Hawaii Budget Primer

by Tom Yamachika, President, Tax Foundation Hawaii

This week we wanted to bring special attention to a 32-page pamphlet recently published by the Hawaii Appleseed Center for Law and Economic Justice, simply called “Hawaii Budget Primer 2024-25.”  The pamphlet’s cover page says that it is written for “Candidates, Elected Officials and Concerned Members of the Public.”  Lots of us in the public should be concerned.  It’s your money, after all.  The work is easy to understand and is a worthwhile reference.

The work goes into great detail on the Governor’s line-item veto authority, and spends far less time on the start and the journey of the budget items that end up in a handful of budget bills.  Perhaps it would have been worthwhile to mention that the largest budget bill, that for the Executive Branch, starts off with a bundle of funding requests by each of the Executive Branch agencies.  Individual legislators also can and do draft appropriation bills covering their respective districts, and all are sent to the money committees, the House Finance or Senate Ways and Means committees, for consideration and compilation into the budget bills.  At the beginning of the legislative session, the money committees hold several days of hearings to debate the budget requests.  Each agency is given a chance to defend its budget request and will typically submit detailed answers to a legislative questionnaire, or some other written presentation, which becomes part of the public record of the hearing and can be viewed by anyone. That way, at least in theory, the public can keep tabs on what the various agencies are doing to make this place a better Hawaii and, if they don’t think the agency was doing a good job, can testify as to their concerns during later hearings on the budget bill as it moves toward enactment.

A significant portion of the work is then spent on how money for the budget is raised.  But the discussion there is almost entirely focused on taxes, including the kind of taxes we have in Hawaii, their effects on different segments of the population, and the effects of tax credits.  In the next version of the work, maybe more attention could be paid to user fees.  User fees are not trivial.  For example, at least in theory, they used to support the entire Department of Commerce and Consumer Affairs.  User fees can have a profound effect on industries, especially when those industries are regulated and any deficiency in payment of the user fee means a denial of the license or certificate needed to enter or remain in that industry here in Hawaii.

The discussion on “Who Pays Hawai‘i's Taxes” seems to leave out significant information.  The discussion appears to be limited to resident individual taxpayers, with a casual mention of visitors at the end.  No mention at all is made of business entities as taxpayers; perhaps the work simply looks through business entities to gauge its effect on individuals, but if that is so the work should have told us that.

In the middle of the work, there is a section called “Opportunities for Investment.”  In that section the work ceases to be a budget primer but is rather a policy argument about areas, programs, and credits that, according to the authoring organization, can and should be funded.  In this review I am not critiquing the policy position but am simply recognizing that it is a policy position nestled in a work that is supposed to be a primer on our budget.

In any event, this work is definitely worth reading to raise awareness of many issues that pop up in the legislative process year after year.  We thank the Appleseed Center for publishing this work.