up right now, after all the tax increases and all the additional benefits paid out to everybody, it's really tough. I'm not going toI'm emphasizing that, but I know you heard that from everybody, I know you understand that as well. Sure, if we had more time to deal with this it might make a different, have a, be a different story, but I don't think that'll make too much of a difference. I think we all talked to as many people as possible when we were dealt this the last time, or from when the Legislature gave this to us from the special session to say that this could happen. I think we all had it in our minds where it might be going. The thing with me is, and it was brought up earlier, is when we increase anything, I want to see where exactly it's going. I want to see the details of where all the money is going to be put to. We said that with the fuel tax and it came back, you know, this road's going to be paved, this road's going to be paved, you know, the fine details. That's what made it easier for us to understand, which made it easier for our constituents to understand. It was palatable to, not everybody, but at least the public knew where the funds were going to go to. This one, I have no idea. We have a lot of terrible roads, we are Mass Transit; as we got that presentation a couple of weeks ago, was in dire, is in a dire situation and we all realize that. It's just I'm not—I don't have guarantees of where the monies going to go to. I know you guys gave a list and I appreciate that, you know, Ane Keohokalole needs to be built and our roads need to be paved, and our safe routes to schools, unreal kinds of stuff we have to do for this County. But until I get a solid list of this is going to be done, and this is Page 42 FC -27 February 6, 2018 going to be done for sure, guaranteed, it's real hard for me to vote for something like this. You know, 25 million, I think this Council said is loud and clear, we're not going to give blank checks. That's a tough situation to put all of us in, and I'm not trying to talk down to the administration because that's not what I'm emphasizing. I understand we're in a tough situation here. Being able to diversify our revenues is something that the Legislature never gives us, so I understand. To me, I think this bill helps the poorest districts. If you're going to be putting a lot towards the Mass Transit, that's the people that need the most help, that need to get to their services, that need to get to work. Just in terms of my position, I'm still open. I want to hear everybody, but it's hard for me to give a vote for a blank check right now. So, I'll just say that right now and then I can hopefully think of something to say afterwards, but that's kind of where I stand right now, Madam Chair. MS. SAKO: Can I respond briefly? CHR. DAVID: Thank you. MS. SAKO: I think one of the situations we're in, as Mr. Richards said, when we got the Mass Transit Master Plan, it shows like 20 million per year we could spend on just doing transit. So, one thing is we could put all the money to transit and that would be it, but I think we know our roads are poor too. So, I really kind of do need to talk to the new Transit Administrator to get a good feel for what the priorities are and what do we need to do first? You know, part of it is to get to make it a good system, some of it is to make it an awesome system, and maybe we have to phase that in. It's unfortunate that I don't have the exact figures now. She starts on the 16th, so by the next reading, we should have a better idea of what do we need right away and what can be pushed down the road a little bit farther. CHR. DAVID: Mr. Kanuha. MR. KANUHA: Thank you and thank you for saying that because I totally forgot to bring that up as well. That's why it makes it tough, again, that we don't have the Administrator in front of us to really go down the list of whether they evenI have no idea if that person supports the draft Plan or not. It's hard to think the possibilities of what could possibly happen, but again, a big chunk of change is going to something that we don't even know what to talk about, right? So, that's kind of the hard thing for me to decide, at least. So, thank you. Page 43 FC -27 February 6, 2018 CHR. DAVID: Thank you, Mr. Kanuha. Mr. Chung. MR. CHUNG: Thank you. I'm going to give a pitch for this GET. It's really hard for me to do so when the real main pitch man isn't here as requested earlier, and it really indicates, and I'm not trying to beat a dead horse, but it really indicates, his half-heartedness about this thing, regardless of what his words are. But, I'm going to still make a pitch for the GET, and I don't know if it's going to fall upon deaf ears, and whatever, it is what it is. There's been a lot of talk about the GET being a regressive tax. Mayor Kim said all the studies have shown that it affects the poor disproportionately or more than others. The thing about it is this though, they have to do studies to show that. All I know in my simple mind is this, it's a half percent across the board. On its face, it is a neutral tax, it's not a regressive tax, it's not a progressive tax, it is a neutral tax. Having said that though, if it does in fact affect the poor more, as Mr. Kanuha stated, and which I've stated on numerous occasions, imposing this tax will help the poor immeasurably, particularly in the rural areas. Is it going to affect Hilo? Urban? District of Hilo or Kailua-Kona? Not that much. We're talking about maybe minor enhancements, which are going to make our transit system better, but it's not going to make it that much, and I represent Hilo. I'm actually going to bat for the rural districts and I'll tell you, based on my work experience, I work with a lot of poor people and one of the problems they have, if not the most pressing problem for all of these individuals, is transportation. Getting out of the deepest and darkest recesses of Nanawale or Eden Rock or wherever, out to necessary services that are going to help them get reunified with their children. They cannot get to these services, or medical appointments, and all of these things. This is going to help poor people. I cannot understand how people are going to use poverty as an impediment to us helping the poor people. If you guys don't pass this, I got no problem. I'm still going to drive my car, right? And if I have to go to Honolulu and pay the half percent for their rail system or go to Kauai, pay for their roads, or go to Maui if they pass it, and pay for their things, well then, so be it. And then whenever they come here, and when the tourist come here, well then, we have to tolerate our poor roads, which we have the most linear miles of any island in the State of Hawaii. Maybe if we put them all together, you know? But, if that's what we're satisfied with, or if we think we can find more novel ways of doing things, well so be it, but I haven't seen it really, anything that really has worked. As it relates to Puna districts and my district, I have Chong Street, which is a private road, okay? A lot of the people over there have been clamoring for the longest time, "Pave our road," and we cannot. Why? Because the fuel tax monies, which are established by State statute, do not allow for that. But this could allow for it because it's not fuel tax monies, and we could establish an ordinance, which would allow for certain private roads to be improved. This is Page 44 FC -27 February 6, 2018 our big chance, in terms of substandard roads or private roads. This is our big chance, and if we're going to throw it away, well then, so be it. Fine, because that is the major impediment. The fuel tax monies do not allow and that's how we fix roads right now. We talked about the Mass Transit system. It's kind of fortuitous and I credit Ms. Ruggles for bringing that presentation to the Council the last time. It was very clear from the consultant and we didn't have to hear a consultant tell us this. We all know we have a really bad transit system and it's really a function of the fact that we have such a big island and all of these private roads and should I? CHR. DAVID: You can go ahead. MR. CHUNG: You know, it's a function of our size, really, and the rural nature of our island. But, I got to say to Jen, Maile, Eileen, and Val, I'm very confident that this is going to help your districts, you know? It's not going to help my district too much, it's going to help you guys, and it shouldn't be pitched as something that's going to balance the budget. This has to be something like a forward -thinking measure, something that's going to help us move from here into the future. We can have a solid road management program. Right now, we still don't have sufficient funds. Look at all the roads that we have, they're all in disrepair. This could really help out. The reality of the situation is if we don't pass this, I don't know how many of you have really spent some time with the Legislature, trying to work with these guys, but if we don't pass this, if we ever go to the Legislature and ask them for money, down, we had our chance. You're telling me that we're going to have to find our creative ways of getting money? We're not going to get the TAT, I said that already. I mean, if it does, it's a gift, okay? Ms. O'Hara has talked about maybe adjusting some of the other taxes that we impose. I'm certainly in favor of looking into that because I think a disproportionate amount of our expenses are being borne by real property owners, and that's not right. To me, this should be the model. We should be advocating State Legislature, to allow us to diversify our revenue stream, and this is one such way. If we control—that way, we can control our own destiny. We don't have to go to the Legislature unless they come up with legislation that severely impacts us, of course. But, if they give us this taxing authority, which they have, now we can really start to adjust things. Now we can start to get realistically creative. Move down the real property taxes somewhat, move this up, it's all a balancing act. This will enable us to do that. Now one thing that came up time and time again, both from some speakers as well as members of this Council, it had to do with management. What do we do with this money? Because if we do get it, now we're going to be flushed with Page 45 FC -27 February 6, 2018 money. I cannot answer that because we're not the management side of government, right? But, from the legislative side, what we could do is, I think Jen talked about, I think it was Jen who talked about, where's the rainy -day fund? Was it you? Yeah. We can establish that and we can sequester a lot of money in that rainy -day fund and have it carry over. If administration needs money from it, okay, we can release it, but we can sequester that amount. That's within our power to do that. So, we can somehow control the outflow of the monies to make sure that we don't all of a sudden, expand government and now we're stuck at the same place we are right now. I think that's what Mary Begier was talking about when she said the trust issue. It's not so much trusting because I don't want to put words in her mouth, but I think what she meant by trust is how can we trust government to use our money wisely? So look, the reality of the situation is this, I think all of us know this, the State is making us out to be the bad guys. We got to make the decision to raise the taxes. When you think about it, very simply, they could have done this, impose the half percent Statewide and say that everyone will get the monies that are derived from their counties. How easy. No, they don't want to be the guys to impose the tax. We got to be the guys to impose the tax. I'm willing to step up if it means that I jeopardize my political career, whatever. Who cares? I'm willing to step up because I believe that this, in the long run, is going to improve the quality of life for everyone on this island because if we help the poor, if we can get a good Mass Transit system and we can help the poor, everybody benefits. We cannot use our poverty as an impediment to moving forward. We always use that as an excuse, "We're too poor." If we do that, we will remain poor and we will keep on getting poorer. Got to help the poor, and this is the way to do it, in my opinion. Hope you guys consider what I have to say. Thank you. CHR. DAVID: Thank you, Mr. Chung. Ms. Poindexter. MS. POINDEXTER: I agree it could help with all my roads in my district. The only thing is, I would eat them all up because out of the 150 miles of roads in limbo, 50 percent is in District one. And then private roads, when we talk about private roads, you look at District one and all of the—since the closure of the sugar company, we inherited all the private roads and Mayor, you have—we've brought people before you because mill camp roads throughout the district, they have a lot of mill camp roads that are asking the County to take it over, which we can't. We can't afford to do it, and maybe this money will—but it will eat it up and then what happens to the transportation? So, all I'm saying is I need to go to my community, and I have been—all the community meetings that I've been attending for associations and all, I have been talking to them about this and will come back to them and bring them back this information. Page 46 FC -27 February 6, 2018 At this point, they don't want it right now, you know? It's a difficult thing right now. I cannot, in my heart of hearts, vote yes for this when I know my constituents are saying no, they're real upset. I mean I've had peopleI cannot even tell you what they call and—when they first saw our raisesso, it's just — I know everybody is saying it's the wrong timing. It is. we need to look at other ways, for now. I don't think delayingI don't think we're going to get a Mass Transit up in a year or whatever, but we've lost opportunities at the federal level, too, for funding, so we put ourselves in this situation as well, not just the TAT. You know, we had an opportunity at the federal level to get transportation cost that we did not go after. So, we have some of our faults and like Aaron was saying, the legislators are putting this on us. I don't have to take it. I can put it back on them because they're telling me to be brave, it takes bravery and guts. I just want to say practice what they preach because it takes bravery and guts to help our islands out like they helped Honolulu City and County with their rail system. I'm asking that we go and ask the legislators. I don't know if you talked to, Mayor Kim, if you spoke with Mayor Caldwell on how they approached the Legislature for a bailout? We got to think about that. So, I'm sorry, I cannot vote for this. Thank you. MAYOR KIM: May I comment? I disagree with Mr. Chung when he said I never said anything in regard to the predicament that I placed on the Council. I really thought I did, and every time I come before you for something that puts in an uncomfortable position, I recognize that. The one thing I have to emphasize here, the difficulty on all of us on this, what I'm saying is that we're asking the people of this island who put us here, to trust what we're going to do with the funds that we're asking for, and that's a small word and a huge thing to ask. All I can go is by track record. We talk about the rainy -day fund, I think you know we created that rainy -fund in my second term because things were good. We put money in that. We were the first County in the State to put so much money in GASB (Governmental Accounting Standards Board) when it was not required because money was there. I'm talking about forty million plus. We put money in the emergency fund, and that's all the things we did to show the Council that we're going to be very conscious in regards to how we spend their money, and I'll stand by that, of what we did. And we also dropped the taxes, if you recall, in the second term. The only time we raised it was to balance the budget because we were short a measly three and a half million dollars because of 911. As soon as we were able, we dropped it. In regard to this, I'll agree with Mr. Chung regards to the purpose of this money. The law will require us where to spend it, on transportation. If some of you can remember way back when I talked to you about providing Page 47 FC -27 February 6, 2018 transportation free because we could afford it. At that time, it was a smaller today and I give the example of a person who commuted to Honoka`a every day. It was a time when gas was above four dollars, that she was spending approximately $400 a month on just gas for work. I said I'm going to give this person a $400 a month raise, as you were indicating of helping the poor, for those that were having a hard time. And we gave hundreds of people huge raises by saying your bus fare is free. Unfortunately, time made it very difficult to keep that up because of a budgetary thing. I asked you and I asked the public to trust that we will spend this money wisely. I ask you to trust that we'll come before you that you have the approving authority to modify, approve, or disapprove. This money is dictated by the Legislature, that if you support and approve this, to spend it on transportation - related issues. You know the process, we come to you with a proposal and we'll come to you saying this is how we will spend this increase. On the Transit System, I want you all to know, I think most of you know this, the difficulty it was to come during the year and take a ride down to the transit base yard and see the condition they were in. Those are all things of expenses that you don't know until you get in there. And the media made it enough of an issue so everybody knew that it was in a bad state. We stated quite clearly, "We'll fix it, but we need time." And the time, obviously, because we don't have enough money to buy it all at once. I believeI do not approve the State saying this is the money, we're giving this authority but you got to spend it this way. I would hope they would trust us to know how best to spend our own money, but so be it. They know our position on that. If this is granted, we will spend this money on one purpose only, those related for transportation. And of all those that needs transportation most, and I understand your position, Poindexter, I know the hassle you take. I live there, remember? Very close to the people. They live right next door to you. This is to help the poor. This transportation system is mainly used by people who need transportation and hopefully, this money will expedite making it better, faster. MS. POINDEXTER: Thank you, Mayor, for that and I just want to end by saying that we need, again, from the first time I spoke, the very first time, we need to start talking about bringing services to the communities, versus having all the rural communities, like Ka`u, Pahoa, having to travel so far for services. Because again, if we become isolated as a community, can we survive as a community? If things go down, there's not going to be a bus thing there. Is the community going to be able to manage itself? No, we need to beef up health- care services in Puna. We need an ambulance. We need a lot more. We need that health care facility to be functioning in a way that if they become isolated, Page 48 FC -27 February 6, 2018 they can survive within their community. Yes, they need help with roads, they need help with transportation within their community so it's a walkable, living community, sustainability within itself. But, how does that happen? That happens when we said when we talked about the fuel tax, we said we need to put this fuel tax on, we need to increase it because we need to catch up in Puna. So, that is where I talk about trust and stuff, and at this time, even if you answer, I'll just yield at this time though. MAYOR KIM: If I may, say one thing more I wanted to say. I'm sorry for coming back late. On the bus system, I don't know how many times I wish we could say yes tome of the problems brought to us in the Ka`u district, the kids that, you know, the high school is located in Pahala, as we all know, because of plantation days, and most of the kids come from the Oceanview area, the southwest portion. A lot of them cannot turn out for school activities and sports and other things, afterschool things because of transportation. Occasionally, we tried to make an extra bus for them so they could go home, I mean participate and go home. There's so many things that bus transportation, good