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TAXWatch: An Expensive Charter Crisis on Maui

M aui has figured out a way to bleed cash from its budget very quickly.  It’s called a “Charter Crisis.” It pits one part of government against another one.  Lawyers then are needed to represent one or both warring parties, and when those lawyers get paid, there’s a good chance that taxpayers will end up footing the bill.

A case in the U.S. Supreme Court called County of Maui, Hawaii v. Hawaii Wildlife Fund, No. 18-260, started as a 2012 lawsuit claiming that Maui County was violating the federal Clean Water Act because it was injecting treated wastewater into the ground, and that water eventually found its way to the ocean and damaged the reefs.  After the Honolulu federal court rendered certain key rulings against the County, the parties settled the case but allowed for the County to appeal the rulings to higher federal courts. The Ninth Circuit Court of Appeals denied the County’s appeal in February 2018.  The County sought higher review – and the Supreme Court decided to take the case. It heard oral argument on November 6th.

Apparently fearful that the conservative-leaning Court could smack down the Ninth Circuit’s liberal-leaning ruling and create national precedent in doing so, the plaintiffs in the lawsuit went back to Maui County Council with a new settlement proposal that would require the County to end the litigation.  The Council passed Resolution 19-158 to do just that, by a 5-4 vote.  It then asked Mayor Victorino to sign off on the settlement.  He refused, arguing, among other things, that it could open up cesspool owners to needing an EPA permit.

The Mayor’s Office is backed up by an analysis from Corporation Counsel saying that settlement of this case requires approval by both the Council and the Mayor.  The Council’s legislative counsel, however, concludes otherwise – that the Council can settle the matter on its own.

On October 28, a lawsuit in Maui Circuit Court was filed (Second Circuit Civil No. 19-1012) against Mayor Victorino and Corporation Counsel Lutey.  The plaintiffs included State Rep. Angus McKelvey, the nonprofit Maui Tomorrow Foundation, and four other individuals.  That suit essentially asks the Maui Circuit Court to sort out who needs to sign the settlement agreement, and to block Corporation Counsel from participating in the fight because she is supposed to represent both the Mayor and the Council.

What a mess!  And now, here come the lawyers.  We have the Corporation Counsel, who perhaps works for the Mayor.  We have the legislative counsel, who works for the Council. We have attorneys from Earthjustice who represent the plaintiffs who brought the 2012 lawsuit and are now trying to settle it.  We have attorneys representing Rep. McKelvey and other diverse individuals (and one nonprofit) who are trying to force the state court to rule on the power issue. (It’s unclear who is paying for them.)  To respond to that suit, both the Mayor and the Council might need to hire special counsel (more lawyers).

Who’s going to pay all these attorneys?  They don’t work for free. Most of the parties involved are public officials, and their representation would need to be paid for with taxpayer dollars.  None of these expenses were foreseeable when the budget for the 2019-20 fiscal year was being worked out.

Good luck paying for other stuff!

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About Tom Yamachika

Tom Yamachika
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.

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