Wednesday, November 13, 2024
Hawai'i Free Press

Current Articles | Archives

Sunday, August 14, 2016
Hawaii Budget: Taxes on the Horizon
By Grassroot Institute @ 5:46 AM :: 4887 Views :: Hawaii State Government, Hawaii Statistics

Hawaii’s Budget: Taxes on the Horizon

by Hiram Ruiz Grassroot Institute, July 28, 2016

Hawaii’s Legislators are well on their way to depleting the state’s $890 million cash balance. Since 1990, Hawaii’s state budget has grown by more than 50%. At the rate Hawaii is spending and taxing, projected budgets will only be sustainable for two more years.

The graph below shows how the general fund (the source of the majority of the state’s budget) has seen its balance change throughout the last 25 years. Note the relative stability of the budget during the 1990’s, and how it has sharply risen during the 2000’s.

GF-1

Since escaping the recession in 2010, Hawaii has seen its expenditures rise at an average rate of 4.15% per year. However, the Council of Revenues (an entity within Hawaii’s Department of Taxation tasked with forecasting government revenue) announced in its May 2016 meeting that tax revenue growth has been declining.

This means that if spending keeps going up as it has during the last decade, we may see higher taxes ahead because Hawaii’s constitution requires a balanced budget.

A balanced budget requirement is good because it prohibits legislators from passing budgets that exceed projected revenues, and it keeps the state in good fiscal health. But it implies that any expenditure increase must come accompanied by a revenue increase of the same magnitude, which will probably mean higher taxes down the road, since revenues have been flattening.

Using current trends, a senate study projected the general fund’s balance for the next five years, in millions:

screenshot-docs.google.com 2016-07-28 09-41-48

Because of Hawaii’s constitution, the large general fund deficits shown above will probably never materialize. However, it should be clear that current trends cannot continue without any adjustment to either tax collection or spending.

Due to past experience, it would not be far-fetched to suppose that the government will try to increase taxes. This raises several concerns.

First, Hawaii is already the most expensive state to live in, so there are both political and economic limits to how much taxes can increase further.

Second, the heavy reliance on the General Excise Tax  (a very broad 4% flat tax on consumer and business transactions), hits the lowest income households the hardest. While the poorest 20% of the population forgo 10% of their income in excise and sales taxes, the wealthiest 20% only contributes 3%.

Third, the lack of straightforward information from the government regarding public projects/programs and their costs is nothing new to the residents of Hawaii. This lack of transparency hurts fiscal accountability, and it can easily lead to overspending.

This is not a call for massive government reduction. As members of this community, we should all acknowledge the value of many of the public services provided by government, since they are crucial to the day-to-day functioning of our economy. That being said, we must also keep in mind the cost of programs, since we know it is those with the least among us that will see their quality of life the most affected by these measures.

Links

TEXT "follow HawaiiFreePress" to 40404

Register to Vote

2aHawaii

Aloha Pregnancy Care Center

AntiPlanner

Antonio Gramsci Reading List

A Place for Women in Waipio

Ballotpedia Hawaii

Broken Trust

Build More Hawaiian Homes Working Group

Christian Homeschoolers of Hawaii

Cliff Slater's Second Opinion

DVids Hawaii

FIRE

Fix Oahu!

Frontline: The Fixers

Genetic Literacy Project

Grassroot Institute

Habele.org

Hawaii Aquarium Fish Report

Hawaii Aviation Preservation Society

Hawaii Catholic TV

Hawaii Christian Coalition

Hawaii Cigar Association

Hawaii ConCon Info

Hawaii Debt Clock

Hawaii Defense Foundation

Hawaii Family Forum

Hawaii Farmers and Ranchers United

Hawaii Farmer's Daughter

Hawaii Federation of Republican Women

Hawaii History Blog

Hawaii Jihadi Trial

Hawaii Legal News

Hawaii Legal Short-Term Rental Alliance

Hawaii Matters

Hawaii Military History

Hawaii's Partnership for Appropriate & Compassionate Care

Hawaii Public Charter School Network

Hawaii Rifle Association

Hawaii Shippers Council

Hawaii Together

HiFiCo

Hiram Fong Papers

Homeschool Legal Defense Hawaii

Honolulu Navy League

Honolulu Traffic

House Minority Blog

Imua TMT

Inouye-Kwock, NYT 1992

Inside the Nature Conservancy

Inverse Condemnation

July 4 in Hawaii

Land and Power in Hawaii

Lessons in Firearm Education

Lingle Years

Managed Care Matters -- Hawaii

MentalIllnessPolicy.org

Missile Defense Advocacy

MIS Veterans Hawaii

NAMI Hawaii

Natatorium.org

National Parents Org Hawaii

NFIB Hawaii News

NRA-ILA Hawaii

Obookiah

OHA Lies

Opt Out Today

Patients Rights Council Hawaii

Practical Policy Institute of Hawaii

Pritchett Cartoons

Pro-GMO Hawaii

RailRipoff.com

Rental by Owner Awareness Assn

Research Institute for Hawaii USA

Rick Hamada Show

RJ Rummel

School Choice in Hawaii

SenatorFong.com

Talking Tax

Tax Foundation of Hawaii

The Real Hanabusa

Time Out Honolulu

Trustee Akina KWO Columns

Waagey.org

West Maui Taxpayers Association

What Natalie Thinks

Whole Life Hawaii