Joint Economic Package Proposes Benefits for Hawai‘i’s Working Class

January 15, 2020, 8:58 AM HST · Updated January 15, 9:06 AM
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PC: Hawaiʻi House of Representatives – Majority

A joint House and Senate package of economic bills, supported by the Ige Administration, is focused on removing economic obstacles and improving the lives of Hawaiʻi’s working-class.  This collaboration was unveiled at the State Capitol on Tuesday during a joint press conference.

House Speaker Scott K. Saiki said the package tackles the issues highlighted in the Aloha United Way sponsored report, “ALICE: A Study of Financial Hardship in Hawaiʻi.”

The ALICE or Asset Limited, Income Constrained, Employed report describes the economic hardships facing working individuals and families in Hawaiʻi. According to the report, after allocating monies to pay for expenses such as housing, child care, food, taxes, health care, and transportation, a family of four needs to earn roughly $77,000 a year simply to survive.

“What my colleagues and I are proposing today to address the high cost of living in Hawaiʻi will directly support individuals and families who are struggling the most to make ends meet,” said Speaker Saiki. “Every dollar counts when you are trying to stretch each paycheck just to meet basic needs. By increasing wages and tax benefits, investing in child care, and creating more affordable housing units, the Legislature, together with public and private partners, is working to end the cycle of poverty.”

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This is the first joint House and Senate legislative bill package since 2004 and lawmakers note, it has the backing of the Governor.

“This legislative package is an example of innovative reforms and targeted investments to help ensure a better future for residents and the state,” Saiki said.

“In these divisive times, this collaborative package is the result of the hard work done over the interim months by House and Senate leaders, with input from stakeholders and administrative departments, that strikes an optimistic tone in addressing these issues,” said Senate President Ronald D. Kouchi. “We are aware that this is a good first step toward making a difference and hopefully, with continued cooperation from all parties, we will continue to invest in Hawaiʻi and in our youth.”

Governor David Ige said package “provides a blueprint for changes for generations to come.” Ige said these bills will better the lives of Hawaiʻi’s people and make the islands a place that future generations will be able afford to call home.

“Many of our families are living paycheck to paycheck, and this proposed package of bills is designed to ease the burden on those struggling to stay afloat and provide a more stable future for the next generation,” said Gov. Ige.

To address these concerns, the economic package includes:

  • Targeting tax relief for working class families and individuals,
  • Increasing the minimum wage,
  • Developing leasehold housing for the working class,
  • Providing tax exemptions for developers to build market priced homes,
  • Providing infrastructure for developments at or near rail stations,
  • Expanding childcare options for parents near their work places,
  • Creating a new Schools Facilities Agency and allow DOE to focus on education.

“According to the ALICE report, large cost drivers, primarily taxes, housing, and childcare, coupled with relatively low income levels make cost of living a challenge for too many Hawaiʻi families,” said Representative Sylvia Luke, Chair of the House Finance Committee. “Instead of trying to resolve these issues in silos, we, along with community members, came together and decided, ‘Let’s help our working people.’ That’s why what we have is not just about wages, and not just about affordability of housing, and not just about childcare needs. It’s about raising up that entire group of our population.”

“This joint House, Senate, Governor effort is a real integrated approach to help working families with increasing their take home pay amounts, providing pre-school for their children, and increasing housing supply” said Senate Ways and Means Committee Chair Donovan M. Dela Cruz.

Reducing Income Inequality

To put money back into the pockets of residents, one measure will provide tax relief for working families by making the Earned Income Tax Credit refundable and permanent. That means qualified families can get a cash refund of up to $380 through this tax credit.

Lawmakers note that for many people, earning minimum wage is not enough to provide enough to live on. This package includes a bill that will provide incremental increases in the minimum wage bringing it to $13 an hour by 2024. “But raising the minimum wage alone is not a solution to providing economic stability,” supporters said.

“This $75 million is some of the largest tax relief for working class folks that the Legislature has made in the last few decades,” said Representative Aaron Ling Johanson, Chair of the Labor and Public Employment Committee. “By coupling a minimum wage increase with the tax relief, we’re ensuring that working class families and individuals not only increase their income, but also offset any increased taxes from those wage gains.”

“I like the idea of a joint Senate-House-Governor proposal for a package that addresses income inequality by providing relief for the working poor. Although the increases to the minimum wage may seem modest, the proposal must be seen in its overall positive impact and in its embrace of the ‘aloha spirit’ toward those that are struggling in our society,” said Senate Labor, Culture and the Arts Chair Brian T. Taniguchi.