one, better ones, will make it better for people, not just to go to work or shop or whatever. And I know Ms. Poindexter, what you said, I ask of you to please reconsider for your constituents, although it's point blank, look again. I ask you to trust us that we will bring down a proposal to you, how this money will be spent, every dollar of it. And part of it is just in transit, others will be related to transportation, to make life better. CHR. DAVID: Thank you, Mayor. Mr. Chung. MR. CHUNG: Thank you. I just wanted to add a few more things onto my earlier discussion. You know, I think, I'm fairly confident, but I could be wrong, maybe I have to consult my resident experts here, Dru and Sue, but if we do pass this, I know one of the problems with many of us and the Mayor has stated about the proposal, is that it's very limited in its uses. I'm fairly confident that if we pass it, the Legislature will now expand it because we don't have that huge project that Oahu has. They're going to realize that it's prudent to allow for more things such as public safety, recreation, and all of these other things. I cannot say I'm going to stake my reputation on this, that they are going to change it, but I'm fairly confident that they're going to do it. I really believe that. You know, there was something brought up earlier, too, by Sally Ancheta, which I never, ever thought about, and that was access to physical activities. I had never thought about that. Our island is now a Blue Zone designated island and this—we have a person who's telling us that this is going to get people out Page 49 FC -27 February 6, 2018 to places where they can get healthy and recreate. I mean I hope I'm not just saying these things, it's falling upon deaf ears, but it's going to help so many people, and not really, not my district people. It's all the outlying poor people. Please consider this and if worse comes to worse, we could even repeal it prior to 2019 if things don't work out. I mean I would say pass it and then do the needs assessment. Cannot do it now, it's too late already to come up with a needs assessment to make sure we need this money. Just pass it and then do the road show. All of us, we can do it. The Mayor can do it, we can all do it. We have some time until 2019 and then we can always repeal it if it doesn't work out. But, I think we will see that there are needs out there. Thanks. CHR. DAVID: Thank you, Mr. Chung. Mr. Kanuha. MR. KANUHA: Just a point of clarification. I know it was stated earlier that the monies could be used to pay for maintenance on private roads. I just want to clarify that and see exactly what the monies can—maybe Corporation Counsel or (Note: At this time, Deputy Corporation Counsel Craig Masuda came forward to address the members of the Committee.) MR. MASUDA: Good afternoon, Craig Masuda, Corporation Counsel Deputy. In answer to your question, I'm going to read from Section 46-16.8 County Surcharge on State Tax. Although it's in this section that I just quoted, it's also within the Senate bill, which became the law that allows us to do it now. So, this is for counties population equal to or less than 500,000, so that's us. Number one, "Operating or capital cost for public transportation within each county for public transportation systems including public roadways or highways, public buses, trains, ferry's, pedestrian pass, sidewalks, or bicycle paths," and number two, "expenses in complying with the American with Disabilities Act of 1990, with respect to paragraph one," which is the one I just read. So, that's your limitations. You have to understand, too, taxation is something that is really controlled by the State, right? We only have the taxing authorities that the State has and this has limited uses and those were what I just read. MR. KANUHA: Would it be—is that the Corporation Counsel's interpretation or could that beI know it's right there but like, I know we have different interpretations from what the State has, you know, in terms of how they consider Page 50 FC -27 February 6, 2018 MR. MASUDA: The question you're trying to ask isI think this is what you're trying to ask. Does public transportation systems include private roadways? MR. KANUHA: Yes. MR. MASUDA: I don't think so because the way it's written, "including public roadways." So, it's kind of defining what public transportation systems are. MR. KANUHA: Okay, thank you. I just wanted that clarification. CHR. DAVID: Thank you, Mr. Kanuha. Ms. Eoff, and then I'll go to you, Ms. O'Hara. MS. EOFF: Just a clarification. So, what was brought up earlier, because it doesn't just say County highways, or County roads, if our public transportation system required improvements to some of the State roads or highways, would our money be expected to be used for that too? MR. MASUDA: That's tough to say because all this says is "within each county." It doesn't designate between MS. EOFF: Right, so just those roads exist within our County and may be necessary to improve the public transportation MR. MASUDA: Right. It doesn't say County systems or State systems, it says public systems. But of course, we're going to tell the State, "No, you got to pay for your own," right? MS. EOFF: You pay for that one. Right. So, I know I asked Joe this question earlier, but it's still bothering me because I thought when Mr. Onishi brought this up the previous term, I thought I remembered him telling us that even if we voted to approve of giving ourselves the option to attach the surcharge, that we didn't have to enact it right away. And even if we did, we didn't have to go to half a percent, we could choose any percent, as long as we did it within the time allowed, which was starting at a certain date and ending before a certain date. It didn't have to be right away. But, I asked Joe that earlier and he said that no, he believed that it means it would begin January 2019. So, I was just looking it over— MR. MASUDA: Yeah, that's in the last State legislation. So, it has to be by March—March 31 is the deadline? MS. EOFF: We have to decide by March 31 and then Page 51 FC -27 February 6, 2018 MR. MASUDA: It has to be in place by March 31. MS. EOFF: So it can go into effect January? MR. MASUDA: Right. And prior to that, you folks have to do the 10 -days' notice for the public hearing, yeah? So, don't forget that. MS. EOFF: Right. MR. MASUDA: As far as what Mr. Onishi said the last time, I wasn't here. MS. EOFF: Right, I mean with this act one that happened in the special session—there were previous dates for a different—back in 2007, but they did change this one word so on page four, little b, it says "each County surcharge on State tax that may be adopted or extended pursuant to Section 46-16.8, shall be levied beginning in," and they changed the word "the" to "a," "to `a' taxable year after the adoption of the relevant County ordinance, provided that no surcharge on State tax can be levied prior to," and then it gives you these dates. But they changed the word "the" to "a" taxable year, and so I guess maybe I thought that meant any taxable year after MR. MASUDA: I don't have that in front of me. MS. EOFF: Meaning, that we could give ourselves the ability to do it but MR. MASUDA: What page are you on? MS. EOFF: I'm on page four of—it's Act 001, Senate Bill four on page four. At the top, starting with b in that paragraph, they amended a word "the" to "a" taxable year. So, I know the deadline is March 31 to adopt the ability of being able to do it, but I was just wondering if it has to start January 2019, or if that would be the way we could buy a little more time to understand how we were going to use the money and if our general population is okay with the half a percent. MR. MASUDA: Yeah, I'm sorry, I don't read it that way. MS. EOFF: Okay, I guess Joe didn't either, so I think I was misinterpreting it. MR. MASUDA: Yeah, because I'm looking at lb, right below that, where it gives you a definite date of January 1, 2019. MS. EOFF: Prior to—does it mean any time after? MR. MASUDA: I don't read it that way. It may be wrong, but I don't read it Page 52 FC -27 February 6, 2018 MS. EOFF: It's just a little hard to understand. MR. MASUDA: Thank you. CHR. DAVID: Ms. Eoff, are you yielding? MS. EOFF: Yes. CHR. DAVID: Thank you. Ms. O'Hara. MS. O'HARA: Thank you, Chair. While it may preclude expenditures on any private roads, open to the public, of which more than 50 percent of the roads in my district are, it will free up funds in our General Fund. I have always dreamt about the ability of the County to develop some grant-in-aid program for the private subdivisions, to help with road paving because they have to keep the roads open to the public. They cannot cordon them off and gate them off and more and more people in Puna means more and more road use. So, I'm hoping that some money freed up out of General Fund could be used for that purpose, whether or not this particular money can, and it seems that perhaps it can't, because of the restriction of language. There is another pot of money that could be considered for that. We haven't acknowledged that we received quite a few written testimonies as well as seven or eight verbal testimonies this morning. In keeping track of that, I found that 34 were in support of this measure, eight either opposing or commenting, and of those eight, excuse me, nine, three of them, when I read, actually supported the surcharge. They just wanted us to take some action to prevent charging GE tax on medical services and food. I agree 100 percent, but it's not our function as the County Council to do that. Unfortunately, that's a State function. Otherwise, they actually support it, so I'll revise those numbers. It was more like 37 in support and six opposing. So, we are supposed to be listening to our constituents. I've also had many discussions already out there in the public in the short time that we've been given to have this discussion, way too short. And if it's properly discussed and messaged properly, there isn't a big opposition in my district, the poorest of the poor because they see the benefit it can provide. When we start talking in language of three times increase and this stuff when we're only talking pennies, we are over stating the impact on households and this is ultimately where it comes down to. What are the impacts on household? I know there are ways that we can mitigate the most negative impacts of this tax increase on the poorest of the poor. I know there are ways we can do that. I've already suggested a couple and I got legislation already in the chute, working as fast as I can to come to the Council, kind of on a parallel track with this measure. Page 53 FC -27 February 6, 2018 And timing was horrible. We've already gone over that, especially as it came out the same day or the after the salary increases, which I'm going to state publicly for the people that don't realize the County Council has no control over that, neither does the Mayor. This is the way it's set up and that salary increase wasn't the real significant increase in expenditures that we're facing as a County because the real significant expenditures are the increases in all the union wages. That's a large increase that we're going to be looking at this year. And if I can just ask the Director of Finance, how much additional millions are we going to need in this coming year's budget to cover the already approved increases in union wages and salaries? (Note: At this time, Finance Director Deanna Sako came forward to address the members of the Committee.) MS. SAKO: I don't have the specific figure with me, but it's probably with all the unions together, it's between five and ten million or a little bit more. It's the fringe impact on top of it that's kind of what's hurting us even more. MS. O'HARA: So, even if the bill that seems to be potentially moving through the Legislature gets adopted, and we get a little bit more in TAT, maybe additional ten million, that would basically offset those salary and wage costs, and that's it? MS. SAKO: Yes. MS. O'HARA: So, I keep coming back to the fact that we can't improve the quality of services provided by the County of Hawaii, in particular transport services, roads, road maintenance, road construction. We can't do that without increasing the pie. We have basically pulled back on every department in this County and pulled back for the last 10 years. It's been going on for 10 years, folks. I don't see us getting there without increasing the size of the pie. So, I know it's painful, it's always painful, but as a member of the public and you're asked, "Would you like to be pay additional tax or not?" Of course, your first response is going to be not, but if you're asked if you're going to pay additional tax and you're going to get additional services, that's a different discussion. So, it's really about how you message it and how you take it out to the public. So, I am going to be supporting this. Moving forward, like I said, I do have other actions that I want to see how the Council responds to in terms of my final decision down the road, a couple reads. I want to hear more from the public. I don't think that the 45 testimonies that we had before us today is enough to really test the public opinion on this, and I do want to know how the money is going to be expended because the needs in my district are huge. I know they're Page 54 FC -27 February 6, 2018 huge across the island, but we need more Police Officers. We need new facilities. So with that, I'll yield. CHR. DAVID: Thank you, Ms. O'Hara. Mr. Chung. MR. CHUNG: Thank you. You know, we're really going down a slippery slope if we're going to try to gauge the pulse of the public in this regard. I mean there are many people who are actually in favor because they feel it's a fair way of raising revenues. But nonetheless, I think each of us has programmed within our DNA this aversion to increase taxes, right? Just by nature already. So, if you ask a person, "You want more taxes or increase?" That's going to be tough and it's going to be a cumbersome process to try to explain the benefits to people, but if we do go that extra route, I think we can make inroads. But, I don't think you'll ever come to a point where more people than not will be supporting this. You just can't reach that many people. I just wanted to caution all of you on that regard. In terms of using the monies for private roads, Mr. Kanuha asked a question, Mr. Masuda answered it. Yeah, it says that it will be used for public highways, but, and I don't know what position the Corporation Counsel is going to take, but I think it is within our power to enact legislation and ordinance which could designate certain private roads for public use because they're being used for the public anyway, a lot of these things. They're not solely used for the people living along these roads. And it's been done, I know it's been done throughout the United States where you dedicate private roads for public use. You're not assuming ownership. But that would enable us to go in there and at least layout some things, go in for repairs for time to time, with perhaps a threshold amount. You dedicate like four percent to private roads because you don't want to take too much away from the actual County roads. But, I believe it can be done. And if not, then Ms. O'Hara also brought up another way, you free up other monies that aren't tied to this legislation. But, I think we could do it, I really do. Thank you. CHR. DAVID: Thank you, Mr. Chung. Ms. Ruggles. MS. RUGGLES: Thank you. I just wanted to mention that I sincerely appreciate your sentiment, Mr. Chung, and that is your perspective that this will help the poor districts like Puna. I would agree in that it's not appropriate to use poverty as an impediment if we had no other options. But, it is my understanding that we do have other options to help the poor without hurting them. In 2013, like I said, Honolulu City Council passed a bill that TAT made a new tax class for a million dollar second homes. And with that, they were able to Page 55 FC -27 February 6, 2018 bring in $39 million in revenue in one budget cycle. That would more than cover the 25 million that we need to do these improvements. I also presented a scenario where we increase property tax rates on assets. We didn't touch homeowners, while providing automatic exemptions to protect more than half of the population within the lower property tax evaluations. As far as the study on how this impact the poor people, we don't need a study to show that general excise tax takes a higher percentage of poor people's income and a smaller percentage of the wealthy's income. That means that is regressive and it will impact poor people more than the wealthier people. Increasing the GE tax will not hurt poor people when there are alternatives. So, yes, lets address the needs of our community, and yeah, we do need to start thinking a little differently. Let's address them by not hurting them more by not taxing them more, but taxing those who can afford it. I don't want to see our citizens harmed unnecessarily either. If we did have a commitment from the administration that the general excise tax would be spent in our district, like Ms. O'Hara had mentioned, I would be a little bit more amenable to this. But, there is no guarantee that business will not be continued, as usual, especially when the administration cannot acknowledge the historical and factual disparity and unequal level of service that Puna has. People cannot get to services in our district because we don't have them. I just want to clarify with Corporation Counsel, is there any way that we could exempt food and medicine? Is that within our power at all, as the Council? (Note: At this time, Corporation Counsel Joseph Kamelamela came forward to address the members of the Committee.) MR. KAMELAMELA: Joseph Kamelamela, Corporation Counsel. No. MS. RUGGLES: Okay, thank you. That's very disappointing. MAYOR KIM: Ms. Ruggles, may I interrupt and address some of your concerns? MS. RUGGLES: Sure. MAYOR KIM: Puna is my home. I think members of this Council know that we don't flaunt what we've done or not done, but we've stated the importance of Puna. I'm proud of the Police Station and Fire Station, making Puna high priority. The highest. I'm proud of the Pohoiki Park area, that it was purchased by the County. Page 56 FC -27 February 6, 2018 Believe it or not, staff will tell you we looked into ways and continue to look into ways of how we can help the private subdivisions. Some of them are more complexed and others for example, as you know, some are incorporated and they collect road maintenance fees, and others are not. We've even discussed maybe we can make matching funds for those that are incorporated. I'm just giving these examples, Ms. Ruggles, to tell you that I appreciate your concern and it is shared. I don't know what I can say that will give you a trust that this is important to us. And those who have heard me talk, even this last Legislature that—and I presented what our problems were. I identified two districts, and Puna was number one, the fastest growing district in the State, the largest district in the island of Hawaii by population. 