COVID Economic Crisis Deserves Special Session

We are in the midst of the greatest crisis of our lifetime. The legislature should convene in a special session as soon as possible and go to work. There are many challenges to be resolved, and no reason to further delay taking meaningful action to help alleviate the mounting economic damage to small businesses and local residents.

This is not the time for “business as usual.” We simply cannot afford to wait until January for the 2021 legislative session to begin, then run its normal course and conclude in May. Issues such as the ongoing unemployment insurance debacle, our imploding economy, food self-sufficiency, and many other pressing needs must be dealt with now and given the urgent attention they deserve.

The primary excuse for inaction to be offered by legislative leaders will always be about money. That my friends is shibai. I learned a long, long time ago that when the government tells you there is no money, what they are really telling you is that what you are asking for, is not a priority.

Our state legislature found the money to fund public workers raises, but yet they can’t seem to find the money or the political will to eliminate the state income tax on unemployment benefits. This is the least our state government can do to help make up for the pain caused by the gross mismanagement of the unemployment application and implementation process.

So much can be done with just the stroke of a pen, and without money or at least without immediate budget impacts. In addition to taking the state income tax off of unemployment benefits, the legislature could also:

Place a moratorium on mortgage foreclosures, or at the minimum create a punitive sized (as in very big) new tax on lending institutions (and related businesses, law firms, collection companies, etc) who institute foreclosure proceedings on any Hawaii properties for a period of X years following the start of the COVID-19 stay at home orders.

Incentivize rent reductions both for residential and commercial rents, by making “rent reductions and unpaid rent” a deductible expense for tax purposes. Government must reward landlords who forgo or voluntarily reduce their rents to long-term tenants. Landlords would then receive a tax benefit above and beyond simply not being taxed on the income.

Eliminate tax penalties and interest for any business that has been negatively impacted by COVID. Yes, the state needs, is owed and deserves to be paid taxes on income and sales, however penalties and interest for late payments should be waived during this period.

Eliminate the General Excise Tax (GET) on long term residential rental income derived from rentals serving 100% of median income and for small business owners impacted by COVID.

Numerous options are available to increase revenue, not the least of which is the legalization and taxing of cannabis. Closing the existing tax loop-hole on Real Estate Investment Trusts (REITS) will also add much need additional funding to the state budget.

Redirecting existing state spending toward “buying local” is an obvious but too often neglected strategy.

The state already spends hundreds of millions of dollars purchasing imported food for prisons, schools, and hospitals. Simply requiring this food to be purchased from local farmers and ranchers would reap huge benefits. Policymakers will respond no doubt by saying that it is a bit more complicated and not so easy, and the state is already “moving in this direction.” True statements I suppose, but an inadequate response during this time when emergency action is needed.

According to one University of Hawaii study, “Hawai’i’s total food imports are roughly $2 billion per year.” The number one item taught by the experts on the “things to do” list for economic development is to “plug the leaks.” Spend public funds locally and benefit from the economic “multiplier effect.” As individual consumers, we can and must also help make this happen by purchasing from local farmers, farmers markets, and in the supermarket always focusing on buying local. But our government must lead the way.

There is so much more our state government can do to spur the economy via local food production.

While it has been talked about and “on the table” for literally decades, the legislature should finally just do it and eliminate the General Excise Tax (GET) on “fresh food” (not prepared food, restaurant meals, or processed food) thus reducing the cost of living for all residents while supporting local agriculture. The term “fresh food” is utilized here to avoid interstate commerce and tariff restrictions.

For the small farms on every island that actually sell food for local consumption, the state should exempt them from collecting or paying any GET whatsoever (on purchases or sales). This effectively reduces the cost of all of their expenses (equipment, seed, water, etc.) by 4.5% and giving their agricultural products a similar price advantage in the marketplace.

There is no shortage of meaningful public policy actions that could be made NOW during a special session. Many in the community have their own lists, and all ideas should be on the table.

What seems to be missing at the legislature is a solution based sense of urgency, and a focused commitment to identify and implement meaningful public policy – today. Unfortunately, too many of our political leaders, like so many others throughout history, seem content to just sit on the sidelines and fiddle, while the world comes crashing down around us.

Yes, the legislature has a responsibility to ask questions and demand answers from the executive branch, but their primary duty is to legislate and not to administrate. It is the legislature’s job to set the policy which guides the direction of our state, and it’s the governor’s job to implement those same policies.

The time of non-action or molasses-like “incremental progress” with the obligatory limp excuses talking about how complex the issue is, or about how hard it is to please the various groups – is over. Call and email your legislator and those legislative leaders at the top of the food chain, today – demand a special session, demand action, demand that they do their job.

About garyhooser

This blog represents my thoughts as an individual person and does not represent the official position of any organization I may be affiliated with. I presently serve as volunteer President of the Hawaii Alliance for Progressive Action (H.A.P.A.) I am the former Vice-Chair of the Democratic Party of Hawaii. In another past life, I was an elected member of the Kauai County Council, a Hawaii State Senator, and Majority Leader, and the Director of Environmental Quality Control for the State of Hawaii - in an even earlier incarnation I was an entrepreneur and small business owner. Yes, I am one of the luckiest guys on the planet. Please visit my website AND sign up for my newsletter (unlike any email newsletter you have ever gotten, of that I am sure) - “Come to the edge.” “We can’t. We’re afraid.” “Come to the edge.” “We can’t. We will fall!” “Come to the edge.” And they came. And he pushed them. And they flew. - Christopher Logue (b.1926)
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