“The ALICE Report showed us that 47% of our households are barely able to provide for the five basic essentials of housing, childcare, food, transportation, and healthcare. These families are left vulnerable as their budget – $28,296 for a single adult and $77,052 for a family of four – does not allow for savings and unexpected expenses. It could take just one incident for these households to fall into a crisis. We have to do better for our families,” said Norm Baker, chief operating officer at Aloha United Way. “We are grateful that our lawmakers are working on a legislative package and partnering with nonprofits and the private sector to create solutions that will help lift our ALICE households.”

Increasing Affordable Housing

The ability to buy a home is part of the American dream but many in Hawaiʻi cannot compete with outside investors to purchase homes and condos beyond their economic reach, according to backers of the bills. To address this issue, the state will identify publicly-owned properties that can be used to develop 99-year leasehold units. Half of those homes will be reserved for working-class families earning 140 percent of the area median income.

“Leasehold sales will ensure that the homes will be reserved for local residents because the investment market is not interested in leasehold,” said Rep. Tom Brower, Chair of the House Housing Committee. “And leasehold will keep the prices down well below the median therefore making it affordable.”

The state will also invest $200 million in General Obligation Bonds to defray infrastructure costs for developers willing to build around the first open rail stations in West Oʻahu and offer a General Excise Tax exemption for projects that meet the goal of 140% AMI or below.

“The goal is to build 10,000 units,” said Rep. Brower. “Developers say the cost of infrastructure makes projects cost prohibitive. This provides a great incentive and will jumpstart construction and expand the number of affordable, available homes on the market.”

“With this package, the House and Senate are taking a major first step toward realizing the ALOHA Homes proposal. Although differences continue to exist, we welcome this sign of commitment to implement the full ALOHA Homes vision in the years ahead,” said Senate Housing Chari Stanley Chang.

Access to Learning for all 3- and 4-year-olds

“All families want the best for their children and studies have shown that an early education contributes significantly to how well a student does in school,” according to backers of the bill, “But finding affordable child care that is also convenient to homes or business is often difficult.”

According to those behind the legislation, the lack of affordable child care serves as a major barrier for families trying to better their economic circumstance. “Many families are forced to forgo child care and early learning for their children and those who do budget for child care spend about one-third of their incomes on it. Lawmakers have been struggling to expand public early learning facilities for decades,” they said in a press release.

To solve this problem, this package contains a bill to create a public-private model to increase the capacity at existing private childcare facilities supported with public funds and also develop new facilities for early learning programs for 3- and 4-year-old children where they are needed.

State-owned sites including Aloha Stadium, the Hawaiʻi Convention Center and all the university campuses will provide space to incorporate early learning centers near where people work.

Learning centers will also be developed on state properties on the neighbor islands, in rural areas and along the rail routes allowing parents to drop off their children near their place of employment, under the package.

“The best way to do something about childcare is to provide early learning. Providing many more early learning centers across the state will help 3-, 4-, and early 5-year-old children the chance to truly be ready for kindergarten,” said Rep. Justin H. Woodson of Maui, Chair of the Lower & Higher Education Committee.

“The Learning To Grow legislation will expand access to early learning opportunities to keiki across our state. It is well documented that early learning has a substantial positive effect on long-term academic success, and we owe it to our keiki to give them the best possible chance at success that we can,” said Senate Vice President Michelle N. Kidani. “The action to move school facilities out of the Department Education is not intended to be punitive in nature; this is simply an acknowledgement that proper and appropriate facilities management requires a different skillset from education. This new School Construction Authority will have the ability to redevelop our campuses and transform our schools into 21st Century learning centers for our students.”

“Our state is at a crossroads – people we love are leaving Hawai‘i not because they want to, but because they have to. They can no longer afford to live here. Two of the primary cost drivers are the lack of affordable housing and childcare options. Addressing these challenges will not be easy, however, I do believe it can be done through our collective effort,” said Micah Kane, a board member of the Hawaiʻi Executive Collaborative and CEO and president of the Hawaiʻi Community Foundation. “Our public-private partnership with the state, legislature, nonprofits, and the private sector gives me hope that together, we will solve these issues for our families. If we are so lucky, our families will stay home and come home.”

Building Educational Results

In order to allow the Department of Education to closely focus on its primary purpose of teaching children, the legislature proposes to create a new Schools Facilities Agency to oversee major construction and repair projects in our schools.

Under the package, the Governor will appoint an executive director for the new agency which will be responsible for all public school construction except for repair and maintenance projects that cost $100,000 or less.

“This new agency will focus on the construction of major building projects at existing and new schools,” said Rep. Luke. “This proposal will ensure that school construction is done in a timely manner with public input and strong oversight. This will enhance the learning experience and give all students a better chance for success.”

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