72 percent of the people there are classified low-income so qualify for free lunch and breakfast. Like you, I love my home, and like you, I'll try everything to make sure that we make life a little better for them. To subsidize private roads is something that we will try to see how we can do it. But, in fairness to the rest of the tax payers, it has to be of fairness to the rest of the tax payers. I'll end this with this, Ms. Poindexter, I'll go to Honoka`a and other places with you, too, just to file a request. But Ms. Ruggles, in seriousness, I share everything you said about the plight of Puna and you have my commitment on that. MS. RUGGLES: Thank you. Unfortunately, I will need something that's a little more legally binding than an oral commitment. I'm sorry. I yield, thank you. CHR. DAVID: Thank you, Ms. Ruggles. Mr. Chung, you had your light on. Are you—okay, are you ready? MR. CHUNG: Yeah. CHR. DAVID: Okay, Mr. Chung then Ms. Lee Loy. MR. CHUNG: I mean this is a great discussion in my opinion. With regard to Ms. Ruggles' idea, this is not a novel idea. Where's Deanna? She's not here? Okay, it's basically the luxury tax. We've been discussing this for at least the last three years and I wish Deanna was here or maybe Craig could answer this. What is the status of that appeal that was—still in litigation? Because I did tell Deanna on the record to support your position. If the City and County's position is ever sustained, let's go. Let's do it over here. But, it doesn't mean we should exclude other sources of revenue as well. I mean weI don't think we might—you know, we have a lot of expensive properties, second homes out there, you know, the Gold Coast of our island. But our goal should be to diversify our revenue stream, really. To just summarily dismiss this other form of revenue generation because we have the possibility of doing this other thing, might, no offense, might be a bit short-sighted. But, I'm with you on that and I Page 57 FC -27 February 6, 2018 would support you on that if and when it's resolved at that higher court. We're still waiting for that. We've been discussing this for a while, it's really not a novel idea. With regard to the exemption for food and drugs, not unlike what I had said earlier regarding being able to use the funds for different purposes, we still have a shot. If we pass this, we can always go—we're in a somewhat of a leverage position. I mean better than if we had not passed it, to go to the Legislature and say, "Hey look, we're in a unique situation, we're not like Honolulu. Can you guys at least give us this flexibility to exclude food and drugs, because that was one of the sticking points when it came up for discussion, because it may affect the poor people, our elderly, a little bit more than others. Would you guys consider changing that, allowing us some flexibility in that regard?" I'm not as confident in this one as I am with the other thing, but it's possible. We would hate to lose this opportunity and see them change it later on for Kauai County and Maui, I mean that would be kind of sad. With regard to the services that are available in Puna and out in Hamakua that both you and Val talked about, I mean I don't know how to address that because developing services in those areas should be a private function and it's driven by needs. Now, I know Puna has a lot of needs, but the fact that the business community is not moving in there says something. I don't know what. I mean we got to put our heads together on this, but it's not as simple as you might make it out to be. I think Mayor Kim said he has a lot of aloha for that area and we're all trying to help, but there's some things that are beyond our control. I mean as we all know, the rural areas are averse to development, so if you can't have development, then you can't have commercialization of certain things. It's just the chicken and the egg a lot of times. But, I'm with you on that, you have my support right now today, but I also say let's try to diversify our revenue stream. Let's not foreclose ourselves from other ways of generating money. CHR. DAVID: Thank you, Mr. Chung. Ms. Lee Loy, you were next, right? Thank you, and then I'll go to you, Ms. Ruggles. MS. LEE LOY: Thank you. I continue to be on the fence, which is why I really appreciate all of this conversation. Mr. Chung just brought up that issue on the luxury tax because I have been tracking that and I actually have legislation to go once that issue is settled. I'm moving in. I am moving in on something to look at diversifying and providing a different revenue source. I'm just going to urge everybody to continue to keep an open mind because that's what I'm trying to do right now. I'm drawn back to something I was taught a very long time ago, you control what you can control. What is under Page 58 FC -27 February 6, 2018 our control right now, as far as revenue sources, is real property tax, fuel tax, and this option with the GE. And again, I still need to hear more. And then, I begin to lean on some of the other skillsets and training that I've learned while being a planner. Cities that are thriving and have a robust economy are structured around their infrastructure when they have transit, when they have rail. Anybody who's been to the mainland, the cities that thrive have a very robust infrastructure, but not only infrastructure by way of transportation, but sewer systems, park systems, those are the cities that thrive. I really want to ask a few of my colleagues to not say no so quickly because the option that's being pushed out there is, let's go back to the State for a bailout, and that's not something we can control and it would hurt. We talk about people in Puna who are poor. My district has people who are on fixed incomes, which is very different. They cannot qualify for subsidies, which other areas can qualify for because they're fixed income is too high. So, the bailout that you guys are asking for are on the backs of those who have fixed incomes. So, please, just take a pause and see the bigger picture. I hear my colleagues and Mayor, it's the plan. It's how are these monies going to get spent? I actually had the conversation with Ms. Ruggles that if we could actually identify some of the roads in Puna and designate them as critical roadway systems that enhance our public health and safety so our fire trucks could get down them, so that our police cars could get down them, I think there is a way that we could actually park some of these monies and create a nexus that could improve some of these other roads. Again, I'm still very much on the fence of all of this, which is why I appreciate the conversation, but I don't want to throw the baby out with the bath water, without this administration vetting all those options, putting together a plan, letting us see where the monies will go, how they'll be utilized, and how they'll enhance this island. One testifier mentioned having strong oversight, and that might be our opportunity. Is that if we as a Council parked the money in a fund that we had strong oversight on, regardless of how the administration makes their decisions, they would have to come to us and ask us and then meet the needs of our community. Maybe that's just commentary, I don't know how I stand on all of this, but I just want everybody to have an open mind and recognize that we are one island and I don't want to pit poor against fixed incomes, or start leveraging, "I'll come along if you can guarantee me." That's politics at its worst. I don't want to give our community false hope. That's the worst thing any leadership in this chair can give right now. So, let's just keep an open mind, keep exploring our options. There are a lot of smart people out there in the Page 59 FC -27 February 6, 2018 community who's going to be able to weigh-in. There's plenty of people who work in the banks, financing system, real property tax, realtors. You name it, they're going to be able to help us see a way through. So, that being said, I'm just going to urge the rest of my colleagues to keep an open mind, move this forward, allow the administration an opportunity to develop a plan, and stop leveraging everybody at this point. We have options, but don't just squander this one away because you want what you want because you still got to get eight others to agree. That's where I'm at. I'm going to yield at this time. CHR. DAVID: Thank you, Ms. Lee Loy. I'm going toMs. Ruggles, did you want to speak? You had your light on, before I go to Mr. Richards. Okay, go ahead. MS. RUGGLES: Thank you, Chair, it'll be brief. I just wanted to respond to the statement about the question of why businesses do not go to Puna and just use that as an opportunity to say that the reason we don't have businesses is because we don't have the infrastructure that we require for businesses to have to operate in Puna. For example, we don't have a wastewater treatment plant that is needed for the hospital, that we need for our population that just superseded Hilo's. The Planning Department has been greatly delaying this process that we have been needing and that's just one example of why we do not have businesses in Puna. Thank you. CHR. DAVID: Thank you, Ms. Ruggles. Mr. Richards. MR. RICHARDS: Thank you, Chair. Once again, I'm going to echo Councilwoman Lee Loy, and something what Councilman Chung had said. We're in a time crunch to get things and we have to keep things moving forward, whether we actually enact this or not. We're not making that decision at this point. What we have to do is keep that conversation going and I said it previously, Mayor, I do appreciate that it's on the table right now. We do have to diversify our income streams but we have to recognize the impacts that's going to be on our constituency. And I appreciate the commitment to go market this because that's basically what we're going to have to do. We're going to have to talk to our constituents and see their feelings. I, too, am on the fence. I see a lot of positives and I see some downsides and there's going to have to be give and take going forward. So, I guess I'm saying this to be mindful that we're not in the final debates or the final decision right now. We're in the conversations of can we explore this and take it to the next step because there's still a lot of homework to get done. I have some stuff concerning this bill that we haven't even started discussing yet. I know Councilwoman O'Hara also has stuff and I did bring my sleeping bag, so I'm ready for the day. But again, the point is, we need to keep the Page 60 FC -27 February 6, 2018 conversation going because I hold no expectation that we're going to have an extension on this. And we can vote it down at the final hour, but I want to be sure that we have the ability to vote it down at the final hour, as opposed to getting stuck in the weeds. So, I'll yield at this point. CHR. DAVID: Thank you, Mr. Richards. I'm going to go to Ms. Poindexter and then Ms. O'Hara. You're—okay, alright. Ms. O'Hara, go ahead. MS. O'HARA: No, I'm not ready to call for the question yet. I'm sorry. Because a lot of things are on the table here that we have just been sweeping under the rug way too long. I came in and said let's not continue to call roads in limbo because there's no real legal definition for it, and the courts have opined that they're the County's responsibility, and we've got 900 miles or something, more or less. I know most of them are in Ms. Poindexter's district, but I got a few and I was on one of those, last weekend, and it almost swallowed my car. It was pouring, and it was getting dark, and I was thinking I got to get out and walk home. It was scary. You're familiar with the Government Beach Road, Mr. Kim, so you know where I was. I came back and I quickly wrote an email to our road crew and described it as scary and they got down there and they took care of it in terms of grading it. But, it's going to be bad again in two months. Rain is all it takes to wipe out that road. We've got so many of those roads in limbo that are our responsibility. We haven't' been budgeting for them. We haven't been doing anything with them. This is our chance to get out of the woods on that. Somebody talked about, I think it was Mr. Chung, sending the bus to the very back of Nanawale. Well, that's a perfect route for it. We actually own and maintain two of the main boulevards that go all the way to the back. We just have to come up with a maintenance agreement with the association on that back road, Mauna Kea Road actually, to be able to do that, to provide bus service to the very back of Nanawale. We're now going down to first in Paradise Park, not all the way across because it's not fully paved, but we're making gains. We can continue to make good gains with good equipment and a new administrator and new maintenance facilities if we accept new money. We're not going to be able to do it if we're going to be trying to chop off an arm here and a toe here of every other department in the County in order to make something happen. It's not going to work. So, I would like to see this advance. I want to see the further discussions. I'm not asking tit for tat, but I do feel that my constituents would be happy to do this provided they get some offsets. That's the discussions I've been having in my community and that's what I hear. And so, I'm listening to what I hear. There was another email here from a Senator that came to all of us, I don't know if you all picked it up, I've got my email open, but basically, he's telling us there's no guarantee that this will be extended. I find it highly unlikely. And Page 61 FC -27 February 6, 2018 when I hear people say more TAT to the counties is preferable, I'm reminded of the magical thinking of children. Every year, you have seen that no matter how loudly the counties ask and no matter my thoughts or your thoughts on the issue, the State keeps not helping the counties in any meaningful way. This is what we continue to see. We've got to help ourselves. We have to got to be the leaders, that's what we were all elected for. It's tough decisions guys, but let's not be followers, let's be leaders here. And that's what I got to say. Thank you. CHR. DAVID: Thank you, Ms. O'Hara. Mr. Richards, I believe your light is on. Do you still want to comment? MR. RICHARDS: Thank you, Chair. Flipping things through my head, so, are we moving beyond the conversation of questioning and getting to the next step? CHR. DAVID: It's totally up to you folks as far as if Ms. O'Hara isI see that you have an amendment. As soon as you want to do the motion, you MR. RICHARDS: Well, I have an amendment that I'd like to put forth and I know Councilwoman O'Hara has an amendment to put forth. Once again, I'm going to look to our Clerk, we're all trying to do the same thing and I don't want to get stuck in procedural issues because I think we need to put stuff on the table and discuss things. And so—and I don't want to play games about if I introduce my amendments first, we're prohibited from talking about her amendments, so how do we get this done? MR. MAEDA: I think we should try and handle one amendment at a time, but if we can maybe figure out a way to discuss—to not vote on it right away or to maybe table it or do something so that we can bring up the next one. That might be a solution as well. I guess it's hard because I didn't really look at the amendments. Are they both so similar? Then we would have to do one at a time. Motion to Amend: Mr. Richards moved to amend Bill 102 with the contents of Comm. 722.3. Seconded by Ms. Lee Loy. CHR. DAVID: Discussion on the motion to amend. MR. RICHARDS: Yes, and with respect to the Mayor and the Finance Director, the reason we kept them here all day is to ask questions. I think we've asked a lot of questions. I'm not going to have any more questions because it's now a conversation amongst us, and I am very willing to let the Mayor go, Deanna, not so much. Not yet. MS. SAKO: I was planning on staying, don't worry. Page 62 FC -27 February 6, 2018 MR. RICHARDS: But Chair, I'm not sure, does that work for people? CHR. DAVID: I think if the Council MembersI'm sure the Mayor has other things that he has to take care of, so, if it's okay with the Council Members to let Mayor Kim go, and Deanna stay back—is that fine with everybody? MR. RICHARDS: Mr. Mayor, I'm not kicking you out, I'm just trying to be sensitive to your time. MAYOR KIM: I don't mind if you do. CHR. DAVID: Okay, then that's fine with me too, Mayor. Thank you very much for being here. MAYOR KIM: Thank you for the discussion and time, I appreciate it. CHR. DAVID: Alright. Mahalo. Okay, Mr. Richards. MR. RICHARDS: Thank you, Chair. Just a little bit of background on this. As we've discussed this today concerning Bill 102, I've worked through this and as I said previously, I've worked numbers and I've consulted with Finance Director Sako concerning my numbers and I've worked at it a bunch of different ways. I actually put together a PowerPoint presentation to talk to the group and we're looking at three o'clock now, I don't want to take this into hours, but I do want to explain where I came from with my proposal. In looking at the proposal as far as being able to take care of our County and our communities, I went back and I looked through and I think I have to respectfully disagree with Councilwoman Ruggles' comment about a regressive tax. I can't see exactly how this is regressive as it's scalable, it goes up. That being said, what my concern is, as we go forward with taxes, loud and clear from my constituencies, no more taxes. So, when I listen to that and templating off of what Kauai did, they put forth their GET by giving back, and I did mention this earlier. And again, rough numbers and I'm a big numbers kind of guys when it comes to referring to this. When we look at this, we've had from the Director, say we're looking at probably the .5 percent increase would yield about 25 million, and that's probably a conservative number, but I like to deal with conservative numbers because that'll—if we win on the other side, that all looks good. The problem is that's taking $25 million more from our people paying into the system. However, if we take a reduction, and this is, I think Councilwoman O'Hara and I agree on, a reduction in the fuel tax. I also proposed one for the real property, or I will propose one for the real property tax, if we take 10 percent out of those two pots, Page 63 FC -27 February 6, 2018 it is somewhere in the vicinity of $30 million. So, a $30 million reduction for our constituency. The GE will replace that $30 million, roughly speaking, say $25, so we're in the same ballpark. However, and again, working my numbers very similar to what has come up with from Finance, about half of that will be paid for by the visitor industry. So, somewhere in the vicinity of $10-$15 million will actually be coming from outside of our constituency, from the visitor industry. What that means is, if we look at our if it's a $10 million deal, we have 200,000 people, what that means is $50 per person in our County more back in their pockets. We talk about economic growth and economic development, and one of the things about leaving more dollars back in our constituency's pockets. If we do that, again, it's modest at first, but the idea there is to capitalize on that and actually saving some our constituents some money. Now, that pot, it could be bigger, but again, we're not going to operate on that. In my mind, if we are doing this, we're actually expanding our funding for this from a different side, but still maintaining the financing side of that for our County. Now, the Director and I have talked about this and I understand that there may be a liability coming for that we're not prepped to fund. That being said, it gets back to what we talked about last year during the budget hearings, and I think we have to be very mindful about our expenses side this year. So, with that, my idea here is, you'll see the General Funds being replaced for public transportation and the revenues from the surcharge shall be transferred and used as follows: reduce the fuel tax for the next three increments that are coming up and reduce the real property tax rate for all property classes by a minimum of 10 percent. And I put that in because there's some latitude there. We may be able to adjust it higher, but at 10 percent, what it does is it give back to the constituency what we're talking about. Ms. Ruggles, I hear what you're saying. I truly hear what you're saying, but that being said, I think this will get it through. All the conversation has been great today, but in my mind, if we can get something like this where we're actually reducing the tax overall burden to our constituencies, I think we're headed in the right direction. I don't support the concept, "Well we have the lowest real property tax, or some of the lowest real property tax in the nation, so thereby that's a good reason to raise it." Because you have to look at the whole tax burden. We have about the highest tax burden in the nation. So, regardless of what the real property tax is, it's just one of the facets of the whole tax burden. So, I think we need to give our constituency something back and we have to be fiscally very prudent going forward. I hear what we're saying about the infrastructure. I hear what we're Page 64 FC -27 February 6, 2018 saying about the equipment. I'm keenly interested in the presentation where we see the actual dollars being spent on what we're doing, not just salary and wages, but our equipment and all that. It's reducing from 30 percent down to maybe 25 percent. This is concerning going forward, but I think by leaving some more money back in our constituent's pockets, long-term, we're going