Hoarding More School Impact Fees

by Tom Yamachika, President Tax Foundation Hawaii

In February of this year, we wrote about an issue with our Hawaii Department of Education (DOE), which, in addition to being one of the largest agencies we have in state government, has the unique ability to levy a tax.  That tax is called a school impact fee, and it has been levied under a 2007 law now in our statute books as HRS sections 302A-1601 to -1612.

In our article (“Hoarding School Impact Fees”), we tracked the balance of the DOE accounts holding these fees, and we complained that the fees were being taken but not used.  The balances in the accounts just keep going up, as shown in this chart (updated with figures from the entire fiscal year 2024):

Source:  Department of Education

As the chart shows, we now have a cumulative balance of a little less than $20 million in the impact fee accounts.  We continue to ask when this money is going to be used to do something at these schools.

But it gets better. Before the 2007 law created school impact fees, the DOE was able to shake down developers for fear share contributions, oops, I meant FAIR share contributions, which were intended to serve much the same purpose as impact fees do today.  It turns out that these accounts also have positive balances that have been steadily increasing over the past few years:

Source: Department of Education

The total of all these fair share accounts is close to $9 million. This money, also, has been sitting around doing nothing. And most of it has been sitting around for at least 17 years because, as we mentioned, the fair share program was replaced by the impact fee program in 2007.

So, when is somebody at the DOE going to get off their duff and spend this money? The DOE tells us every single year that the schools desperately need money.

As summed up by the Hawaii State Tax Watch Doggie’s daughter, who is reprising her role in our November 11 piece, “Washington Monument Strategy”:

THE CLAMORING PUBLIC: You dorks have $29 million lying around doing nothing?  Use it up before you ask us to pay more taxes!  And don’t even dream about cutting the enrichment programs that accomplish something for our kids!