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A panel of senators voted against one nomination and was split on another for two key posts in Gov. David Ige’s administration that will play major roles in bringing Hawaii out of its current financial crisis.

The Ways and Means Committee, chaired by Sen. Donovan Dela Cruz, voted 7-4 against the nomination of Craig Hirai as the state budget chief and was split 6-6 on Rona Suzuki to lead the tax department. Sen. Brian Taniguchi was not present for the Hirai vote. 

The four “ayes” in favor of the Hirai nomination were Sens. Gil Keith-Agaran, the committee vice chair, J. Kalani English, Lorraine Inouye and Dru Kanuha.

The six “nos” for the Suzuki vote were Dela Cruz, Kai Kahele, Michele Kidani, Sharon Moriwaki, Gil Riviere and Kurt Fevella, the chamber’s only Republican. The “ayes” were Keith-Agaran, English, Kanuha, Inouye, and Maile Shimabukuro. Taniguchi voted with reservations.

Both are still expected to face a vote by the full 24-member Senate, which has the duty of vetting Cabinet nominees who lead state agencies.

The tension between the governor’s office and Legislature is building as the state’s financial situation has grown worse.

Experts expect Hawaii to have $2.3 billion less to spend over the next fiscal year, which starts July 1, and face a projected budget deficit in the billions of dollars over the next several years.

Senators honed in on Hirai’s response to that budget crisis in a hearing Monday. Questions for Hirai covered how the state used federal relief funds to deal with the pandemic, as well as how it will navigate its precarious financial situation. 

Dela Cruz asked the budget director for strategies to get the state out of its budget hole. Hirai said the administration is still working on its plan, but threw out some ideas to raise revenue and cut costs.

He suggested the state could end exemptions to certain taxes, including taxing real estate investment trusts, something the Legislature proposed last year but was vetoed by the governor.

Hirai also suggested the state taking a portion of property taxes which usually go to the counties. That would take a constitutional amendment, which wouldn’t be able to make it onto the ballot until 2022.

Sen. Sharon Moriwaki focused on how much communication Hirai had with the other directors regarding what cuts should be made and where. She said the cuts shouldn’t come across the board.

“We intend to do that right away,” Hirai said in response. “We need to have this ready for you next session.”

When Moriwaki pressed him on those discussions, Hirai said the Cabinet hasn’t had time to examine that, adding that the administration has been focused on dealing with the more immediate aspects of the pandemic.

The Legislature will reconvene in January when, among other topics, lawmakers will decide on a new budget for the state.

Ige said he still supports Hirai’s nomination. The governor, a former Ways and Means chair, said the state’s financial planning and deciding which programs to cut and which to expand to provide social services will be a challenge.

“I do believe Craig Hirai is the best person for the job,” Ige said at a Monday afternoon press conference.

At the same press conference, Ige gave a grim financial outlook. Revenues are down $500 million from this time last year, according to the governor.

Ige said the new budget plan could include potential cuts to departments, though that hasn’t been finalized yet.

“I’ve challenged our Cabinet to really evaluate what they do and the services they provide and really focus on core services that must continue,” Ige said.

Ige said he wants state agencies to look into consolidation, and avoid what he describes as “poor decision-making” following the 2008 recession. For example, he said the state laid off all of its vector control agents.

That hurt Hawaii in 2016, when it scrambled to control the possible spread of the Zika virus.

Vote Split On Tax Director

The Ways and Means Committee also got the chance to publicly address some of the concerns they had with Suzuki’s nomination to head the state tax department.

The committee’s split vote came after a three-hour meeting in which the lawmakers grilled Suzuki on the state’s $60 million tax modernization system as well as accusations that Suzuki threatened employees.

Reading from submitted to lawmakers, Moriwaki cited instances of Suzuki allegedly intimidating employees.

Suzuki later said she was surprised to hear of the allegations, as well as other senators’ questions regarding her relationship with employees in the tax department.

“I am somewhat puzzled by the allegations of hundreds of grievances and masses of people leaving as a result of something I did,” Suzuki said.

The main piece of testimony the senators referenced came from Bronson Silva with the American Federation of State County and Municipal Employees. It says that the union received calls and emails describing hostile behavior from Suzuki. It also claims her management style demoralized staff. Some of the senators said they also received calls and emails that made some of the same allegations.

The letter said 14 managers in the department left during her tenure. But Suzuki refuted that, saying it was just two.

In response to Dela Cruz asking what she would do to improve morale, Suzuki said morale in the department has appeared the highest it has been since the state began integrating its tax modernization system in 2017. She added that she often walks the floors in the building and works alongside the employees.

The hours-long back and forth between Suzuki and the senators was often technical, analyzing the ins and outs and stumbles of Hawaii’s tax system.

But for the senators, much of it boiled down to how effective Suzuki can be as tax director. They noted that she began work on the tax system while still employed at the Department of Labor and Industrial Relations in the Office of Community Services.

They also noted the work she’s taken on since the pandemic began. Ige has asked her to coordinate the distribution of federal relief funds, as well as oversee the development of an app to collect information for incoming travelers to Hawaii.

“I’m not sure you’re able to concentrate on one area you are responsible for and do a good job at it,” Sen. Donna Kim told Suzuki.

Suzuki noted that many state employees have been asked to take on additional duties since the pandemic hit Hawaii.

“When there’s an emergency and a crisis, I believe you need to step forward and be a part of the solution,” she told the senators.

Last week, Suzuki asked for her name to be pulled from consideration after learning that the committee likely did not have the votes to support her confirmation. In a strongly worded letter, Ige demanded that her nomination be taken up again, while also accusing the Senate of playing politics.

Speaking from the Senate floor Monday, Senate President Ron Kouchi denounced the letter.

“I urge you to continue to be vigilant in the work you do,” Kouchi told the chamber. “Continue to put the scrutiny on every nominee like you have done.”