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Proposed tax increase to fund homeless services not likely to advance in Legislature

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Sophia McCullough
FILE - State senators begin the legislative session on opening day at the Hawaiʻi State Capitol on Jan. 18, 2023.

A bill that would have raised a tax to support affordable housing and homeless services isn't likely to be heard this session.

Senate Bill 678 would have raised the state conveyance tax on homes selling for more than $2 million. The proposal would increase the tax from 2% to 6%. Expected revenues from the tax would go to the state for land conservation, the state's rental housing revolving fund, and to expand support to homeless services.

The measure was scheduled to be heard on Feb. 7 by two Senate committees. But it has since been deferred, with the likelihood that it won't be heard this session.

"We need a hearing on this bill," said Kenna Stormo-Gipson, housing policy director at the advocacy group Hawaiʻi Appleseed. "There's really no reason not to hear the bill, considering the amount of public testimony and support that it received."

SB 678 received nearly 100 pages of written testimony, with only two testifiers opposing it. According to Hawaiʻi Appleseed, more than a dozen houseless individuals on Kauaʻi were waiting to testify during the hearing. A majority of supporters cited the benefit of having a sustainable funding source for state homelessness efforts.

But an important deadline looms for measures that have yet to be heard this session. The Legislature's first lateral is Friday — a deadline for bills to move to their last committee. SB 678 hasn't been scheduled for a hearing by the two committees it was referred to.

"I'm sorry that the opportunity wasn't there that day. We just ran out of time," said Sen. Stanley Chang, the chamber's housing chair and introducer of SB 678. "It was a logistical challenge. And had we known, maybe there were things that we could have done in advance to try to accommodate the number of people wishing to testify on a different day or reschedule an agenda."

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Hawaiʻi State Senate
FILE - Senate Housing Committee Chair Stanley Chang at a hearing on Jan. 31, 2023.

Chang told HPR another conveyance tax measure, SB 362, was approved earlier. He hopes language from the stalled SB 678 could be added to the surviving bill.

"SB 362 does increase the conveyance tax, and does increase the amount of funding going into the Rental Housing Revolving Fund," Chang said. "Additional ideas from SB 678, or any other bill having to do with the conveyance tax can also be inserted as amendments in the future."

Stormo-Gipson told HPR that she understands passing a tax increase isn't easy. But she fears the deferral of the measure, and not letting houseless individuals be able to testify their support, may hurt public trust in the process.

"People start to lose some faith in our public process," she said. "I think that's really the biggest missed opportunity here, because there's an opportunity to let people have their voices be heard and show that our public processes work. I think the biggest downside is people feeling like 'Hey, I showed up to testify, and then I was turned away.'"

Chang said the legislative session is long, and bills often change. He hopes the public will continue to participate in the process, and testify on proposals to help lawmakers make the right decisions.

Casey Harlow is an HPR reporter and occasionally fills in as local host of Morning Edition and All Things Considered. Contact him at charlow@hawaiipublicradio.org or on Twitter (@CaseyHarlow).
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