Kent: Legislators should cut budget, not hike taxes

from Grassroot Institute

Gov. Josh Green’s proposal to “pause” the phase-in of Hawaii’s historic income tax cuts enacted in 2024 is essentially a tax hike, according to Joe Kent, executive vice president of the Grassroot Institute of Hawaii. 

“A lot of people in Hawaii were counting on this money, and we need it to survive the cost of living,” he said last week during radio host Rick Hamada’s daily morning program on KHVH News Radio 830.

Kent told Hamada that state lawmakers could avoid hiking taxes to cover $1.8 billion in projected expenses by simply reducing spending instead.

“Even right through COVID — the pandemic — the budget grew and grew, and so we’re at a record-high budget right now,” he said. “If you look at the budget, there’s so many places to cut.”

Hamada also talked with Kent about Hawaii’s ongoing population exodus to mainland states, which was recently confirmed again by U.S. Census Bureau data.

Kent said there are two ways to help those who are struggling with the state’s high cost of living. One way is “to dole out money from the government,” he said. “But the only way to do that is to raise taxes on the very people that you’re trying to help.” 

The other, more preferred way, he said, “is to lower taxes so that those people can then more easily survive life in Hawaii.”

Kent noted that Hawaii’s population loss should be taken seriously at all income levels, because it is a drain on the state’s overall economy. 

“People say, ‘Oh, even wealthy people, get out of here,’” he said. “You know how much [Hawaii’s wealthier residents] donate to the hospital and local charities and everything? You know, if the residents of Hawaii leave, who’s going to be here to keep things going?”

TRANSCRIPT

2-6-26 Joe Kent with host Rick Hamada on KHVH News Radio 830

Rick Hamada: All right, I suggest that you hide the children. No, just kidding. Bring them out because they’re going to hear this. Joe Kent, Grassroot Institute of Hawaii. Back in the seat of power and authority. Well, OK, in our second mic. Joe, it’s good to see you.

Joe Kent: Good to see you too, Rick.

Hamada: How you been?

Kent: Very good. Yeah. We’re having fun at the Grassroot Institute of Hawaii — Hawaii’s only free market think tank. And boy, is it needed.

Hamada: Oh, boy, I’ll tell you that right now. And that’s why I’m so glad that we connected. And thank you for reaching out and reminding how important it is our conversations can be. That said, more on Grassroot, how can folks access and support?

Kent: Well, go to grassrootinstitute.org, and you can subscribe to our email newsletter. And of course, you can also click the support button as you said. So that helps too.

Hamada: Please do, absolutely. Joe, Big Square Building underway. Let’s just jump right on in. Can we establish just a couple of baselines and then we’ll continue? No. 1, the state budget of Hawaii is a biennial budget. Could you break it down for us, please?

Kent: Well, it’s $20 billion, and the problem is it’s overspending by about $1.8 billion. And for that reason, the governor has proposed a tax hike. This is a big reneging of the tax cuts from several years ago. 

I mean, the governor deserves credit. Several years ago, he did implement the income tax cut along with the Legislature. And that was scheduled to go in year by year, get bigger and bigger every year. 

But now, their spending plans are overruling the tax cut and they’re going to “pause” — quote unquote — this tax cut moving forward. Well, if you weren’t listening closely, that sounds like a tax hike actually.

Hamada: See, thank you for that. I don’t mean to interrupt, but just to clarify, we talk about a $20 billion biennial budget, so our budget is $10 billion per fiscal year.

Kent: Oh, actually, it’s $40 billion on the biennium. It’s $20 billion per year and then $10 billion just for the general fund.

Hamada: OK. There we go. Just want to make sure in regard to that. The governor mentioned at his State of the State that there is a pause on the cuts that were proposed. I have been contacted by the governor’s office saying, “No, there’s no cuts.” 

So I am of the same mind, is that if you promise this and you eliminate it, then that, in essence, is a cut from what you proposed, basically.

Kent: Yeah. That’s right. It sounds like a tax hike to me. I mean, I was counting on the money. A lot of people in Hawaii were counting on this money, and we need to survive the cost of living. This is thousands and thousands of dollars for every family in Hawaii.

Hamada: 2026, though, if I understand for 2026, those cuts are still in place.

Kent: That’s right. That’s right. Just to be clear, the cuts so far up until today remain. It’s just those future cuts that we were promised that might disappear. But they might not if lawmakers do the right thing. 

I mean, every time you see a tax cut, it should be accompanied by a spending cut. So we had the tax cut. Now where is the spending cut?

