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In his annual State of the State address at the Capitol, Hawaii Gov. David Ige asked lawmakers on Tuesday to consider the birth of the state’s first newborn of the year — Alekah Obra Garcia.

“In 2037, when she and her classmates graduate from high school, some of us will be long gone,” Ige said. “Perhaps one of your grandchildren will be among the Class of 2037. How will they view the decisions we make today? How will they grade the schools and education we provided for them?”

By considering the future of Garcia, who was born Jan. 1 to Clarissa and Johnson Garcia of Kona, the governor put into context his top priorities for the 2019 Legislature — education, taxes and housing. Leaders in the state House and Senate welcomed the initiatives but also expressed concerns about how to fund them.

Ige called for creation of a “universal, statewide high-quality” public preschool system to provide every child in Hawaii “a head start” on learning. He also wants to move sixth grade into middle schools.

Ige will also ask the Legislature to remove the current $103 million cap on the state’s hotel tax and return the revenue to the counties as a straight percentage of collected transient accommodations taxes.

“In other words, the counties’ share would rise and fall based on the amount of money collected — without any cap on the high side,” said Ige. “There is a fairness to that formula that speaks volumes not only about our concern for others, but about our willingness to work with the counties as equal partners in moving the state forward.”

The governor’s third top priority is affordable housing.

His proposed budget includes $315 million for housing over the next two years. The administration also wants to build condominiums to sell on state lands utilizing 99-year leases. They would include parcels along the transit route and underutilized state lands.

The future, Ige argued, is about working now to make it possible for younger residents to afford living in Hawaii.

“Too often, when we talk about the future we speak in macro-economic terms,” Ige said. “But for me, the future is personal. In many ways, it has to be — if we want to make good and wise decisions. The future has a name and it is the name of a son or daughter, grandson or granddaughter.”

‘Living Wage’

The Legislature opened Jan. 16 with leaders identifying their own priorities, such as increasing the state’s minimum wage.

Ige said Tuesday that concern for others “is why we are submitting legislation to bring our minimum wage closer to a real ‘living wage.’” Ige’s legislation would increase the current $10.10 per hour to $15 over several years.

The governor’s address identified what he considers accomplishments under his tenure. They include moving the state toward a 100 percent renewable energy standard, having the highest bond rating in the state’s history and maintaining a low unemployment rate.

“The state of the state of Hawaii is sound,” Ige proclaimed.

He said Lt. Gov. Josh Green will be the state’s new “point person” on leveraging private sector partnerships to address the chronically homeless. In that role, Green will work with Scott Morishige, the state’s homeless coordinator.

The governor also suggested he is open to discussing what to do with Oahu’s outdated jail in Kalihi. He has proposed building a new jail in Halawa, although a recent task force reported that the state’s focus should be on rehabilitation, not incarceration.

“If we are legally obligated to carry out judgments of the courts whenever confinement is ordered, then let’s do it in a way that doesn’t make matters worse for those incarcerated,” he said. “If we disagree on the location, how big it should be, or the programming offered — fair enough. Let’s work together.”

Other highlights from the speech:

• increased funding for land conservation by removing the $6.8 million cap on the 10 percent conveyance tax to the Legacy Land Conservation Program;
• $3.9 million over two years for Sustainable Hawaii initiatives to support biosecurity, watershed protection and the Agricultural Loan Revolving Fund; and
• $35 million for homeless programs.

Ige closed as he opened his State of the State — by looking to the next generations.

“Alekah Obra Garcia is our future and we welcome her with loving open arms,” he said. “We have a job to do to prepare these islands for her, so let’s get started — shall we?”

Where’s The Money?

Updated: Ige’s speech was well received by top lawmakers. Senate Majority Leader J. Kalani English, for example, said the speech aligned well with the Senate’s legislative agenda. House Speaker Scott Saiki said it was one of the best speeches he had heard the governor deliver.

But they and other lawmakers want to see more specifics when it comes to financing key proposals.

Sen. Gil Keith-Agaran, the assistant majority whip, said, “He did just make sort of broad outlines, and it was fairly modest in certain respects. I think there is some interest in the Senate to go a little but further. Just as we went a little bit further with homeless programs and housing last year, and with disaster relief.”

Senate Vice President Michelle Kidani, who also chairs the Senate Education Committee, welcomed Ige’s ideas on education but said she did have some concerns, primarily financial.

“There are only so many dollars that are going to go around for that preschool venture, pre-K adventure,” she said. “I think it’s most important that we do that. All of us totally believe in early learning, and it’s just a matter of how we cut up the pie to do this.”

English and Keith-Agaran, who represent neighbor island counties, said they generally support Ige’s proposal to lift the TAT cap for all four counties.

“The question is going to be where exactly is that money coming from — is it coming out of the general fund? Or is it coming out of HTA’s portion of it,” said Keith-Agaran, referring to the Hawaii Tourism Authority. ‘We’re waiting to see what the governor’s actually proposal is. But in general, as someone from a neighbor island county, we’ve been looking forward to getting this money back for a long time.”

“The governor spent quite a lot of money through the proposals he announced in his speech, and we’ll be looking at it closely at the Legislature.” — House Majority Leader Della Au Belatti

English agreed, adding that, “When times are good, there will be lots of money. When times are not good, that money will drop and the counties will get less. So, that’s part of the discussions. We have to see the details.”

Still, the senators said they were committed to working with the governor during session. That was the message from House leadership as well, again with the caveats about paying for new initiatives.

Saiki said that the Legislature just two years ago increased the TAT allocation to the counties when it passed a bill to bail out the Honolulu rail project.

“But the bottom line is that the TAT generates a lot of money for all of us,” he said. “If we were to remove the cap, then the state would lose approximately $380 million per year — $380 million of the TAT now goes to the state general fund after contributions are made to the counties and to the other special funds that are funded through the TAT.”

Saiki continued: “So the bottom lines is that we would have to know how to address a $380 million loss. And when you factor that in with the governor’s other proposals that were made today, I’m not sure how you would pay for new initiatives.”

As for the preschool proposal and moving sixth grade to middle school, House Majority Leader Della Au Belatti said adding to school facilities would cost $51 million annually for operations.

“To use existing and to build out new space, we’re talking about another $500 million,” she said. “So we in the Legislature, we in the House in particular, are very concerned, because we know the repair and maintenance backlog is over $860 million. The governor spent quite a lot of money through the proposals he announced in his speech, and we’ll be looking at it closely at the Legislature.”

Meeting with reporters later, Ige said the loss in TAT money would not be $380 million. He said lifting the cap is about sharing state revenues and working in partnership, although he agreed with English’s point about how the stream would change when the economy softens.

As for resistance to the preschool pitch, Ige said the implementation would take time. His administration estimated that his budget currently asks for about $14.3 million in capital improvement funds for preschool conversion in schools where classrooms are already available.

Ig’e budget also calls for $830,535 in fiscal year 2020 for 44 permanent positions, and $2 million in fiscal year 2021 to support 22 additional pre-kindergarten classrooms.

The governor’s legislative package, which is expected to total 119 bills and four resolutions, was due to the Legislature  on Tuesday. As of 4 p.m., .

Read Ige’s speech below: