Governor’s tax-refund proposal ‘on the right track,’ institute says

News Release from Grassroot Institute of Hawaii, January 24, 2022

HONOLULU, Jan. 24, 2022 >> The Grassroot Institute of Hawaii today commended Gov. David Ige for his proposal to send out refund checks to Hawaii taxpayers.

The governor’s announcement came during his State of the State address, during which he proposed that each Hawaii taxpayer and dependent be sent $100. Thus, the average family would receive a much-needed $400, which, the governor noted, would “also inject $110 million back into our economy, giving it a boost as well.”

Grassroot Institute of Hawaii President Keli’i Akina commended the governor for his refund proposal, saying that it will help businesses and residents still struggling to recover from the COVID-19 lockdowns.

“The governor is definitely on the right track,” he said, “and now that he has endorsed the idea of a refund, we hope that the Legislature will act promptly to put the governor’s plan into action, or even increase the refund amount. This is one of the best and most immediate ways for the Hawaii Legislature to help working families while boosting the economy.

The money for the tax refund is available thanks to higher-than-expected revenues, combined with an infusion of federal funds that has left Hawaii with a $3 billion budget windfall. 

Earlier this month, the Grassroot Institute of Hawaii suggested that Hawaii lawmakers return at least $1 billion of the windfall to Hawaii taxpayers.

Joe Kent, institute executive vice president, writing in the Hawaii Filipino Chronicle, said that if the state distributed just $1 billion of its recent windfall cash to Hawaii’s 734,673 taxpayers, that would result in $1,361 per taxpayer.

He noted that Hawaii’s Constitution requires that any “excess revenues” be given back to taxpayers, if the revenues are over 5% for each of two successive fiscal years — “exactly the situation we are in today, as the state’s revenues increased by 8.1% in fiscal 2021 and are projected to show a [15]% gain by the end of fiscal 2022.”

Kent added that over the years, Hawaii’s constitutional tax-refund provision has been amended to also allow excess revenues to be saved for a rainy day or be used to pay down debt or unfunded liabilities — but any of the three options, he said, would be good moves.

In any case, said Kent, “there still would be plenty of room to lower state taxes, which would be a refreshing change from the deluge of tax-hike proposals we see each year.”

Akina also urged that the governor and Legislature look for ways to lighten Hawaii’s exceptionally high tax burden.

Said Akina: “What we need most are policies that would lower the cost of living in Hawaii, and that begins with more responsible budgeting and spending. By proposing the return of excess funds to the taxpayers, Gov. Ige has demonstrated that he is listening to the people.”

Link: Grassroot Testimony on SB3100