to get that. First of all, the support, and as we build for the future, and that's what we're talking about here, the future. We're expanding that pot. Again, conversations with the Director, two-thirds of our income stream comes from the real property tax. Actually, 75 percent is what she said when we were talking, if we're not including the grants and all that. Okay, that's putting a lot of eggs in one basket and I'd like to have a few more baskets to draw on. So, with that, like I said, I did put together a PowerPoint presentation and I would like to ask for personal privileges, but I think I'm going to defer that until the next conversation because I do want to hear Councilwoman O'Hara's side. And so, with that, I'll yield at this point. CHR. DAVID: thank you, Mr. Richards. Ms. O'Hara, before I move on with you, could I possibly ask a question of Corporation Counsel first? Okay, thank you. (Note: At this time, Corporation Counsel Joseph Kamelamela came forward to address the members of the Committee.) MR. KAMELAMELA: Joseph Kamelamela, Corporation Counsel. CHR. DAVID: Mahalo for taking the time. I just have a really short question that's pretty confusing for me right now as we're going into discussion about amendments. Bill 102 is the Council electing to approve the Mayor's proposal to implement the GE, that's State law. MR. KAMELAMELA: Right. CHR. DAVID: Now, we're proposing to make amendments to Bill 102. I'm having a hard time wondering whether we can affect that kind of amendment to a law that's under State jurisdiction, or do we have to wait until after we elect to do this and then bring forth amendments to the bill after that? Because right now, I'm just wondering why, if we're proposing amendments, aren't we proposing an amendment to the State law? Or not? I'm not sure. MR. KAMELAMELA: Okay, actually, I wasn't going to go down that road, but I do have concerns of this amendment because when I read the Charter, Section 3-10b, it has a provision in the Charter that it should be, any such bills like this should be, one subject matter. And so, in thinking about that Charter, we Page 65 FC -27 February 6, 2018 also go the Missler case and the Missler case had a firm certain law that has been—did discuss as to what does that mean? Because when we talk about one subject matter, it should be on the topic that we're talking about. So, let me just give you my analysis and then what I see is a consequence of approving this amendment. So, in looking at the Missler case and the Charter, although we're talking about taxes, that's not the test for this case because in every single case that this County Council had dealt with, dealing with any type of tax increases, it was very specific. Each one had a process and there's a reason for that because if you start talking about one thing and then mixing it up some other things, then I see a situation where you're actually doing substantial changes to what you're trying to move forward. So, it's something like this, like I'm thinking okay, we're actually talking about three separate distinct matters here. Each one has different sections, whether it's under the statutes or the Code, which sets out a certain process. So, if something like this was minor, I would say go for it, but this is not minor. This is something major, you know? So, my recommendation is Ibecause if you pass something like this, like say you go through the public hearing, something like this is approved, do you know what I'll be telling the Mayor? "Mayor, veto this, it violates the Charter." That message that I give to the Mayor is a public record. Now, it's going to be up to the Mayor whether to veto it, but we don't want to take any chances. So, if you go through this process and do this amendment, you know what I'm going to tell the Mayor because that's going to be public. CHR. DAVID: And that was my concern because I don't know what the process would entail. But, I'm seeing that we are trying to make amendments that may be, not that I don't agree with the amendments, I do think that those are good proposals, but I don't know whether we should be doing that at this point in time because—and that might jeopardize the effort of this Council, given the short timeframe we have to make decisions and work on this. MR. KAMELAMELA: And a part of that analysis is based on what I know about what Kauai did. Yes, Kauai passed the GET, but that's all they dealt with the bill. Subsequent to that, one of the Council Members wanted to make some other changes to other portions of certain laws, one involving decreasing the weight tax, the other decreasing the fuel tax. So, from what I understand, that bill failed, whether it didn't move forward or it just failed. All I know, recently, it didn't get passed. And so, that demonstratesI mean my thinking on this it's the same with other County attorneys elsewhere. We all think the same. Why? Because we look at the Charter, it's all similar and the law's the same. CHR. DAVID: Okay, so now, Council Members, I think we have a Page 66 FC -27 February 6, 2018 MR. RICHARDS: I get to respond to that. CHR. DAVID: Okay, thank you. Thank you, Mr. Kamelamela. Hang on one second. MR. RICHARDS: You might as well sit there. CHR. DAVID: Mr. Richards. MR. RICHARDS: Okay, I politely disagree, because under the name of the bill, and as I was instructed, the name of the bill is very important. It says, "as it pertains adding new article relating to transportation surcharge," and that's exactly what this does. Nowhere in my amendment does it change it. I'm glad you brought up the Ka`u CDP because this is my point exactly. You told me that this does not actually change anything, and my intention is not—what this does is it puts a timeline so until this actually happens, we don't adopt the function of this bill. But these amendments do not change anything. It's complete separate legislation and so, putting that forth, and this gets back to my comment about silo legislation. It's exactly, if we don't adopt stuff that is inter -related, we're doing exactly the same thing again, and that's exactly what our constituency doesn't want. They want us to look at things in context with each other. So, I hear what you're saying, Mr. Kamelamela. I got it. I understand your concern, and had this bill been named differently, I would appreciate that. But, it's not, it says, "at it relates to it," and this all relates to it. So, with that, from my perspective, I will argue back against that this in fact is all tied into one and the same, and we may not ever adopt the changes, according to my amendments, and if we don't, okay, then we never actually trigger the half percent GET. What I'm trying to do is respond to the constituency because if I go ahead and vote approval of this, and I'm not even sure I'm going to vote for the approval even if these amendments go through, but if I were to, do I have everybody's promise that we're going to do everything? I mean is that how we're going to do legislation going forward? Okay, I've got one promise, okay. Cross your heart? But, my point on this is trying to be fiscally -minded and fiscally responsible for our County, for our community going forward and tying things together so they have a level of comfort in what we're trying to accomplish. And I hear it, I hear it loud and clear the concerns. I'm not an attorney and I appreciate your years of experience and your law school, don't think I don't, but I would argue back that under the guidelines here, my intention is not to change anything. What I'm saying is—but we can enact this until we actually do. And that other stuff, if it doesn't pass, then it doesn't pass. I got, but I'm not trying to change anything, and the CDP has taught us that. We were told we have Page 67 FC -27 February 6, 2018 to change everything individually, one by one. So, I do appreciate you bringing that up, that's helpful to articulate my argument. MR. KAMELAMELA: Actually, I wasn't talking about the Ka`u situation, I was talking about Missler, when it talked about the concepts. So, each situation is different and there are differences between the Ka`u CDP situationI mean so and there might be other kind of thing, but the impact of this, the impact of something like this should actually, talking about different things, different contexts, and the clearer path, this will deal with it separately, just like what Kauai did. They dealt with it separately. Now, it's up to the County Council, if they include this and then it gets to the public hearing, and then that gets passed and then it goes through two readings, you know what my opinion of this is going to be already. I don't know what the Mayor is going to do, but I know what I'm going to say about this already. I'm going to inform the Mayor that this is invalid, and I state the law as I stated right now, and that's it. Sorry, I disagree with you too. MR. RICHARDS: No, and I still continue to disagree with you. I will because that's the whole point. It isn't separate. The thing we're talking about is taxes and that's all one unit. So, with that, and I'llit brings back other conversations that we'll leave for a different time, but the whole point is to take care of the constituency, and if we do silo and continue to do silo legislationI mean we can do this and we could do it that way if we didn't have the Sunshine Law that ties our hands tight so we could actually work out the details and get something done for the community. So, the other challenge that we're faced with is this timeline that we're talking about. And we don't have time to get that stuff done, and again, in my opinion, the whole idea is to take care of the constituency. I think they could accept an increase, again, we have to go talk to them first, if there's a concurrent decrease somewhere else. But, if we present only increases and then promise bumby we're going to try get a decrease, it's not going to fly, and I'm can't support that. So, my intention is to take care of our constituency. MR. KAMELAMELA: I mean I do understand your intention and the pressures that we face, but, you know, it doesn't change my opinion at all. MR. RICHARDS: And thank you, and you haven't changed mine either. MR. KAMELAMELA: Thank you for that. CHR. DAVID: Thank you, Mr. Richards and Mr. Kamelamela. Ms. Poindexter. Page 68 FC -27 February 6, 2018 MS. POINDEXTER: I'm going to agree with Mr. Kamelamela because when we do fuel tax, when we did real property tax, it's all tax, but we have to deal with it separately. And this, for me, kind of makes it even more confusing, even to the public, making them think that, "Okay, if we pass this, then look, it's going to get done. Fuel tax and real property taxes is going to get lowered," and that's false hope. But the way it is, to me, it's not the right way to do it. We got to deal with the issue of Bill 102. If that goes through whatever, then if people want to bring up amendments to real property tax, that would be one issue, amendments to fuel tax, that be another issue, but we never deal with taxes all together. I mean I've never known it to be done that way. I mean we've always dealt with it separately because they are separate items and different restrictions on each one. So, I don't know how we can compile all of this. I think it just kind of muddies the water, too, for me. So, I'm not going to be supporting this amendment, with no disrespect. CHR. DAVID: Thank you, Ms. Poindexter. I think it was Ms. Eoff and then Ms. O'Hara, and then back to Mr. Richards. MS. EOFF: I also appreciate both Mr. Richards and Ms. O'Hara trying to do the give and take and figure out where we can—how we can best direct excess funds. Yeah, yours is different. Okay, so I won't talk about Ms. O'Hara's, but for Mr. Richards', the problem I see is kind of what Joe said, as well as when we do anything to the fuel tax or the real property tax, we have a whole other process we have to follow with public hearings, et cetera. So, I think there's too many yeah, it isn't really right to mix it in, although it's a great suggestion. So, I don't know, maybe Deanna could help us with that, but I do understand taxes are all related and we want to tax where it's the most appropriate, but I don't think we can accomplish it through this amendment. MS. SAKO: I'm having a little bit of heartburn, especially on the real property tax side. We did talk about trying to cut things. I guess we didn't talk about specific language because I about had a heart attack when I saw the 10 percent, like hit the floor kind of thing. Because we're already short in the budget, andI mean I love you guys but this would drop another 30 million that I'd have to find. But, there is a process for setting the real property tax rates and I think it's something—it's the "shall be" part that I think I was having problems with, the "shall" because it's one of those things that if it's like we should try to or something like that, that's one thing, but it's really hard when we say the "shall" because there's a process we follow in Chapter 19 to go through the rate setting process and to have the public hearing. The way we're supposed to do it actually, is to set the rates each based on the portion of the real property tax revenue that we feel should be attributed to each classification. So, it's kind of just mixing a Page 69 FC -27 February 6, 2018 lot of things together, but I think it's some of the "shalls" that I'm having trouble with. MS. EOFF: Thank you. CHR. DAVID: Thank you, Ms. Eoff. Ms. O'Hara. MS. O'HARA: Thank you, Chair. It's getting late in the day, we're losing Council Members, people are falling. It's a shame because this is real important stuff, but you just brought up a really great point, Deanna, about the "shall" in this amendment, and I think Joe, you didn't mention it, but isn't this something of a separation of powers issue? It could be, and you've already stated that your opinion on this would be to recommend that the Mayor veto it. So, this is a very different amendment than what I amended. I'm not taking 10 percent of the property tax and forgive me, Mr. Richards, this is a very broad -brush approach. I like the way you're doing it, let's do it simple and broad -brush, but to reduce the fuel tax for fiscal year 2017 to 2018, that's almost over already. So, for us to go out and do the public hearing and everything, the fiscal year will basically be over before this would ever get through. So, I think it really complicates matters to throw something that really needs to be separated. Now, you said we didn't have time to do that. I don't know, my office did it and it's in the chutes already, being reviewed and going to make the next committee hearing. It can be done and maybe I haven'tI do have a very exceptional Legislative Assistant, but it's that kind of stuff that gets me moving and when I saw this, I'll be honest, I got a head's up from a certain person on Council the day before it appeared in the paper. Thank you, first time I didn't have to read about it in the newspaper. But, my first reaction was, what the you know, because it's so late in the game. It's like pushing you into the corner and you have no time, but I went to work immediately, that weekend, texting my Legislative Assistant, here's what we're going to be doing. Because to me, this is very important and this is an opportunity that I don't want to waste. I'm not going to sit around and wait for the State Legislature to give us an extension, which is highly unlikely. I don't know what they're going to do with the TAT, but I'm not going to sit idly by and wait for them to make that decision, whether they give us an extra 10 million or maybe more, maybe not. Who knows? What the handwriting on the wall though is, we're not going to be getting additional monies from the fells. Highway fuel tax is going to be decreasing over time. We need to expand our opportunities here. We need to diversify our tax base. Not all taxes are the same, we can't lump them all together in one simple bill. It doesn't work that way, it's way too complex for that. Page 70 FC -27 February 6, 2018 I fully appreciate that seeing a 10 percent decline in property tax across the board caused you to have close to a heart attack. I could have imagined that must have been your reaction. It's just hard to see how that plays out when it's done so simplistically and I think we need more detail. Now, I won't be supporting this amendment and we can discuss my amendment. I've certainly put the content of my amendment out on the floor in our discussion repeatedly while the Mayor was in the room because mine is not a "shall." Mine is a "may." I'm trying to influence what the administration does with money that it frees up from the General Fund. It's a different game. So, I just want to put that out there in our discussion, but the way this is written, I would have a hard time supporting it as well. Thank you. CHR. DAVID: Thank you, Ms. O'Hara. Ms. Ruggles. MS. RUGGLES: Thank you. I just had a question for Mr. Richards. Is the intent of this amendment to offset taxes from the fuel tax revenue and property taxes, and put it towards the GE? MR. RICHARDS: Put it towards the what? I didn't hear that last part. MS. RUGGLES: General excise? MR. RICHARDS: The intent is to, and again, rough numbers. If you reduced real property and fuel by 10 percent, you're saving about $30 million, rough numbers to the constituency. If you increase the GE by a half percent, that will take in somewhere around $25 million as projected right now, and that's based upon a conservative GDP (Gross Domestic Product) of five billion that the County has projected to have. When I worked the numbers backwards, based upon population, I came up with a GDP for the Big Island of about $10 billion. Statewide, we're looking at about $73 billion based upon some of the numbers that came out of DBED (Department of Business and Economic Development). If you work the numbers backwards, you get somewhere closer to $85 billion for a GDP for the State. And again, my numbers for the 10 billion was strictly based upon population. Grant it, we don't have the same economic thing, so talking to Finance Director, came up with a conservative five billion for our County GDP. Worked the numbers, half percent, that's where the 25 million comes from. It could be higher, but the intent, just so we can talk, $30 million comes out of real property and out of fuel tax, gets replaced by $30 million coming in with the half percent, so we're net, net, zero. The difference is half of that or about half of that gets paid for by the visitor industry. So, the net return or the net savings to our constituency is about between $10 and $15 million. Does that make sense? Which puts about $50 to $75 per person of our constituency, back in their pocket. Page 71 FC -27 February 6, 2018 MS. RUGGLES: Okay, thank you. MR. RICHARDS: That's what the intent is. MS. RUGGLES: Thank you. Okay, so it's to offset some of the burden on the local residents? MR. RICHARDS: Completely. MS. RUGGLES: And put more of it on the GE tax, of which 30 to 40 percent is paid for by the visitors. MR. RICHARDS: In defense of Deanna, it's hard finding this information to get exact, so it's really tough and I dug and I talked to her, and a lot of this is conjecture, but it makes sense. If you look at what tourists spend or our visitor industry spend about $180 per day while they're here. Translated, if it's $200, they're spending a dollar a day in this additional GE. If you look at our residents, again, family based on four people, long story short, they're spending somewhere around $25 a day. So, we're talking 25 versus say 200. You can do that math on that one. So, that's why, even though we have about say 30,000 visitors on any given day on the Big Island, compared to our 200,000 residents, because of the spending habits of someone living here versus vacationing here, that's the difference. And so, that's why a substantial portion would be paid for by the visitor industry. Does that make sense? MS. RUGGLES: Yes, it does. MR. RICHARDS: And it's relatively small as far as what they're paying because it's a half percent. So, that's my intent. MS. RUGGLES: Okay, great. Thank you for that. CHR. DAVID: Thank you, Ms. Ruggles. Mr. Chung and then back to Mr. Richards. MR. CHUNG: Question to Mr. Richards. I just need clarification. So, this is basically going to be a wash, right? MR. RICHARDS: The answer is yes, based upon conservative numbers. Yes. MR. CHUNG: You know, I see the