Dedicated Funding?!

by Tom Yamachika, President, Tax Foundation Hawaii

When we do our work here at the Foundation, we get to review a LOT of bills in detail because they involve tax or public financing.  This year we are following more than 300 bills out of nearly 3,200 that have been introduced this session.

One of the bills that is moving this session attempts to create yet another special fund, something we have railed about in the past, on KHON2 for example.  Here is some language from the preamble to House Bill 1410 (EVSLIN, AMATO, BELATTI, IWAMOTO, KAHALOA, KAPELA, LAMOSAO, MARTEN, MORIKAWA, TARNAS, Kila), that attempts to justify it:

The legislature further finds that there is a need to provide a dedicated funding source to support housing designed for individuals with special needs, including those with alcohol or drug addictions, individuals transitioning from incarceration, youth aging out of foster care, survivors of domestic violence, veterans, individuals with disabilities or mental illness, frail elderly, and chronically homeless individuals.  Although significant resources are allocated annually for supportive housing, reliance on legislative appropriations creates uncertainty for non-profit providers and the counties, which face significant risks in developing permanent supportive housing.

Even the bill supporters admit that there are “significant resources” allocated annually for supportive housing, but that isn’t good enough for them. “Reliance on legislative appropriations creates uncertainty”?  When is there ever “certainty” in obtaining funding for anything year after year?  It certainly doesn’t happen in business.  A customer who is here today may be gone tomorrow.  In accounting and law practice, for example, a customer who has been with you for years and years may die, retire, get into an accident, get hauled off to the hoosegow (hopefully this doesn’t happen too often in your line of work), or get acquired.  In the nonprofit world, donations supporting any organization, including the Foundation, are never guaranteed and can disappear suddenly for many of the same reasons, and also if there is a new manager or owner who has a new set of priorities for the donating (soon to be formerly donating) company.

In addition, anyone who wants to be paid with public money needs to know that taxpayers paid that money, and those same taxpayers elected representatives and senators to oversee how that money is spent.  Expecting lawmakers to abdicate their oversight responsibility is a frightening thought.  But bill after bill introduced in our legislature proposes to establish special funds.  We even have legal criteria for special funds, contained in section 37-52.3, HRS, but bill after bill proposes special funds that don’t even come close to meeting the criteria.

Is there any wonder that we have so many special funds, many of which, as we have discussed in articles before, contain gobs of unused cash?  We have developed a dangerous tradition of being unable to keep tabs on the money we have, and as a result keep asking for more and more and more in taxes.

There.  Is.  No.  Such.  Thing.  As.  A.  Dedicated.  Funding.  Source!  Get that concept out of your heads and be satisfied with appropriated funding.  Or our State’s budgeting process will become even more insane than it is now.