TAXWatch: Someone Was Listening to the Howl in the Woods

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[dropcap] H [/dropcap] ere at the Tax Foundation, we watch our state government, and we howl a lot.  Often, we don’t know if our message is being heard, or if it’s being taken seriously.

A few weeks ago, we complained that multi-million dollar projects undertaken by state and local government could sink into “standardless spending” because the law controlling the State’s procurement process, Hawaii Revised Statutes chapter 103D, had been ripped out and thrown to the side according to the Governor’s Thirteenth Supplementary Proclamation that was signed on September 23 (the wholesale suspension of the procurement code can be traced back to the Sixth Supplementary Proclamation that came out on April 25).

Hawaii Revised Statutes chapter 103F, which governs procurements for health and human services, was similarly suspended.

In mid-October, I received an e-mail from an executive at a major Honolulu public relations firm.  The firm was assisting with one of the major multi-million-dollar government projects.  “The state’s lifting of procurement is solely for emergencies related to COVID-19 and the [government project] is operating fully under the procurement code,” it said.  The executive added that the Department of Accounting and General Services, which issues the State’s checks, was also following the rules and was not using the COVID-19 emergency to sidestep them.

“The problem,” I replied, “is that it’s not generally known whether and to what extent agencies … are using the procurement process notwithstanding that the Governor’s proclamation states that 103D is suspended in full.  We hope that the agencies are not applying the suspension arbitrarily or based on vague criteria like ‘we think it’s related to COVID-19.’”

Then I find out that two days before I received the email, the Governor had issued a Fourteenth Supplementary Proclamation, in which the language suspending the Procurement Code was radically changed:

Chapter 103D, HRS, Hawaii public procurement code, [is suspended] only to the limited extent necessary to procure goods and services in direct response to COVID-19; to procure goods and services using funding that must be expended on or before December 31, 2020; and to procure goods and services not in direct response to COVID-19 but for which certain procurement requirements cannot reasonably be met through the regular procurement process due to the emergency.

Similar language was used to walk back the suspension of chapter 103F from a suspension in full to a suspension to the limited extent necessary to deal with the emergency.

Apparently, someone had been listening to our howl in the woods and had done something about it.

It may be that the Governor’s intent all along was to suspend the procurement code only where the pandemic emergency required quick action, which seems to be shown by the wording in the initial emergency proclamation that came out on March 5.  Things may have gotten lost in translation by the time we got to the Sixth Supplementary Proclamation.

But legal effect comes from the words on the current document, not from the 15 or 16 documents that came before.  I am still chalking this one up as a win for the howl in the woods.

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Tom Yamachika is the President of the Tax Foundation of Hawaii, a private, nonprofit educational organization dedicated to informing the taxpaying public about the finances of our state and local governments in Hawaii. Tom is also a tax attorney in solo practice and has been since early 2013. Prior to 2013, he was with the accounting firm Accuity LLP, which was formed in 2006 from the Honolulu office of Coopers & Lybrand (which later became PricewaterhouseCoopers). Before that, he served as an Administrative Rules Specialist in the State of Hawaii Department of Taxation from 1994 to 1996, where he drafted rules, interpretive releases, and legislation on several different state taxes. Prior to that, he practiced litigation and tax law with Cades Schutte Fleming & Wright in Honolulu.