beauty in all of that because you shift the burden more to the tourist, lessen the blow to our residents, somewhat, and it does diversify our revenue stream, with the possibility, the potential for it to grow as more tourists come. It's kind of difficult for me to swallow where we got to go Page 72 FC -27 February 6, 2018 through this whole exercise to come away with a wash. In other words, we're going to have no improvement to our Mass Transit for a while, and that's basically been my pitch, where this is going to help the poor people. We're not trying to reduce the impact to poor people via some kind of shifting around of the tax. I don't know about that. MR. RICHARDS: Well, you want to offer a friendly amendment of five percent? Will that give you less of a heart attack? MS. SAKO: Can I just make a quick comment? One of my concerns, and I think why I was having part of the problem is that real property tax funds the entire General Fund, of which, we did say that it's just about seven million goes to Mass Transit. But, none of the rest of the GE tax could be used for the General Fund, it has to be used for transportation. So, we have to kind of keep the transportation revenues together maybe. So, I was having trouble removing more than seven million from real property tax. MR. CHUNG: Yeah so, I think it might not work even with that compromise of five percent, but I like the concept of providing some kind of relief from the increase that we approved this past fiscal, and I also understand where you're coming from. You have to be able to show people that we're getting a tradeoff and you want it to be done now. The problem is, this should be more appropriately done, I think, in the way of a companion resolution. I mean let's say we supported it today, it's not fatal, even if Joe says he's going to tell the Mayor to veto, no, and I'll tell you why, because there's a severability clause built into all of these bills. So, he could just say, "Well, this should be severed from the bill and we'll let the rest go because that was the intent." Then, it will actually be like a quasi -resolution. There's a statement that was approved by people here and hopefully, we will follow through. I don't know if I can follow through on this one though, Tim. It's really tough getting a wash. We're trying to look at forward improvement, but hey, I want to help you guys on this, okay? I'm trying to find a way. I support Ms. O'Hara's amendment as a "may," more like a resolution, right? Basically, that's what it is, and some kind of relief on the real property side because we don't immediately need all that much money. But, I want to ask one question of Joe, or if Craig was here, I'd ask him. I don't want to jamb the conversation up, but I just have one question, but another related one. Nothing precludes us from going below half percent, right? We can do that, right? It says we can go "up to." I'm for half percent, but in case guys are on the fence, you know, you talk about maybe having some kind of play here. This might be the way to go. MR. RICHARDS: Okay so, now, while he's looking, can we talk story, Chair? Page 73 FC -27 February 6, 2018 CHR. DAVID: Who do you want to talk story with? Okay. Alright, go ahead. MR. RICHARDS: Okay. Yeah, that is my intent, and I am, under no illusion that this is normal and mainstream and have been done before, and what I am posing the question is maybe what's been done before is not the right way to do things because again, get back to the concept. Okay, we can only do this because we're only talking about this. It's silo after silo after silo. That creates the problems and doesn't fix anything. If we keep doing the same thing over and over again, we're not fixing anything, we're just perpetuating the problems. So, it's my intention to start blending this stuff, and like I said, this doesn't change anything. All it does is say we're not going to enact anything until we actually make a change. I'm open to a friendly amendment, and I would take it because what I'm trying to do is listen to our constituency. They're telling us, "Come on guys, you're going to give us more taxes? Last year you nailed us and so this year you're going to reward us by nailing us one more time?" I don't want to do that. I want to be responsive to what they're saying and if we're giving something, I think we can do it and I think the numbers are conservative. Like I said, when I worked them backwards, I got 10 billion. I used five billion based on what I was told. If it's 10 billion, that changes that 25 to 50 million for the half percent, and there could be a tremendous amount of funding there. We don't know that and I'm not going to bank on that right now. But, my intention is to give back to our constituency. MR. CHUNG: I see the logic, I see the beauty to it, it's not without merit. It actually makes a lot of sense in many regards. But, it kind of defeats the purpose or defeats the reason why I would be supporting it, to help beef up our Mass Transit, fix our roads, and do that. MR. RICHARDS: And I got that. I hear what you're saying because looking at that as we discussed previously, the Mass Transit, we're looking at about a $200 million investment over the next 10 years. 20 million, I got it. How are we going to fund that? I'm not sure yet, but we don't even know if our new administrator is going to take the Plan. We got a lot of what ifs out there. The problem is our timeline is short and I don't want to sign up for more tax liabilities for my district unless I've got something I can say, "Look, but we're working on this other side," and that's where the challenge is. And like I said, I know you've already promised, you guaranteed we're going to vote if we produce this other stuff, so I appreciate the promise, but I don't have enough votes yet. Page 74 FC -27 February 6, 2018 MR. CHUNG: I mean some kind of relief, yeah? I really want to support each of your amendments, it's just— MR. RICHARDS: I've never been one to stay in the box when they trot around me. MR. KAMELAMELA: Under HRS Section 237-8.6, you cannot set a rate greater than one-half. MR. CHUNG: Right, we know that. MR. KAMELAMELA: Yeah, so MR. CHUNG: But you could do it less, right? MR. KAMELAMELA: No, you cannot. Oh yeah, can. Yeah, you can. MR. CHUNG: It cannot be more, but it can be less. MR. KAMELAMELA: Can be less. MR. CHUNG: Now, another question auxiliary to that would be, let's say we started with something less, two years hence, could we go up to no greater than a half percent? MR. KAMELAMELA: No, there a way that it's MR. CHUNG: It's a one-shot deal? MR. KAMELAMELA: Yeah. MR. CHUNG: Where does it say that? I mean I'm not questioning you, I just want to MR. KAMELAMELA: You are questioning me. MR. CHUNG: I mean I am, but I'm not doubting your MS. SAKO: Okay, my non -legal opinion is that the ordinance has to be adopted March 31, so I think to change the rate would require another ordinance, which wouldn't be passed by March 31, 2018. MR. KAMELAMELA: I mean the way that I'm reading Section 46-16.8, you can't. It has to be an ordinance. It's a one-shot deal. Sorry. Page 75 FC -27 February 6, 2018 CHR. DAVID: You yield, Mr. Chung? Are you done? You sure? Okay, then I'll go to Ms. O'Hara. MS. O'HARA: Okay. I appreciate what Mr. Richards is trying to do, but in another way, it's very clear that we need to expand the pie in order to get the quality of services and the quality of reads that we want in this County. So, simply trading this for that isn't going to get us there. It just isn't, and I appreciate that it puts more of the onus of the visiting industry rather than on the residents, but I think there's other ways that we can do that. I think this really complicates rather than improves this measure at this point in time. That's just my feeling and again, I call into question whether we can force, in terms of the language, "shall," the administration in this manner. I could see why Corporation Counsel would be recommending to the Mayor to veto this, but ultimately, we have to identify new money above and beyond our existing revenues if we're going to move forward with this Mass Transit Plan. There's been a lot of talk about whether or not the new administrator is even going to pick up the Plan. I don't think that's a reasonable way to look at it. She's coming into the County, we've just spent a $500,000 in two years developing a really great Master Plan for Mass Transit. I don't think it's up to one individual who we're just now hiring to say nay to that. I don't think that's going to happen, folks. We've got a lot vested here and I'm sure that she's already studying up on that Mass Transit Master Plan. That would be my guess. If I was coming into that position, I would be trying to find out everything I know and see how to best go about implementing it. We've never had a Plan before. We've just been going down the road and blah, blah, blah, and I'm surprised nobody has used this term yet, that by potentially voting down this measure, we could be throwing the County under the bus, but I got to throw it out there because that's exactly what may happen if we vote this down. Sorry, it's getting late in the afternoon. CHR. DAVID: That's a good one. MS. O'HARA: My Irish humor is coming out. CHR. DAVID: Thank you, Ms. O'Hara. Can you top that one? MR. CHUNG: No, I cannot. CHR. DAVID: Okay, Mr. Chung, go ahead. MR. CHUNG: I just have a question of you or our County Clerk. Regardless of how we vote on the main motion, is this still going to a public hearing? CHR. DAVID: Yes. Page 76 FC -27 February 6, 2018 MR. CHUNG: Okay. CHR. DAVID: It's required to do that. MR. CHUNG: Alright, but we got to get everything straight when we go, to public hearing because we can't change after that, right? CHR. DAVID: Right, and I think the public hearing has to be set before the 20' or by the 20th. Okay, Ms. Eoff and then I hope we can take a vote on the amendment. MS. EOFF: Oh yeah, this isn't really on the amendment. CHR. DAVID: Okay, then MS. EOFF: I was that Mr. Chung had asked but I guess I can wait until after we vote. CHR. DAVID: Okay, cool. Alright, are we ready to vote on the amendment? Okay, all those in favor of amending Bill 102 with the contents of Communication 722.3—shall we do a roll call, guys? Okay, Mr. Clerk, roll call, please. All those in favor— Vote on Motion to The motion to amend Bill 102 with the contents of Amend: Comm. 722.3 failed by the following roll call vote: Failed Ayes: Committee Members Kanuha, Lee Loy, and Richards – 3. Noes: Committee Members Chung, Eoff, O'Hara, Poindexter, Ruggles, and Chair David – 6. Absent: None. Excused: None. CHR. DAVID: Thank you very much. The amendment fails and so, do we have any? Okay, Ms. O'Hara, your turn. Motion to Amend: Ms. O'Hara moved to amend Bill 102 with the contents of Comm. 722.1. Seconded by Mr. Kanuha. CHR. DAVID: Go ahead, Ms. O'Hara. MS. O'HARA: I'm going to make it short. It's easy for you to read and it's really about my concerns with some perhaps policy differences between the Council and the administration in terms of fiscal responsibility. So, I wanted to urge the administration to consider expending money in these two areas with the Page 77 FC -27 February 6, 2018 Department of Environmental Management for wastewater projects, and in the County Police Department for additional patrol positions and facilities, in the most underserved areas of the island, such as my district and a few others. I've said this several times with the Mayor present, so I pretty much got the point across in all that we really can do in this context is urge. I don't think we can use language like "shall" without it becoming a legal challenge because of the separation of powers and stepping on the toes of the administration in terms of operations. I'm urging. I'm hopeful if we pass this measure that we will see more money spent on public safety and more money spent on dealing with our wastewater problems, because the environmental issues resulting from our lack of moving forward on wastewater is beginning to catch up with us and we're hearing about that. So, those are two areas of importance. There's a lot of things we need. We need more workers at our parks. We need all kinds of things, but I just wanted to put those two pieces as top priorities coming from the Council, and if we are successful in passing this, we may not, I implore my fellow Council Members to really be fiscally responsible in how we allocate and distribute money through the County. Last year's budget was painful for all of us, and for many of us, it was our first time up here doing a budget, so it was a learning experience for everyone. I certainly learned a lot and I hope this year, when we go about that process, we'll have the value of that knowledge that we have gained and the value of how painful it is to deal with tax increases, and understanding where the shortfalls are, and recognizing that you can't just let a road sit there forever. It won't be there 10 years down the road. No pun intended. But, it's that kind of stuff that we have to really start understanding how this all fits together, how the big puzzle fits together and I appreciate Mr. Richards' attempt to like tie it all together because a tax is a tax. But, it's not quite that simple and there's all of these background statutes in HRS that we have to comply with as well as our own County Charter, et cetera. So, it's real easy to mis-step and I appreciate that Mr. Kamelamela is here to give us some guidance on that, and of course, to the Director and Deputy Director for being here, and Aaron, you too, you've been very helpful, thank you. So, I'm just asking you to consider this. You don't have to pass it or not. I'm kind of ambivalent, so late in the date, I guess, but I'm asking for your support. Thank you. CHR. DAVID: Thank you. Ms. Lee Loy. Page 78 FC -27 February 6, 2018 MS. LEE LOY: Thank you, Chair. That was short, Ms. O'Hara. I'm just going to speak on what I like and what I don't like. I like that we're trying to give the community, what I heard today, was an opportunity to provide strong or extraordinary oversight on how this money is going to be utilized because we're going to see—we always keep going back to Mass Transit because everybody knows that number, seven million from the General Fund, seven million from the highway fund. And this GE would interject or infuse that department. So, then the question keeps coming up, what happens to that seven million from the General Fund and where it's going to go. We had a lot of discussion earlier about this administration putting together that plan, so I'm going to leave it there. What I don't like about the proposed language is we are putting environmental management and the needs of that department above our Police Department. I know I might have a little skin in that game, but I actually have skin in both, Environmental Management because we're seeing a lot of problems in my district alone with the wastewater treatment facility, with water quality, with the rubbish dump, with the composting center, but I feel strongly that police will help everybody's district, even those that don't have a wastewater treatment facility, or a rubbish dump, or water quality issues. So, that's what I don't like about the way it prioritizes where this excess or spillover would go. And if we kept it a little bit more broad -brush, I would be more supportive, but I just want to hear from my colleagues at this time what they think about this proposed amendment. So, I yield at this time. CHR. DAVID: Thank you, Ms. Lee Loy. Ms. Ruggles, go ahead. MS. RUGGLES: Thank you. I also just want to say that I really appreciate Mr. Richards and Ms. O'Hara for bringing these amendments forward and thinking creatively. I just had a question of Ms. O'Hara. You said that these projects would be spent in underserved areas. Where does it say that on your amendment? MS. O'HARA: It doesn't. MS. RUGGLES: Okay, thank you. MS. O'HARA: And it is something that I would consider amending my own amendment to include that language and just because it's numbered one and two, is not a ranking, it's just the numbering system for the bill. MS. RUGGLES: Right. MS. O'HARA: So, it's not a priority. Page 79 FC -27 February 6, 2018 MS. RUGGLES: Yeah, that was going to be my next question. I'll yield at this time. Thank you. CHR. DAVID: Thank you, Ms. Ruggles. Ms. Poindexter. MS. POINDEXTER: I'm sorry, but I cannot support this either because it's very vague inI mean it's going into supporting Police and positions and I want to fight for positions in Laupahoehoe and expand andso, it starts to get a little crazy. I'm hoping that I can just bring forward to my community and take up our Mayor on his offer to come with me to the community to say what the GET is going to do for them and for me to hear that so I can feel comfortable in voting. If it changes their mind, then I'll vote in favor of it, but at this time, again, I just prefer taking a vote on what is before us, going out to my community, and coming back, because it'll move up to Council. This is going to move up to Council. So anyway, I'll yield at this time. Sorry. CHR. DAVID: Thank you, Ms. Poindexter. Anyone else before we vote on the amendment? Mr. Richards. MR. RICHARDS: Yeah, just make a quick comment, thank you, Chair. I do appreciate Councilwoman O'Hara bringing that forward. I like the public safety thing. You know, when I listen to Chief Ferreira last year talking about the Police Force and they've increased four officers in the last 10 years or something like that, they definitely need a lot of help. I like that. Environmental Management side, we all have issues with that but I'm challenged by that part. So, I appreciate the public safety side, not sold on the Environmental Management side. I yield. CHR. DAVID: Thank you, Mr. Richards. Anyone else? Alright, Ms. Ruggles. MS. RUGGLES: Thank you. I just want to say that I like where Ms. O'Hara is going with this and that it provides us better flexibility to provide in the other areas of need that we have desperately. I'm just going to leave it at that. I'll yield for now. Thank you. CHR. DAVID: Thank you, Ms. Ruggles. Alright, Ms. O'Hara. MS. O'HARA: I'm happy to modify this and withdraw the number here if that is giving people heartache and just simply say, "to Hawaii County Police for additional patrol positions and facilities in the most underserved areas of the island." I think that will basically direct us to our rural districts. If that is what people want to see happen, I can make that change, but I guess I have to—so postpone it and table it and then consider that. Page 80 FC -27 February 6, 2018 CHR. DAVID: Do you want us to table it until the end of the day? She wants to table the vote on your amendment, right? What are you tabling? MS. O'HARA: Tabling the vote on my amendment until I make modifications to it. You tell me, I'm not sure. My brain's a little foggy right now. Table it until the end of the day and make those modifications and bring it back to you guys? MR. MAEDA: If that's what you would like to do. CHR. DAVID: Okay, let's take a short recess and figure out what we're going to do about this amendment, okay? Thanks, we're in recess. Recess: At 3:58 p.m., the Chair called for a recess. Reconvene: The meeting reconvened at 4:11 p.m. CHR. DAVID: Aloha, Council Members, we're out of recess right now, back to Finance Committee. Ms. O'Hara. Vote on Motion to Ms. O'Hara moved to table Bill 102 to the end of the day. Table: Seconded by Ms. Lee Loy and carried by the following (Approved) voice vote: Ayes: Committee Members Chung, Eoff, Lee Loy, O'Hara, Poindexter, Richards, and Chair David – 7. Noes: None. Absent: Committee Members Kanuha and Ruggles – 2. Excused: None. CHR. DAVID: Okay. Alright. Thank you. So now, let me see, we should move to Communication 69.5. Let me see if we can get Mr. Victorino because we're going to have toMr. Richards, is that—are you requesting executive session on this? You are? Okay, we'll have time then, we can go ahead. Right, but then before we go, he's going to request an executive session. MS. LEE LOY: I'm ready to go with Bill 98 if you guys want to take that one and I can just provide CHR. DAVID: Background. MS. LEE LOY: Background while we wait for other people to come forward. CHR. DAVID: Okay, Mr. Clerk, then, why don't we just go with Bill 98? Page 81 FC -27 February 6, 2018 Bill 98: INITIATES AN AMENDMENT TO ARTICLE XIII, SECTION 13-28 OF THE HAWAII COUNTY