A package of measures lawmakers introduced at the start of this legislative session to ease Hawaii’s cost of living have cleared the halfway point in the Legislature.
The four bills, two in the House and two in the Senate, were among hundreds of bills that crossed over Tuesday between the two chambers. Bills related to climate change, including a tax on carbon emissions, also passed.
The priority package would raise the minimum wage, develop housing, streamline maintenance at public schools and expand pre-K education in the state. They all sailed through with little opposition from legislators.
And as the House and Senate get each other’s bills, they are unlikely to make major changes to the package as its provisions were already agreed upon by lawmakers and Gov. David Ige before the session even started. The package was unveiled in January after legislators met with the business community last year.
House Bill 2541, which proposes the minimum wage increase, soared through in a 49-2 vote after about an hour of debate on the House floor.
Only Reps. Gene Ward and Val Okimoto, two of five Republicans in the 51-member House, voted “no” on the bill. Okimoto tried to get a tax credit for small businesses inserted into the bill, but that move was shouted down by the House’s Democratic majority over economic uncertainties and concerns that it could incentivize employers to never raise wages above the minimum.
Some groups have pushed for raising it to $15 an hour or even $17 an hour, and even the Legislature and Ige considered a $15 an hour increase just last year.
“The debate was is it too little or too much,” Rep. Aaron Johanson, chair of the House Labor Committee who worked on the bill, said regarding the minimum wage level.
Besides raising the minimum wage, HB 2541 would also make the state earned income tax credit refundable, meaning folks can get money back in their tax returns, and would set a food tax credit to $150 per eligible recipient in a family as opposed to the sliding scale found in the current law.
The package was developed last year with input from the business community, which has voiced strong opposition to minimum wage increases in the past.
However, they’ve flipped this year, and now support the slight increase. Members of the House who were opposed to an increase last year now support it as well. Some businesses in Hawaii including hotels, banks and some fast food restaurants already pay above the minimum wage.
HB 2541 also makes the state earned income tax credit refundable.
In Hawaii, the tax credit, which cuts off at an annual gross income of $56,844 for a married couple with three children, is set at 20% of a similar federal tax credit.
That same family could expect a maximum of $1,320 if that credit is made refundable.
A report on tax returns from 2018, the most recent tax year for which data is available, shows that 55,656 claimants received the nonrefundable credit. The average credit amount per claim was $375.
A separate bill in the Legislature could spread out the credit over the year. House Bill 2708 has already cleared the House and is now awaiting committee hearings in the Senate.
The bill would let taxpayers withhold the amount of credits they expect to get, meaning they would pay less taxes throughout the year.
The tax benefits could cost the state more than $70 million a year to sustain.
House lawmakers also passed a bill to increase taxes for earners making over $96,000 a year. House Bill 2385 creates new tax brackets for every $100,000 earned up to $600,000.
The measure passed 41-10, with Reps. Lynn DeCoite, Sharon Har, Sam Kong, Calvin Say, James Tokioka, Ward, Okimoto, Lauren Matsumoto, Cynthia Thielen and Bob Mcdermott voting “no.”
The state tax department expects $59.8 million in additional tax revenues in 2022 if HB 2385 becomes law.
Will Hawaii Get A Carbon Tax?
State senators moved briskly through their agenda of hundreds of bills Tuesday. Many votes were unanimous or nearly so.
One of the few measures to spark debate was Senate Bill 3150, which calls for a carbon dioxide emissions tax. “Carbon pricing,” as it is known, is intended to encourage producers of oil, gas and coal to reduce the greenhouse gasses they emit into the atmosphere.
Sen. Karl Rhoads, the chief sponsor of SB 3150, told his colleagues on the chamber floor that an “overwhelming majority of economists support a carbon tax as a way to combat global warming.
“This is not controversial,” he said, at least for economists if not politicians.
But Sen. Lorraine Inouye warned that such a tax could be costly to the state, which depends heavily on imported fuel. She noted that the Hawaii State Energy Office is studying a carbon tax and expects to report its finding back to the Legislature.
Inouye also expressed concern that any state action could be challenged by the federal government.
But Ruderman, a co-sponsor of the bill, called the carbon tax the most “meaningful” piece of legislation before lawmakers to tackle climate change. The cost of not addressing carbon emissions, he argued, would dwarf any expenses incurred by passing SB 3150.
“Procrastination is not acceptable,” he said, adding that Hawaii’s “dirty little secret” is that it has a very high carbon footprint because of its reliance on air transportation.
For nearly all other bills, however, there was very little floor discussion.
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