Civil Beat: Don't Back Down On Financial Disclosure Requirement for State Boards
February 06, 2022
There’s an old adage that there are certain topics best not brought up at the dinner table. They include sex, religion and politics.
Money is also often part of that list, but money is something that very much needs to be talked about — especially in politics and government.
This year, bills before the Hawaii Legislature would prohibit the public from learning about compensation paid to members of top boards and commissions from a variety of sources. The main argument is that sharing financial information on financial disclosure forms turns off a lot of folks who might otherwise be willing to volunteer for government service.
Two bills propose that the Hawaii State Ethics Commission redact the financial amount ranges. As the legislation explains — in both House Bill 1849 and Senate Bill 2123, introduced by the House Speaker and Senate president on the part of unidentified parties — “community members who are most qualified to serve are often not willing to pursue a seat on state boards or commissions because of the requirement that financial disclosures be made public. Those individuals and their businesses often value privacy concerning compensation.”
Removing this requirement, the legislation contends, would “increase the size and quality of the pool of candidates,” thus benefitting Hawaii.
Actually, blacking out the dollar ranges — for instance, $50,000 but less than $100,000 — would only raise doubts about the sincerity and interests of the candidates to serve on more than a dozen state boards, commissions and agencies.
They include the University of Hawaii Board of Regents, the Board of Land and Natural Resources, the Land Use Commission, the Board of Agriculture, the Hawaii Community Development Authority, the Hawaiian Homes Commission and a dozen more boards, commissions and agencies along with the State Ethics Commission itself, the entity responsible for documenting the disclosures and posting them online.
These boards make important decisions that deeply influence the direction of state policies and impact nearly everyone in Hawaii. They also involve a lot of public monies.
Testimony in opposition to HB 1849, which was heard last week, made it all too clear why the proposed change in statute is a move “in the wrong direction,” as Ethics Commission Executive Director Robert Harris wrote:
“Reducing public transparency in this manner weakens public confidence in the actions of these individuals and their respective boards and commissions, which is contrary to the purpose of the state ethics laws. Moreover, without knowing the amount of a Board or Commission member’s financial interest, a public stakeholder could not reasonably evaluate the potential of a conflict of interest.”
Sandy Ma, executive director of Common Cause Hawaii, testified, “Redaction of financial disclosure information serves no good government purpose, especially when many non-paid volunteer boards hold tremendous power.”
Douglas Meller of the League of Women Voters of Hawaii’s legislative committee pointed out that these very board members “can authorize private use of public property or spend public funds for private benefit.”
One Down, One To Go
On Friday, HB 1849 was deferred indefinitely in the House, but that does not end the chances for the legislation to pass. Rep. Angus McKelvey, the chair of the House Government Reform Committee, noted that the Senate companion “has fewer committees” — suggesting it could be easier to advance.
SB 2123 now awaits a hearing in that chamber, and it might well receive one, as the proposal has lots of influential proponents.
The testimony in support of the House version included Land Use Commission executive officer Daniel Orodenker; Christian Fern, executive director of the University of Hawaii Executive Assembly; Tim Dolan, a UH vice president and UH Foundation CEO; and Department of Transportation Director Jade Butay.
“We must take steps to increase the pool of qualified candidates willing to voluntarily serve on boards and commissions and amending — but not eliminating — the financial disclosure is one important step that could help,” wrote Randy Perreira, executive director of the Hawaii Government Employees Association.
The desire to change financial disclosure requirements did not arise in a vacuum. David Lassner, the UH president, noted in his supporting testimony that UH strongly opposed legislation in 2014 that made financial information of the members of the Board of Regents publicly available.
“Four sitting regents resigned when the Legislature changed the conditions of their public service,” he wrote. “They had provided their financial disclosures for Ethics Commission review but were not willing to have their privacy and that of their families compromised. In the years since, we have seen declining numbers of applications from individuals willing and interested to serve as regents.”
In addition to the four regents, members of the LUC, the ADC, the BLNR and the Hawaii Housing Finance and Development Corporation board walked off the job, too.
Then Gov. Neil Abercrombie, who had his own odd reasons for opposing the 2014 bill — he claimed it would hurt women and discourage their government service — let it become law without his signature.
This is also not the first time the Legislature has toyed with tinkering with the statute. In 2018 there was a move to water down the financial disclosures, and for much the same silly reasons. The Senate version made it all the way to conference committee before dying.
The Senate Should Act
Today, based on the submitted testimony for HB 1849, a large number of leaders from the private sector also want to keep financial figures private.
Among them are Michael Pietsch, president of Title Guaranty of Hawaii; Ed Schultz, president and CEO of Hawaiian Host Group; Josh Feldman, president and CEO of Tori Richard; Emily Porter, COO at MacNaughton; Paul Yonamine, executive chair of Central Pacific Bank; John Morgan, president of Kualoa Ranch; Kris Nakagawa, a vice president at Young Brothers; Sean M. Nakamura, corporate controller and treasurer at Island Holdings; Meli James, president of the Hawaii Venture Capital Association; and Chuck Bergson, president and CEO at Pacific Media Group.
“By removing irrelevant personal information from public disclosure — information that is not relevant to assessing any conflict of a board member — we believe that the state will attract the right individuals who are willing to serve our state on a Board or Commission by giving of their time, skills and wisdom,” testified Brandon Kurisu, president of the University of Hawaii Alumni Association.
It is encouraging to see executives from such a broad and distinguished swath of Hawaii businesses and organizations wanting to improve government service. But their many rationalizations are weak and sometimes simply wrong.
Brian Black, executive director of the Civil Beat Law Center for the Public, poked a big hole in one of HB 1849’s main arguments: “None of the 17 relevant boards have more than one vacancy currently. In contrast, other state boards and commissions — whose members’ financial disclosure statements are not publicly posted — have multiple long-standing vacancies.”
In fact, says Black, there are “plenty” of qualified individuals in the state who are not deterred by publicly identifying their conflicts of interest. If someone is not willing to be transparent, he adds, “that person may not be the best person to represent the people of Hawaii on a civilian oversight board.”
The Legislature should not be trying to fix something that is not broken.
Click on the links to contact the following Senate chairs to ask them to scrap SB 2123: Sharon Moriwaki on Government Operations, Karl Rhoads on Judiciary and Donovan Dela Cruz on Ways and Means.