CHARTER (2016 EDITION), RELATING TO THE SALARY COMMISSION Requires that at least 30 days prior to the approval of any salary adjustment, the salary commission submit copies of a detailed report of its findings and conclusions to the Office of the County Clerk and Office of the Mayor, publish a notice that said report is available for public inspection and include in the notice a detailed account of proposed salary increases or decreases, and hold at least one public hearing in both East and West Hawaii. Also requires that any increase or decrease of more than 10 percent be approved by a two-thirds vote of the entire membership of the commission. Reference: Comm. 712 Intr. by: Ms. Lee Loy Motion to Approve: Ms. Lee Loy moved to recommend passage of Bill 98 on first reading. Seconded by Mr. Richards. CHR. DAVID: Ms. Lee Loy. MS. LEE LOY: Thank you very much, Chair. I'm hoping I can get the rest of my colleagues to support this. This particular Charter amendment materialized after the Salary Commission came back, what I heard in the community, and I personally felt was excessive. Having done some research with the Salary Commission, I began to find that it was very hard to make or introduce ways to slow that process down and provide for larger public input. So, I took this as an opportunity and then took a look at how we did raise other taxes, like our fuel tax, and began to model an amendment for our Charter, which follows that same framework, that it would give the public an opportunity to weigh in. They would have an opportunity to see what type of adjustments were coming, formulate meaningful dialogue, and then allow the Salary Commission to digest that before moving their proposals forward. In addition to that, there was an opportunity for them to provide what I would call like a finding of fact on how they arrived at their decision because when those questions were asked, they were trying to adjust disparities between civil servants at the high of their classification, as compared to a Director or an average of various Directors across various municipals in the State. I found that although those were good intentions, there wasn't a nexus. For example, the City and County of Honolulu Mayor has a larger budget and they take care of a whole lot more people. Maui County, for example, they have a very robust real property tax collection. So, those salary and wages, as it pertains to various individuals and cabinet members, was in line with their budget and their way to generate revenues. Page 82 FC -27 February 6, 2018 So, it bothered me that we were just kind of taking an average, and inputting an average of everybody else's salaries, and then came up with ours. So, this bill actually provides that framework. I would love to hear what all my other colleagues have to say about this. This still leaves that decision-making authority with the members of the Salary Commission, but if they should exceed this threshold of 10 percent. They would have to do it by supermajority. We can have a discussion on what other, maybe safety nets we could put in. This is a Charter amendment, so however we move whatever language forward, I believe it takes three readings and then would be put on the ballot for our constituents to decide. Having said that, I also spoke to Hugh Ono, who is the Chairperson of the Salary Commission. He isthey're working on some of their framework down at the Salary Commission level, and hopefully, will be coming before us at our February meeting in Kona. I think this conversation is right for us to have and if it is the will of this body to move it forward and then hear what the Salary Commission and Mr. Ono has, as far as framework goes, and maybe come up with a hybrid between what they're thinking about and what's before us, or have our conversation, make whatever edits or modifications we as a body see, defer until we hear from Mr. Ono. I am open. My colleagues have heard that I like to do meaningful legislation and policies, so, I yield at this time. Thank you. CHR. DAVID: Thank you, Ms. Lee Loy. Ms. Eoff. MS. EOFF: Thank you, Madam Chair. I really appreciate what Ms. Lee Loy has just articulated about listening to the Salary Commission, because they have firsthand experience with their processes and then seeing what else they can come up with as far as within their own rules or a hybrid of a Charter amendment, potentially. I would think thatI'm not sure if we have a time limit, I know Charter amendments take three readings in the Council, but I think we still have time and I would maybe say to keep it here in committee while we do get a presentation from the Salary Commission. Thank you. CHR. DAVID: Thank you, Ms. Eof£ Mr. Richards. MR. RICHARDS: Thank you, Chair. Can I talk story again? CHR. DAVID: Yes, if she allows you to. MR. RICHARDS: Councilwoman, did you get a sensing from the Salary Commission that—have they read this? Do they have a feeling of what you're trying to accomplish? Page 83 FC -27 February 6, 2018 MS. LEE LOY: Yes, and they actually have gotten inquiries from people in the public to provide their metrics or their analysis on how they came up with the various salaries. So, even they themselves found that the general public was interested to understand how they arrived at the various salary and salary ranges. I'm confident that when Mr. Ono, the Chairman of our Salary Commission is before us, we're going to find a lot of similarities, but I don't want to undo the work that they're doing or overstep. I think we all have a role in County government and our boards and commissions have a very important role at that, and I don't want to short circuit that opportunity for them. MR. RICHARDS: Okay, and as I read this for any salary adjustment, you're talking about public hearings and all? MS. LEE LOY: Any salary adjustments as it relates to non -bargaining unit. So, any cabinet member, us, you know, elected officials, and appointed officials. The other salaries are handled by our bargaining unit contracts, so this is really just a specific class, and within the context of the Salary Commission, as defined by our Charter, they have those boundaries on which salaries they can affect change to. MR. RICHARDS: I appreciate your frankness with the Commission and all. What I don't want to do is increase the cost of government by more over oversight, and I completely support and I understand the justification and part has been playing catch up and all that. Fine. I love the checks and balances, but I don't want if we're just having like an almost a cost of living allowance increase or something like that, and if that all has to go before, I'm concerned that we're over oversighting, and I put that forth as just something to consider. But, I think we're going to talk about tabling until we hear stuff, so—and I just throw that as a concern. I yield. MS. LEE LOY: Chair, if I might answer that. I do put in a CHR. DAVID: Thank you. MS. LEE LOY: Qualifier, it's of more than 10 percent. So, some of the other stuff might fall below that and we can allow them to do their work. MR. RICHARDS: And that's my because over 10 percent, I'm all about that. If it's under or if it's a moderate, I don't want a lot more government because that's costly to our County. That's opinion right now. Thank you. CHR. DAVID: Thank you, Mr. Richards. Ms. O'Hara. MS. O'HARA: I appreciate Ms. Lee Loy for bringing this forward as a proposed Charter amendment. We were all, perhaps, taken aback by the Salary Page 84 FC -27 February 6, 2018 Commission's decisions. I mean there's one side of me, the economist, that steps back and looks at the global picture and realizes that our salaries, as they were prior to the increases, were dismally low, and when you have dismally low salaries, you tend to attract not the finest talent, aside from us, of course. No, I'm just—but we are the exception in this because we were not the six -figure incomes because we're considered 50 percent full-time equivalent, which I know none of this really are. I know I spend at least 40 hours or more a week on my job, but that aside, we didn't do this. I don't think any of us committed to this for the money. So, it was kind of shocking and it was upsetting to the public to see these increases. But, if you are to step back and look at a small town, North Carolina for instance or something, the Mayor there is earning $180,000 to $220,000. These salaries that they set are not extraordinarily high, relative to other places, and we have a high cost of living here. So, all of those things said—but I really appreciate what Ms. Lee Loy is trying to do here. I'm not trying to justify what the Salary Commission did, but they were within the rules of the time. This expands their requirement to gather public input. I did walk in on one hearing, I didn't provide public input, but there was very little of it, even though it was broadcast. I got to thank our newspaper reporters for getting the articles out into the paper. Otherwise, the public wouldn't know about much of anything, and we all find out about stuff in the newspaper. But still, other people didn't realize it was happening and didn't have an opportunity for public input. So, I don't think it hurts. I appreciate Mr. Richards' concerns about adding even more oversight. When we say oversight, that means there's a Deputy Corporation Counsel assigned to the Salary Commission, there's a Secretary to record their minutes, they have to set up their meeting places, they're on County staff time involved in additional meetings, definitely. So, it is something of a tradeoff, but I agree, this is something that is really important in terms of the public perception and additionally, public input would be a good thing. So, I can argue for this. On the other hand, I can also argue against it because maybe it doesn't go far enough. Because yeah, what if we are stuck with an extraordinarily high salary rate that is problematic for us to even budget? We have no oversight over that. The administration has no oversight. It's a complicated situation. We wouldn't want oversight over our own salaries, obviously, so, it's great that you're taking it this far. I don't know quite where we could take it another step, but it feels like there needs to be another step. That's all. Thank you. CHR. DAVID: Thank you, Ms. O'Hara. Anyone else? Mr. Chung. MR. CHUNG: I support it. Sue knows the background behind how the current Charter—well, why it was set up the way it was. In the past, you had the Salary Commission and they would come up with recommendations, then it would come Page 85 FC -27 February 6, 2018 up to the County Council, and the County Council would make that decision. It became highly politicized because it's very difficult for County Council members to vote for their own salaries and others, and it was never the right time. The economy was bad, it was not the right time. When the economy was good, it wasn't the right time. It was never the right time and I think there were a lot of political considerations involved in that. Because of that, it went there was a Charter amendment and now we have the current arrangement, and as Sue said, at some point, we have to respect all of our roles, and I do respect what the Salary Commission had to go through. What concerns me is there's really no checks and balances on this. They're the final arbiter, so what they think is fair is the end. That's it. I think this strikes some kind of balance. It's not real onerous or anything like that, and that raise was a whopper, right? So, it doesn't foreclose the idea of having a raise, which is over 10 percent, it just requires it to come to the County Council. And hopefully, what comes out from all of this is that the Salary Commission will do things incrementally. I don't think anybody really has a problem with raises, you know, for administrators or politicians, elected officials, but when it's a 40 percent when our union workers are fighting for these small increments, it's hard, very difficult to explain to the public. So, I think this isit could use some work, but all in all, I like it. I'll support it. CHR. DAVID: Thank you, Mr. Chung. Anyone else? Ms. O'Hara. MS. O'HARA: I think you just said, Mr. Chung, that over 10 percent, it comes back to the County Council, but I don't think that's what it reads. It's an affirmative vote of two-thirds of the entire membership of the Salary Commission, just pointing that out because I really don't want it to come back to us. MR. CHUNG: I mean actually, it's better because the super majority MS. O'HARA: Yeah, because that's a real conflict of interest. Okay, thank you. MR. CHUNG: Sorry about that. CHR. DAVID: Thank you. Ms. Lee Loy. You have a question? Okay. MS. EOFF: On that same topic, it does require that copies of the detailed report be submitted to the Clerk's office, so that would mean we would just get it as an FYI? It wouldn't be an agenda item? Page 86 FC -27 February 6, 2018 MS. LEE LOY: We could do whatever we want with it. I think it just provides the public with a bigger and better understanding at how they arrived at their decision, and people can choose to digest that information however they want. Backing up on Mr. Chung's point, I am leaving the supermajority at the Salary Commission level, but if this body is willing, if that number is excessive, you know, the bigger checks and balances is anything above that is a supermajority at the Salary Commission and then before the Council. That's why I'm leaving it open. I'm also leaving it open until we have a deeper understanding of the Salary Commission and they're thought process at arriving at that, which is why I am more than willing to make any amendments that this body sees fit, to provide a good safety net and a good checks and balances for the community -at -large, listen to what the Salary Commission has to say and what, maybe some internal policies that they are looking at. My only concern with an internal or administrative rule that they make is they can go back and change it any time. Whereas, this framework in the Charter kind of keeps them within that framework, rather than one year they make a set of rules and the next year they make a different set of rules. So, that's my optics on it and if there's any other questions or any other amendments, like I've said in the past, I do pride myself in listening to my colleagues and moving together, or moving forward policies that are meaningful and make a difference. So, I yield at this time. CHR. DAVID: Thank you, Ms. Lee Loy. Anyone else before—okay, go ahead. MS. LEE LOY: And I just wanted to share a letter that I did get from Mr. Ono. He was responding to a constituent and they were asking for similar information. He mentions, as he provided the background on how they went about making the changes for the Salary Commission and an explanation, or like a white sheet, he did reference that there was similar testimony received from Council Members Aaron Chung and Sue Lee Loy, to provide that nexus. So, I believe we saw it, so I just saw it as an opportunity to take it to a bigger community. So, thank you. CHR. DAVID: Thank you, Ms. Lee Loy. If everyone's done, I just wanted to make one comment. Basically, thank you for bringing this forward and my position is I would really like to hear from the Salary Commission because any amendments that you're willing to entertain would make sense after we have given them the opportunity to speak about the process. So, if you're inclined to postpone this— MS. LEE LOY: So, with that, I'd like to postpone Bill 98 to, I believe it's February 20, 2018 in Kona. And hopefully, maybe as it's placed on the agenda, it would allow the Salary Commission to give their input and then this to follow, to keep it in context. Page 87 FC -27 Vote on Motion to Postpone: (Approved) Return to Order of Business: February 6, 2018 Ms. Lee Loy moved to postpone Bill 98 to February 20, 2018. Seconded by Mr. Kanuha and carried by the following voice vote: Ayes: Council Members Chung, Eoff, Kanuha, Lee Loy, O'Hara, Poindexter, Richards, Ruggles, and Chair David – 9. Noes: None. Absent: None. Excused: None. CHR. DAVID: Bill 98 is postponed to the February 20th meeting in Kona. Okay, Mr. Clerk, I believe we now have Mr. Victorine is outside? Yes, okay. That's the reconsideration, Communication 69.5. The Chair directed the Committee to return to the order of business. Comm. 69.5: COMMUNICATION NO. 69.4 - REQUEST FOR RECONSIDERATION From Council Member Herbert M. "Tim" Richards, III, dated January 24, 2018, requesting that Communication No. 69.4 be reconsidered pursuant to Council Rule No. 15. ; and Comm. 69.4: SECOND QUARTER CLAIMS REPORT: OCTOBER 1 – DECEMBER 31, 2017 From Claims Investigator/Adjustor Clifford D. Victorine III, dated January 4, 2018, transmitting the above report pursuant to Section 2-9 of the Hawaii County Code. Filed: January 23, 2018 Motion to Reconsider: Mr. Richards moved to reconsider the vote taken on Comm. 69.4 on January 23, 2018. Seconded by Mr. Kanuha. CHR. DAVID: Discussion? MR. RICHARDS: Thank you. I appreciate—thanks so much for coming in, and I'd like to go into executive session, so how do we do that? MR. KANUHA: Do we have to vote on the reconsideration? FC -27 February 6, 2018 CHR. DAVID: If we have no discussion on the reconsideration, thenI see none. All those in favor of the motion to reconsider Communication 69.4, please say "aye." Vote on Motion to The motion to reconsider the vote on Comm. 69.4 taken Reconsider: on January 23, 2018 was carried by the following voice (Approved) vote: Ayes: Council Members Chung, Eoff, Kanuha, Lee Loy, O'Hara, Poindexter, Richards, Ruggles, and Chair David – 9. Noes: None. Absent: None. Excused: None. CHR. DAVID: So, Ms. Eoff— Point of Order: MR. KANUHA: Just a point of order, Madam Chair. CHR. DAVID: Go ahead, Mr. Kanuha. MR. KANUHA: Maybe if we ask them first if there's a necessity to go into executive session. If there's answers that we can talk about outside of executive session first and if there's a need, then maybe we can go. MR. RICHARDS: That's good for me. So, Chair— CHR. DAVID: Go ahead, Mr. Richards. MR. RICHARDS: First of all, I appreciate Corporation Counsel coming in and thank you. I did meet with Corporation Counsel, I think it was last week, that sounds right, to discuss this and my intent for the reconsideration was, as I was reading through this and we had another long day, the more I thought about it, the more I was concerned about some of the things. So, that was the reason for the reconsideration. We have met and discussed, and it's my intention to have a frank conversation about this with the Council. I'll ask them if they—executive session or not (Note: At this time, Deputy Corporation Counsel Laureen Martin came forward to address the members of the Committee.) MS. MARTIN: Laureen Martin, Deputy Corporation Counsel. I believe some of the questions we probably could answer in open session, but depending upon what the questions involved, such as the merits of the settlement itself, that should be in executive. Page 89 FC -27 February 6, 2018 CHR. DAVID: Council Members, if those are going to be the range of questions, then— MR. RICHARDS: Yeah. CHR. DAVID: Okay, then I suppose we need to go into executive— Vote on Motion to Mr. Richards moved to enter into Executive Session in Enter into Executive order to hold attorney-client privilege discussion Session: regarding Communication 69.4, as authorized by (Approved) Section 92-5(a)(4) of the Hawaii Revised Statutes. Seconded by Ms. Poindexter and carried by the following voice vote: Ayes: Council Members Chung, Eoff, Kanuha, Lee Loy, O'Hara, Poindexter, Richards, Ruggles, and Chair David – 9. Noes: None. Absent: None. Excused: None. CHR. DAVID: We are in recess until we set up. Recess: At 4:41 p.m., the Chair called for a recess to clear the room. Reconvene: The meeting reconvened at 5:15 p.m. CHR. DAVID: Council Members, we're out of recess and out of executive session. So, there is a motion to file Communication 69.4 on the floor. Any further discussion? Thank you, Mr. Richards. Go ahead. MR. RICHARDS: Thank you, Chair. The question came up when we discussed in our meeting, the concern we have about $47,000 of settlements, and I get it. It seems like we have a reasonably high level of hitting parked cars and from a fiscal management, in discussing with them, and I do appreciate what they're saying is we're putting this stuff, taking care of it, but what are we doing to minimize