Office of Hawaiian Affairs might get more of what it’s owed from the state of Hawaii

Hawaii lawmakers are facing a decision on whether to give the Office of Hawaiian Affairs more income from ceded lands that the agency is owed.

A bill that the House of Representatives approved unanimously Tuesday would raise an annual sum the state pays OHA to $21.5 million, up from $15.1 million, as another interim effort to satisfy a state obligation rooted in Hawaii’s Constitution.

Senate Bill 2021 also would give the agency 10 years’ worth of ceded land revenue stashed in a state holding account — about $31 million — tied to long-held disagreements over calculating the obligation that was established along with OHA in a 1978 constitutional amendment.

The measure, if it becomes law as currently drafted, would increase the annual ceded land revenue payment to OHA, which hasn’t changed since 2006, and allow the agency to increase its annual grant awards aimed at improving Native Hawaiians’ well-being.

“We finally get some kind of progress,” said Casey Brown, OHA’s chief operating officer. “It’s significant. OHA is appreciative of getting something out of this. But it’s still very far from (the amount) we’ve been asking for.”

Exactly how much the state owes OHA has long been in dispute and remains an unsettled matter that continues to divide lawmakers.

Members in the state Senate passed initial versions of SB 2021 that intended to give OHA the holding account funds but no annual payment increase.

OHA is supposed to receive 20% of state income generated from primarily crown and government lands that were ceded to the United States following the 1893 overthrow of the kingdom of Hawaii, which the U.S. Congress has recognized as illegal.

Control of this land trust, which includes about 1.4 million acres, passed to Hawaii upon statehood, and the 1959 Admission Act requires using income from the lands for five public purposes, including public education institutions, farm and housing development, and “betterment of the conditions of native Hawaiians.”

Hawaii’s 1978 constitutional amendment stipulated that an unspecified share of such income go to OHA, and in 1980 the Legislature made the share 20%.

Yet agencies that manage ceded lands — including the state Department of Land and Natural Resources, Department of Transportation and Department of Agriculture — have been accused of, and sometimes admitted to, not adequately accounting for all the revenue from the public land trust.

Some agencies also have opposed efforts to increase OHA’s cut because it would leave less money for their own operations.

Suzanne Case, DLNR chair, said in written testimony on the bill that there could be a catastrophic impact on her agency if it has to cover a shortfall in its funding created by higher payments to OHA.

“The Department opposes paying OHA any additional funds above the fixed annual payment of $15.1 million,” she wrote.

OHA contends that an analysis it commissioned from a local accounting firm showed that its 20% share should have been $78.9 million in 2016 and that the amount has only gone up since then.

SB 2021 aims to help resolve the disagreement by forming a working group to settle differences over ceded land income calculations.

The working group would comprise six members, with three appointed by the governor and three appointed by OHA’s board of trustees.

Carmen “Hulu” Lindsey, OHA board chair, recently called the bill a good start toward resolving the long-held disagreements about the public land trust income obligation.

“We appreciate these legislative efforts to address (public land trust) issues in a pono (just) manner,” she said in a statement.

OHA, state administrators and lawmakers have periodically tried to resolve the disagreements. Yet only interim adjustments have been achieved.

In 2006, following litigation in the 1980s and 1990s over the obligation to OHA, lawmakers enacted Act 178 to pay the agency $15.1 million a year as an interim measure. The 2006 law also appropriated $17.5 million to OHA to compensate for underpayments during the prior four years.

Also in connection with Act 178, the holding account was established to reserve any annual sum above or below $15.1 million after the various state agencies contributed their calculated 20% obligation to OHA.

Then, in 2012 the Legislature agreed to a negotiated agreement between state administrators and OHA that gave the agency land in Kakaako valued at $200 million as compensation for past-due obligations under the public land trust. As such, the holding account balance went to zero and has grown since then.

At the end of 2021, there was $29.3 million in the account. The current total is estimated to be near $31 million.

If SB 2021 is enacted, OHA is expected to boost the amount of money it gives out in grants. The agency’s board decided about two years ago to channel all public land trust revenue to grant distributions, which increased from about $6 million in 2017 to $16 million in 2021.

“We give all that money straight out to the beneficiaries,” Brown said.

OHA’s roughly $50 million operating budget is mainly funded from investment income.

Brown said the proposed annual public land trust income payment to OHA is based on inflation over the past decade.

Hawaii lawmakers, however, did make attempts in earlier versions of the bill to keep a heavier lid on OHA’s distribution.

The Senate Ways and Means Committee in February passed a draft of the bill intending to set the annual distribution at the greater of $15.1 million or 20% of public land trust “net income,” meaning revenue minus expenses.

Hawaii’s Constitution does not define income as it pertains to the obligation to OHA.

The House Finance Committee earlier this month eliminated the “net income” language and increased the annual distribution figure to $21.5 million, which is what OHA sought in a different bill that failed to gain traction earlier this year.

“This has been a long battle since the formation of OHA, and I think it’s time that we pay up, if you will,” state Rep. Gene Ward (R, Hawaii Kai-Kalama Valley) said Tuesday in a House floor speech.

It remains to be seen whether House and Senate members can hash out differences in their respective versions of the bill.