this coming forward? Because $50,000 a quarter, if you amortize that, or project it over a year, it's a lot of money. And not that it's saying it's every quarter like that, but as our conversation had, they can make recommendations, but are any of these guys repeat guys that's hitting the same, or the same driver? What do we have in place to again, protect the County because we don't need to be spending more money. We're talking about budgets all the time and so to me, this is a very good area to focus on to try and down, so I pose the question to them. And again, I've had the conversation, I want to open it up to the other Page 90 FC -27 February 6, 2018 Council Members and see if they have any concerns. I think we need to have something going forward. CHR. DAVID: Thank you, Mr. Richards. Ms. Poindexter. MS. POINDEXTER: So, how often do we do traffic, require traffic abstracts? If the person got into an accident, do we automatically require traffic abstracts and then say, "Oh my gosh, he got caught for speeding about 20 times and drunk driving, maybe he shouldn't be driving our County vehicles." I don't know, do we have policy in place that we require traffic abstracts? (Note: At this time, Claims Investigator Clifford Victorine came forward to address the members of the Committee.) MR. VICTORINE: Cliff Victorine, Claims Investigator. We got in the policies and so a lot of that is set by the departments. There may be certain types of policies like such things like abstracts or so being required by HR (Human Resources), when hiring processes. But we don't really do that. We can recommend that might be something that they do. We can strongly recommend this is something that you should do. We can sit there and say, "Hey, I think this is something you should do," until we're blue in the face, but these kinds of things are really run more by the departments and their heads. So, it would be more— MS. POINDEXTER: During the hiring process, normally, if you're going to operate a vehicle, they're going to run a traffic abstract. MR. VICTORINE: Yes. MS. POINDEXTER: But, I think with what Concil Member Richards was bringing up about how much times we're paying out for accidents within the County that are, maybe, they're just not paying attention or whatever, but could that trigger, or ask the departments if that could be put into place, policy in place that would trigger a traffic abstract if the person has been in an accident. I mean what if the person is not supposed to be driving? I don't know. How do we—can be a long-term employee and has never had a traffic abstract done since his hire and something may have happened, and we may not want him or her to be operating our vehicles. MS. MARTIN: I understand your concern. However, it really is a departmental issue and part of it is because of all these different union contracts that they have, different responsibilities. So, maybe it's something that they do require, I just don't know if they're doing it. I'm not comfortable saying like we could issue something saying you should be doing that kind of thing. Page 91 FC -27 February 6, 2018 MS. POINDEXTER: Right. So, I would have that conversations with the departments or I mean, we could just email them and tell them our concerns or I don't know what the contract says, I would have to look at each individual contract, but I would think that we would have some type of in-house policies that would afford the union person a grievance if we would say you need to provide a traffic abstract and they probably file a grievance if it's in the contract, or even not in the contract and see what happens. I don't know, I'm just trying to look at how do we start minimizing these types of payouts? Safety. MS. MARTIN: Right. I was speaking with the Finance Director and one of the issues she brought up was that the Risk Manager, along with Safety, they do get copies of the accident reports, and if they see a pattern or concern, they do try and work with the departments to try and correct any deficiencies. But because Clifford's role and our role is really just to look at the liability aspect of it and resolve, try to negotiate a reasonable settlement, we're just not involved in that. We know the departments are aware of it, but as far as getting really involved in, "Well, what are you going to do about this employee?" That's just not our role. I know that Cliff, if he sees a pattern or a concern, he will follow up with the departments, say, "Hey, I noticed this issue." But again, that's not his role to make sure that they do anything about it necessarily. MS. POINDEXTER: Thank you. CHR. DAVID: Thank you, Ms. Poindexter. Mr. Richards. MR. RICHARDS: I just wanted to back them up on that one. As they've said, they see this stuff but that's not their prerogative as far as, or their purview to take care of. So, maybe that's something as a Council, we should—yeah, something. Again, I'm trying to save money for the County, so I appreciate you guys coming forward and letting us pose the questions because it's a lot of money. So, anyway MR. VICTORINE: Real quick, if you mind, could I respond just real quick? You know, it's like Ms. Martin has said, you know, when I do see a pattern, it's not like we sit back and don't say anything. We try to bring as much as we can to their attention. I was talking to the Risk or who recently retired but now on contract with us, and he went as far as making a chart that went back to 2005 and gave each department that list of all the accidents and everybody involved, to them, to make Page 92 FC -27 February 6, 2018 sure that they had this and what payout. So, he's also taking a very proactive stance in this. The accident report that must be filled is signed by the person, or supposed to be signed by the person who was in the accident, his immediate supervisor, his section supervisor, and the department head. So, whoever came up with that is the departments are supposed to know what's going on. So, that's why when you go there, you know, that's why when—do they know? They should know. If not, I do, Scott knows, we'll let them know when we see things. HR does have training, driver's training, defensive driving, two levels of it that is available for the departments to send their people to. So, there is help or directives out there for the departments to take. CHR. DAVID: Thank you, Mr. Victorine. Anyone else have any comments? Thank you very much for coming today at this late hour and for your time. Thank you so much. Alright, Council Members, we have a motion—if no one else has any discussion, all those in favor of filing Communication 69.4, please say "aye." Vote on Comm. 69.4: The motion to close file on Comm. 69.4 was carried by Filed the following voice vote: Ayes: Council Members Chung, Eoff, Kanuha, Lee Loy, O'Hara, Poindexter, Richards, Ruggles, and Chair David – 9. Noes: None. Absent: None. Excused: None. CHR. DAVID: Alright, thank you. Mr. Clerk, shall we go right back to Bill 102, remove from the table? Okay. Ms. O'Hara, could you entertain a motion to remove Bill 102 from the table? Vote on Motion to Ms. O'Hara moved to remove Bill 102 from the table. Remove from Table: Seconded by Ms. Lee Loy and carried by the following (Approved) voice vote: Ayes: Council Members Chung, Eoff, Kanuha, Lee Loy, O'Hara, Poindexter, Richards, Ruggles, and Chair David – 9. Noes: None. Absent: None. Excused: None. CHR. DAVID: Now, Ms. O'Hara. Withdraw Comm. 722.1: Ms. O'Hara announced the withdrawal of Communication 722.1. Page 93 FC -27 February 6, 2018 Motion to Amend: Ms. O'Hara moved to amend Bill 102 with the contents of Comm. 722.4. Seconded by Ms. Lee Loy. CHR. DAVID: Ms. O'Hara. MS. O'HARA: Yes, we had a little discussion on this previously, and there was some objection to one of the items that I was hoping to bring to the Administration's attention, in terms of hoping they will direct any funds from the General Fund that is offset by the GE surcharge, should we adopt it. It is now down to just police services, so it would be used for the Hawaii County Police Department for additional patrol positions and facilities in the most underserved areas of the island. And it's an urge encouraging the Administration to expend any monies that are freed up from the General Fund on that activity. Do you not have it? It says "may," it's not a "shall," it's a "may." CHR. DAVID: Thank you. Mr. Chung. MR. CHUNG: I'm just wondering if our Corporation Counsel has any comment on this, like he did the other one. CHR. DAVID: Mr. Kamelamela. (Note: At this time, Corporation Counsel Joseph Kamelamela came forward to address the members of the Committee.) MR. CHUNG: Basically, what's going to be your recommendation to the Mayor on this? CHR. DAVID: Thank you. MR. KAMELAMELA: I'll tell him that it's okay. MR. CHUNG: Alright. Okay. CHR. DAVID: Thank you. Alright, anyone else? Alright, then I guess we're ready to vote. All those in favor of amending Bill 102 with the contents of Communication 722.4, please say "aye." Page 94 FC -27 Vote on Motion to Amend: (Approved) February 6, 2018 The motion to amend Bill 102 with the contents of Comm. 722.4 was carried by the following voice vote: Ayes: Council Members Chung, Eoff, Kanuha, Lee Loy, O'Hara, Poindexter, Richards, Ruggles, and Chair David – 9. Noes: None. Absent: None. Excused: None. CHR. DAVID: Now, back to the main motion, Bill 102, as amended. Any discussion? Ms. Lee Loy. MS. LEE LOY: Thank you, Chair. I think this is more of a procedural question and if maybe that Clerk can help me through what the next steps will be. It looks like we have a Bill 102 that, if I understand correctly, needs a public hearing process, and a process that it be forwarded on to the Council on the 21st° so CHR. DAVID: Mr. Clerk, can you just run down our schedule? MR. MAEDA: We're looking at doing the public hearing on the 20th in Kona, after the committee meetings. We didn't get a time yet. We need to publish it in two papers prior to that, so we're going to start that process. And then it's going to be heard next in Kona on the 21st, on the Council meeting. It'll be on that agenda. CHR. DAVID: And that would be the 102 as amended, right? MR. MAEDA: Yes, it's 102 as amended. CHR. DAVID: Okay. Does that answer your question, Ms. Lee Loy? MS. LEE LOY: Yes, but I do have a question for Deanna. Does that—looks like you guys have a week there, the 12th through the 16th to formalize—take it on the road as we suggested or make comment to. Is that something doable for you folks? (Note: At this time, Finance Director Deanna Sako came forward to address the members of the Committee.) MS. SAKO: I think it's doable. I think we're probably going to need help from each of you if there's a special—particular groups that would like to hear more about it. I mean, today's the sixth. Page 95 FC -27 February 6, 2018 MS. LEE LOY: And then, just another process question for the Clerk. If, through this public hearing process or through the process that the Administration utilizes to get feedback, what would happen if there were more feedback where we amended Bill 102 again? What happens then? MS. SAKO: Then, Joe can answer that. (Note: At this time, Corporation Counsel Joseph Kamelamela came forward to address the members of the Committee.) MR. KAMELAMELA: Joe Kamelamela, Corporation Counsel. Actually, I wanted to first address the timing of the public hearing and maybe I'm hearing the wrong date, but according to HRS 46-16.8, notice of a public hearing and—it has to have two publications "within the County at least twice within a period of 30 days immediately preceding the date of the hearing." So, it's a short period of time, so I thought I heard February 21'. No? 20th? So, that wouldn't—would that be 30 days? No, so the hearing would have to be—yeah. No, but it says, "within the period of 30 days immediately preceding the date of the hearing." So, you set the hearing, it's likeno, but is it? MR. MAEDA: If we publish any time after this meeting but before the 20th, that would be within the 30 days. MR. KAMELAMELA: No, I just needed to hear the—today is February MR. MAEDA: Sixth. February 6. MR. KAMELAMELA: Okay. So, it's my time period was kind of off. Okay. Now, to answer your question, if it gets changed, as we had experienced what happened with the fuel tax or it's you just got to do another public hearing. Yeah. If it's amended, yeah. If it's amended again. Yes. MS. LEE LOY: I'll ask that question. MR. KAMELAMELA: Yeah. MS. LEE LOY: In our notice to the public, if the language was structured in a way that we would be looking at increasing the GE tax, up to, but we back down, would we be required to have another public hearing? MR. KAMELAMELA: No. CHR. DAVID: Are you yielding, Ms. Lee Loy? MS. LEE LOY: Yes, I am because I got to digest a little bit. Page 96 FC -27 February 6, 2018 CHR. DAVID: Because I think Mr. Chung has a comment. MS. LEE LOY: Thank you. MR. CHUNG: But that's not what the bill says through, right? Yeah, it doesn't say "up to." I mean you cannot do something vague like that. You have to we're going to have a public hearing on the proposal. MS. LEE LOY: I'm sorry, Mr. Chung, can you explain that to me one more time? I'm looking at the process. You know me, I'm all about the process and I want to ensure that however we move this through a process, that we did dot every "I" and cross every "T." So, that notification MR. CHUNG: I mean I'm not 100 percent sure what the process is, but I was just addressing the specific question that you had posed whether we had a public hearing on the increase of a surcharge up to half a percent, which is not what is being proposed. The proposal is for a half percent, not a range of percentages. I guess I'm thinking, and maybe Joe can confirm, when we take a proposal to a public hearing, it has to be what is being proposed, and if it's changed, we have to go back for another public hearing. That's what I think. MR. KAMELAMELA: I agree with you on that one. CHR. DAVID: Alright. That's promising. Ms. Lee Loy, did you want to continue? MS. LEE LOY: No, I think we've got the process. Yes, I understand the process. Thank you CHR. DAVID: Anyone else have any questions or discussion? Ready to vote? I think we'll do a roll call on this one, Mr. Clerk. All those in favor of approving Bill 102, as amended, with Communication 722.4 and move it forward with a positive recommendation, please say "aye." I mean Mr. Clerk. I'm sorry. Page 97 FC -27 February 6, 2018 Vote on Bill 102: The motion to recommend passage of Bill 102, as amended Draft 2 to Draft 2, on first reading was carried by the following roll (Approved) call vote: Ayes: Council Members Chung, Lee Loy, and O'Hara – 3. Noes: Council Members Eoff, Kanuha, Poindexter, Richards, Ruggles, and Chair David – 6. Absent: None. Excused: None. (Note: Ms. Lee Loy and Ms. O'Hara voted "kanalua" then "aye." Mr. Kanuha vote "kanalua" then "no.") CHR. DAVID: Thank you, Mr. Clerk. Bill 102 as amended moves forward with a negative recommendation. Alright, Mr. Clerk, can we take—can you read in Communication 72.2, please? Comm. 72.2: 2017 ANNUAL REPORT OF THE PUBLIC ACCESS, OPEN SPACE, AND NATURAL RESOURCES PRESERVATION COMMISSION From Mayor Harry Kim, dated January 18, 2018, transmitting the above report pursuant to Hawaii County Code Section 2-217. The Mayor provides a detailed summary of the purchasing history and status of the lands purchased with the fund, an accounting report, a statement on management and stewardship of the lands, and requests that the Council accept the updated prioritized list as provided by the Commission. Vote on Motion to Ms. Poindexter moved to postpone Comm. 72.2 to Postpone: February 20, 2018. Seconded by Ms. Eoff and carried (Approved) by the following voice vote: Ayes: Council Members Chung, Eoff, Kanuha, Lee Loy, O'Hara, Poindexter, Richards, Ruggles, and Chair David – 9. Noes: None. Absent: None. Excused: None. CHR. DAVID: Thank you very much. Mr. Clerk, Communication 705, please. Comm. 705: REQUESTS DISCUSSION REGARDING THE FORMATION OF A BUDGET REVIEW AD HOC COMMITTEE TO REVIEW, RESEARCH, AND ADDRESS CONCERNS RELEVANT TO THE COUNTY OF HAWAII BUDGET FOR FISCAL YEAR 2018-2019 From Council Member Herbert M. "Tim" Richards, III, dated January 10, 2018. Page 98 FC -27 February 6, 2018 Motion to Close File: Mr. Richards moved to close file on Comm. 705. Seconded by Ms. Lee Loy. CHR. DAVID: Mr. Richards. MR. RICHARDS: Thank you, Chair. CHR. DAVID: You're welcome. MR. RICHARDS: I think the communication you all received is pretty evident and as in the title, it explains exactly what I'm hoping to do. We went through the budget cycle last year and that was a sprint from the get go. What my intention with this is to pattern in part off of what Maui does with their budget and their budget discussions. It's also to get away from the silo legislation that we are dealing with and start putting a working group together so we can review the departments and review our impending cost, but put that in context with their revenue side. So, going forward, when we come back and we report back to the Council as a whole, our findings and our recommendations coming forward. So, the idea is to not go through the cycle last year, like we did and be more methodical about it coming forward. Obviously, I'm sure we're we'll have lots of conversations with Finance and get a better, more methodical approach to looking at our budget. Open for questions. CHR. DAVID: Thank you. Who's first? I didn't see it. Ms. O'Hara was first and then Ms. Eoff. Ms. Lee Loy, did you have yours on? Go ahead, Ms. O'Hara. MS. O'HARA: I would like to ask Mr. Richards if he would consider postponing to the next Finance Committee meeting because I believe it merits discussion, and I think we're all a bit tired and fried here tonight. So, I would ask him to consider doing that. MR. RICHARDS: I'll respond to that. My question is timing. I just want to make sure—we're in February now and I want to make sure—my concern is I want to be sure that we go into this and we're not rushing to do something—to do what we're trying not to, rush. But, that's my—so yeah, I'm very willing because I agree, this needs conversation. CHR. DAVID: Thank you. MR. RICHARDS: What are peoples' opinion about ad hoc? I don't think we went through the budget cycle last time in a very good way. CHR. DAVID: Okay, anyone? No one? Ms. Lee Loy. Page 99 FC -27 February 6, 2018 MS. LEE LOY: Thank you, Chair. I like the idea of an ad hoc. This last budget cycle, we did the program review and I found myself just rather exhausted towards the end of the day, and depending on which department was being heard, big ones like Parks or Public Works, which needed a lot more attention, or just had a lot more discussion, were scheduled towards the end of the afternoon and I just really felt that if I had an opportunity to have longer conversations with these individual departments, it would have helped me make a better decision about the expenditures and the revenues and just some of the needs for the department. It's rather challenging when we have nine members who are—for example, talking about Parks and they're talking about Parks for their district and then we kind of mackerel out about an overall expense for the department. So, I like the idea of an ad hoc committee where we can kind of drill down or just look at the department as a whole and then be able to report back out. I also believe there's a section in either our Charter or our rules where there is a program review requirement and I think this ad hoc committee would allow us to utilize that section a little better. That's my thoughts. CHR. DAVID: Ms. Poindexter. MS. POINDEXTER: I thought about this and there's pros and cons to having this because the public's perception of just a group of individuals going to get that information and then is that group going to be the ones who push for us to lean one way or other, or what will it look it? So, I can't wrap my head around this yet, Council Member Richards. I don't know what the purpose is because we can still, individually, go to each department and have that private conversation as long as we want to. You know, ask about our own district stuff, ask about what they're presenting, and so we still can get that information ahead of time. I know that—can I ask Deanna a question? (Note: At this time, Finance Director Deanna Sako came forward to address the members of the Committee.) MS. POINDEXTER: The department heads already provide—by when do they provide something to the Mayor? They provide a status quo budget or a cut, I don't know what he expects of them, but when does that happen? MS. SAKO: We start the whole process in September, so it's not like it's something we just do the last month ahead of time. But, there's a lot of information that's not finalized until actually later this month, which is why the first budget comes in March first and the second amended budget comes in on May fifth. And so, while they've submitted information already, several of them are still submitting changes to us as well, especially as we finalize real property tax. Page 100 FC -27 February 6, 2018 So, the process is definitely in place. I mean, we've been working on it, we have a lot of data, but we won't be submitting the budget until March first. MS. POINDEXTER: But, it will be good or wise for us to try and give input per district so that we could possibly make them make some changes, or we may encourage them to, correct? MS. SAKO: Right. And which is true, that pretty much, a lot of Council Members are speaking to departments year around with their needs because like I said, we do kind of start in September. So right, I mean you can talk to them at any time. MS. POINDEXTER: So, I see that as being more productive than trying to grab an ad hoc and havingI cannot see the ad hoc working better than a one-on-one for each Council Member. That's what I'm saying, so, thank you. MR. RICHARDS: Okay, so I know that the question is to postpone and so, I just was curious, but I do have to respond to that. The intent is to save money and save time because if we have nine people meeting with each department head as opposed to one group meeting with department heads, we cut down your department head's time about 85 percent. So, that's the first thing. And the idea again is to look at everything in context. But, I'm very willing to postpone the conversation and finish this conversation later. The whole idea is to make better decisions because we have better conversations in a timely fashion. MS. POINDEXTER: Right, and my response to that would be then who chooses? Who gets to be on the ad hoc to then promote because a lot of people, a lot of times, we try to promote our district. But, I'm going to support a postponement because this warrants real good, heavy discussion. Thank you. MR. RICHARDS: And like I said, we don't have to repeat the, or we don't have to invent the wheel, we just have to template off other jurisdictions that have done it. I hear your concern, but we can—there at some point, we actually have to move forward on stuff We know last year was not a good thing so we have to make a change on that. So, with that, what do I do here? Do I move to? CHR. DAVID: Wait, hang on a second. Before that motion to postpone, could I say something? MR. RICHARDS: Absolutely, you're the Chair. CHR. DAVID: Unless Ms. Lee Loy—I'll go to you first and then I'llbefore we postpone. Page 101 FC -27 February 6, 2018 MS. LEE LOY: I'll keep it short. I hear what Ms. Poindexter is saying, but we are bound by the Sunshine Law and I think it doesn't prohibit you from individually working with each department and having those conversations, but if there's a number of things that we can flush out prior to getting to the budget, I think it would make that process go a lot quicker. I mean we were here until midnight just setting the budget and doing program reviews until six and seven. I don't think it hurts, but I will support the postponement because we're at a late hour again and we're tired. So, we end up this is where we end up when we're trying to vet the departments and I just don't want to be here. It's a marathon not a sprint, and so we have to pace ourselves. I yield. CHR. DAVID: Thank you, Ms. Lee Loy, and if everybody's done, I'll support the postponement. I think my question would be, and I think we can digest this before we resume this at the next committee meeting. I'm having difficulty in our procedures on forming ad hoc committees because it's my understanding that according to our rulesI know the budget is an official business of this Council, but we form—typically ad hoc committees are based on something that's before us that's being considered. I don't see the Mayor's budget here yet for us to consider and then I'm kind of wondering how would we define the scope and investigation and the authority of this ad hoc committee to discuss budget? I think we need to be more specific than that. I'm just not sure if we can actually pinpoint the specific duty of the ad hoc in discussing a budget that we don't even know yet. We'd haven't' received it yet. It's not before us. But, that's just a question I pose to your folks because I'm havingI'm looking at our rules on how we form ad hoc committees, and it's usually because there's an issue on something that's on our agenda that we need to assign a few people to investigate, and then come back with their recommendations. I get what you're saying because it's really hard on us when we have to talk story only when we meet. But at the same time, I'm just wondering what our—how do we specify the specific duty of this ad hoc committee without overstepping the fact that the four people on the ad hoc will have the ability to? Point of Order: MS. O'HARA: Point of Order. Aren't we discussing the motion to postpone? No? CHR. DAVID: We didn't make that motion. MS. O'HARA: Okay. I'm sorry. Thank you. CHR. DAVID: Thanks for reminding me, but we didn't make one. I said before you make a motion to postpone, I wanted to say something so we can think about this. But, that's my concern. If we read why this Council, this body forms an ad hoc, if we can find, or we can ask our Clerk's Office to help us with this between now and then. So, motion to postpone, someone. Ms. O'Hara. Page 102 FC -27 February 6, 2018 MS. O'HARA: I was actually going to call for the vote. If we weren't going to move to postpone, we've just been slushing around here and I was going to call for the vote. So, I'm going to be courteous if Mr. Richards wants to move to postpone. Vote on Motion to Mr. Richards moved to postpone Comm. 705 to Postpone: February 20, 2018. Seconded by Ms. O'Hara and carried (Approved) by the following voice vote: Ayes: Council Members Chung, Eoff, Kanuha, Lee Loy, O'Hara, Poindexter, Richards, Ruggles, and Chair David — 9. Noes: None. Absent: None. Excused: None. CHR. DAVID: Okay, hang in there, I think we got one more resolution, which Mr. Clerk, 488-18. ORDER OF The Chair directed the Committee to proceed to the next order of business, RESOLUTIONS: Order of Resolutions. Res. 488-18: SUPPORTS SENATE BILL NO. 3088 EXTENDING THE PERIOD WITHIN WHICH A COUNTY MAY ADOPT A SURCHARGE ON STATE TAX UNDER CERTAIN CONDITIONS, FROM MARCH 31, 2018, TO SEPTEMBER 30, 2018 The proposed extension would provide counties who have not already established a surcharge on state tax additional time to receive public input, conduct the required public hearing, and determine whether or not to establish such a surcharge set forth in Act 001. Reference: Comm. 728 Intr. by: Ms. David Motion to Approve: Ms. Poindexter moved to recommend adoption of Res. 488-18. Seconded by Mr. Kanuha. CHR. DAVID: Thank you, if I may. I know, based on all our discussions today, we really believe that this might not even fly, but I think it's an effort that we need to let the State Legislature or the Senate know that we're supportive of their efforts to extend this. If they do it, it extends our time to make this important decision. So, I just ask for your support. Ms. Lee Loy. MS. LEE LOY: Chair, I know you did it by request, I was wondering who was requesting it. Page 103 FC -27 February 6, 2018 CHR. DAVID: No, I didn't do this by request, this was mine. MS. LEE LOY: Oh, yours? Okay, thank you. CHR. DAVID: I believe there's another one that's asking for a one-year extension and that one I think our Mayor supported the one-year extension. But this one came out first so I figured I'd bring this resolution first. MS. LEE LOY: Chair, is there a House companion bill to this Senate bill? CHR. DAVID: I'm not sure. It is? Okay, now there is? Okay, thank you. MS. LEE LOY: Has it been scheduled for a hearing and do we know the timing of that hearing? CHR. DAVID: I had Dawn check, my staff check on this and so far, there's nothing yet. MS. LEE LOY: Is there a drop -dead deadline that this bill would need to be heard by a particular date to allow us to have the extension? My concern is that if this matter is not scheduled and heard before the March 31st deadline CHR. DAVID: It's a moot point. So, as far as that goes, I don't know whether they're going to even assign a hearing date at this rate, based on what we've heard today. So, I'm just saying that this is no harm, send it down to them and let them know that if we can have more time, that'll be great. If not, we're working on the deadline regardless, to meet that March 31st deadline. So, I just, like I said, ask for your support. MS. LEE LOY: Okay, if I might. CHR. DAVID: Go ahead. MS. LEE LOY: I'm going to be speaking against this one. I think sending them a mixed messagetoday, we worked really hard at the GE and we got clear indication that's not something that this body is ready to do. So, I just feel that I don't want to give anybody false hope. I think that's a loss leader. I think it's, frankly, I think that puts us at a bigger disadvantage at the Legislature that at some point, if they show good faith that somehow, we will take the measure up and consider raising the GE. I voted yes because I wanted the conversation to continue. I wanted to hear a plan. I wanted it to be shopped around. I wanted my colleagues to have an open mind about it and clearly, we got the signal, six, three, we're not going to do it. I'm going to be speaking against this and voting against this. I refuse, as Page 104 FC -27 February 6, 2018 a leader, to give anybody false hope or mislead any of my other colleagues, not only here but at the State Legislature. So, thank you. CHR. DAVID: Thank you. Ms. O'Hara. MS. O'HARA: My concern was when we do this by bill number, we preclude the fact that this action could take any bill number by the end of the Legislature. But, on the other hand, I have to credit Ms. Lee Loy with what she just said, because the timing here is such that we would not know the outcome until the end of April. So, we are basically unable to take action because we cannot bring this bill back in this cycle, if I'm correct. I mean we have just voted negative recommendation on Bill 102, moving forward to Council. If those votes hold for the next two votes, we have voted down 102, so we cannot bring it back. If the Legislature, in its wisdom, decides to grant us an extension, we won't know about that until well after these votes are taken, so I'm not really clear on this. I mean I have been supporting personally sending in testimony in support of extensions, and I think we all can individually do that if that's what we want to see happen. But, I'm just not real sure that as a body, we should be doing this in this manner because I agree, we're sending a mixed message here. It's not real clear what we're trying to get from the State Legislature in this regard. CHR. DAVID: Thank you. Ms. Poindexter. MS. POINDEXTER: I don't see any harm in supporting it because they may want to expedite it. Who knows? Seeing that we had a negative vote today, they may want to fast track this. And I think if we're individually sending our support or non-support of their bill, we're going to speak that right here by our votes too, in the same way. So, if the majority says yes, this goes. If it says no, it doesn't go. So, I just say put it to a vote. I don't think it's, to me, it's not a false hope. I think it's telling people that we support the extension and gives us more time with our people to get information. Like I said, they may fast track it there knowing what happened today and the outcome of the vote on the bill. Thanks. CHR. DAVID: Thank you, Ms. Poindexter. Mr. Chung. MR. CHUNG: I kind of was going to be voting against this and I wasn't really going to explain, but since you guys explained, I'll give my perspective too. Basically, what we're going to be asking these guys, based on the vote that we had today, is pass this thing so that we can continue doing nothing. That's what it is because we had all of this time since Fresh introduced this thing, all the way until now, and we vote it no. You're telling me from now, until—if we've got until September, we're going to be doing things that might change the vote? No, I'm voting no on this. Page 105 FC -27 February 6, 2018 CHR. DAVID: Thank you. Ms. Eof£ MS. EOFF: Let me try and ask a question then, because today, I heard that some of us just wanted to hear, have a little bit more time to hear from the public, which is one of the reasons why I think a public hearing is required. Finance is going to do a couple of outreach efforts to better explain how the bill may benefit certain communities. I mean, if we hear, or the mind set of our constituents starts to be that this is a great idea, or maybe we hear that they support it if it was maybe a quarter percent, I mean, there's things that could happen between now and possibly, if the Legislature grants an extension, that might change some of the way we would vote. Something you said, though, would potentially be a problem if we voted Bill 102 down at any point. Would we be able to bring something back in this term? Is it in the term or in the year? In the term that resembles this. So, I don't know if changing the percentage would be a big enough difference to bring a new bill, I don't really know the answer on that. So, that sort of bothers me I guess. But yeah, I think some of our votes today indicted that we needed more time before we were willing to support the measure. CHR. DAVID: Ms. O'Hara. MS. O'HARA: I guess I didn't hear that in the votes. I mean, usually, when you're uncertain, you vote kanalua no or yes. I'm still uncertain and I've explained why because I want to see some offsets, but I heard definitive noes and so that kind of brings a different bell in my ear. So, I'm not really sure where we're going with this. So, that's why I questioned this aspect of sending this message to the Legislature, as a group. We can individually do whatever we choose. CHR. DAVID: Ms. Poindexter. MS. POINDEXTER: I think the difference from when Council Member Fresh Onishi was here, is we didn't have a County of Hawaii Transit Master Plan to show the community, and I think this could be the selling point. I'm not saying it will be, but we have an opportunity. All I'm saying is just the extension is in good faith, that we are making sure that we get public input and not fast track this. So, that's all I'm saying, it's my opinion. Thank you. CHR. DAVID: Thank you, Ms. Poindexter. Mr. Chung. MR. CHUNG: I mean—and that's true, that's something that came up later. But, we all knew that our Mass Transit system was junk. This only confirms what we already knew. So, it would have been good if we had tried to sell it a long time ago and when the Mass Transit study came up, we said, "Look, this Page 106 FC -27 February 6, 2018 confirms what we've been saying," and what you, the public, have known for all of these years. So, someone said what's the harm in passing this? I would say, "What's the harm in not passing it?" Nothing, right? CHR. DAVID: Well, I really understand your comments and your position on this, and when this Senate bill came out, it was because we were really under a tight gun, having found out that this bill was coming forward. So, my intention was although we needed to make this decision or try to make this decision and take it out to our community and get as much information as we can, I felt that we should support the efforts of our Legislature, whoactually, two people saw the need that maybe we can be granted an extension. Then there was another bill that asked for a one-year extension. So, whether it's about sending mixed messages and whether—yeah, like Mr. Chung says, "Hey, if it passes, it passes. If it doesn't, what's the harm?" But for me, I just wanted to support our legislators who brought this forward, with some inkling that we might need some help because we had such a short notice to do this. And that's all this is. So, you vote however you want to vote, I mean that's fine with me. How they vote on the extension or whether they do or not, that's their prerogative, but ours is to either approve this or not. So, I appreciate your comments. Ms. Lee Loy. MS. LEE LOY: Just a simple question. Were these bills initiated by a legislator at the State, or was that done at the urgency or at the urging of some individual at this— CHR. DAVID: I found out about Senate Bill 3088 from Mr. Kai Kahele, and he called me and said that their Senate Bill 3088, they're asking for an extension and if that works for us, we can send support testimony or resolution. So, I told him thank you and that's why I asked for this to be placed on this agenda, so we at least had some time to talk about it. MS. LEE LOY: So, no member from this body requested that or initiated that? CHR. DAVID: No, I had a conversation with Senator Kahele, and he's the one that told me that there was this Senate bill. I didn't even know they had one and he forwarded it to me. MS. LEE LOY: Thank you. CHR. DAVID: Mr. Richards, go ahead. MR. RICHARDS: I wasn't going to speak but I'd better because I agree with the general feelings of the members that have said they're concerned about sending mixed messages. I think we worked pretty hard to have this Page 107 FC -27 February 6, 2018 conversation and get it more or less lined out as far as what the beliefs and feelings are. I don't—the mindset of the Council right now is not to go ahead and move this forward. It's going to go up to Council with a negative recommendation and I have to agree with the two Councilwomen to my right, that I don't think we're ready in the current form. I know I'm not, and this kind of harks back to the other taxes and the fuel tax. We haven't worked hard enough on stuff and we need to have some balancing of this, and I'm not seeing that. So, I can't support this coming forward. Thank you. CHR. DAVID: Right. Ms. Poindexter. MS. POINDEXTER: Council Member Sue Lee Loy asked about if anybody encouragedI was at the meeting, I think it was Finance and WAM with the Mayors and it was offered up by a Senator saying that they would look into even a possible extension. So, that was alluded to at that meeting. So, we were expecting something to come out of it. Thanks. CHR. DAVID: Okay, thank you. Ms. O'Hara. MS. O'HARA: I just wanted to report that having had some discussions with Senators and Representatives of the House, there's more reception for this potential extension on the Senate side than there is on the House. So, they both have to agree and so, I'm just pointing that out. This is the Senate bill only. CHR. DAVID: Thank you for that. Mr. Kanuha. MR. KANUHA: Thank you. I definitely hear from everybody. I completely get what Ms. O'Hara and Ms. Lee Loy are saying in that, well, I'm not going to repeat because I'll probably get it completely wrong, but I have no problem moving this to Council with a positive recommendation, but the problem I'm going to have is if from there on, what's going to happen with the GE? That's when it's going to be more of an issue for me in voting for this. So, I have no problem voting for it now and to move it on with that positive, but it'll be problematic later on if we do vote it down, the main GE. CHR. DAVID: Thank you. Okay, are we ready? Alright. Mr. Clerk, voice vote. Page 108 FC -27 February 6, 2018 Vote on Res. 488-18: The motion to recommend adoption of Res. 488-18 was (Adopted) carried by the following roll call vote: Ayes: Committee Members Eoff, Kanuha, Poindexter, and Chair David — 4. Noes: Committee Members Chung, Lee Loy, O'Hara, Richards, and Ruggles — 5. Absent: None. Excused: None. (Note: Mr. Kanuha voted kanalua then "aye.") ADJOURN- There being no further business, at 6:05 p.m., Ms. Poindexter moved to adjourn MENT: the meeting. Seconded by Ms. Lee Loy and carried by the following voice vote: Ayes: Committee Members Chung, Eoff, Kanuha, Lee Loy, O'Hara, Poindexter, Richards, Ruggles, and Chair David - 9. Noes: None. Absent: None. Excused: None. CHR. DAVID: We are adjourned. Approved: Ms. Maile edeiros David, Chair Finance Committee MD/jm 4AQ /I g (Date) Page 109