Hamada: And that’s my next question to you. Joe Kent, when is the last time there has been a substantial tax cut and spending cut? When’s the last time? Pass a law, pass some spending. Has there ever been the contrary of reduction or elimination of spending?

Kent: I can’t remember. I looked and looked into the history for this. And even, you know, right through COVID, right through the pandemic, the budget grew and grew. And so we’re at a record high budget right now. And we’re talking about tax hikes. 

Well, I think it’s time for tax cuts. And if you look at the budget, there’s so many places to cut.

Hamada: That’s exactly right. Boy, thank you for that. Joe, I’m going to go back to the pandemic for just a moment. We had talked about, and the infusion of federal monies was astounding. Multiple billions of dollars were received by the state and by correlation, counties, including Honolulu. 

And the mayor comes on regularly and says, “This is what we spent. This was the rent relief. This was the anti-eviction. This was this. That [was that].” OK. From the state, I’ve never heard a breakdown of multiple billions, how they were spent. 

But I did hear about funding of [the state Department of Hawaiian Home Lands]. I heard about spending incredible amounts in other areas, but I never heard about, did we get too much and did we ever give it back?

Kent: That’s right. And you know, there was so much money that we’re still spending it today, in fact. There was just a hearing where the education department was being grilled on, “What are all these trips to Korea? It sounds like a junket.” You know, and the education department said, “Oh, don’t worry. Those were the COVID funds.” 

You know, so we’re still spending them today. But a big chunk of those COVID funds actually were for the extra pay for government workers during the hazard pay. You know, private sector workers did not get hazard pay for working.

Hamada: I got an ID that said I could go to work.

Kent: That’s right. 

Hamada: Yeah.

Kent: But public sector workers got a huge hazard payout. This was negotiated by the unions. And this is, you know, at least $1 billion, could be more — hundreds of millions of dollars in extra monies every year. 

And that’s actually part of the reason, I think, for the overspending in future years. I mean, the unions just went through big negotiations, and they’re finalizing that this year. And if you look at the union negotiation line item in the state budget, it’s $1.8 billion. So that seems to match exactly the tax hike that they’re wanting.

Hamada: We are being told by the administration: Due to the previous government shutdown, the demands on the state budget for things such as for food and more, those expenditures [were] necessitated by the federal government. You hear it all the time, “Because of the federal government, we dot, dot, dot.” Your thoughts?

Kent: It’s all smoke and mirrors. The money for this government shutdown was, I don’t know, $10 million, $20 million. It was in the tens of millions of dollars. We’re talking about $2 billion here when it comes to what they say is needed for the tax hike. 

So this isn’t about a government shutdown or health expenses. I mean, that’s pocket change in the budget — $10 million sounds like a lot of money, but compared to the tax hike, it’s pocket change. 

And actually, if you look at the Medicaid spending before the pandemic, it was, you know, low, it was lower than it is today. So the pandemic happened, the Medicaid spending spiked, and now it’s coming down. It’s still higher than before the pandemic though. So, you know, we have to put all this in perspective.

Hamada: That’s amazing. It’s 7:19 in the morning with Joe Kent, Grassroot Institute of Hawaii. I want to, we’ll open up the phone lines in a moment, but still would like to continue on this tack. 

UHERO [The Economic Research Organization at the University of Hawai‘i] has issued yet again another report. It is indicating, cost of living is just a partiality of people’s concerns. It’s about, do I have a future in Hawaii? Will I be able to afford, not just now, but what can I work toward? 

Because it’s an opinion of a lack of confidence that anything’s going to change, year after year. Your thoughts from the Grassroot Institute, cost of living, affordability and the future?

Kent: Well, the numbers just came out from the census that we are, again, experiencing an outflow. People are leaving the state because of the high cost of living. There’s been many studies on this. 

And I think there are two roads that a policymaker can take to help solve this. 

One is, OK, the cost of living is high, so we need to dole out money from the government to help supplant that in various, you know, subsidies for businesses or, you know. And that’s one way. But the only way to do that is to raise taxes on the very people that you’re trying to help. 

The other way to do this, the other road, is to lower taxes so that those people can then more easily survive life in Hawaii. And, actually, what happens when you do that is oftentimes they are able to contribute to the economy. 

Just think about all the people that have left and all the people that might leave in the future. They are a drain on the economy. This is all the people who are contributing to all the businesses and even nonprofits and, you know, donations to the hospital. 

People say, “Oh, even wealthy people. Get out of here, wealthy people.” You know how much they donate to the hospital and local charities and everything? You know, if the residents of Hawaii leave, who’s going to be here to keep things going?

Hamada: That’s exactly right. I mean, this is a 31-year-old conversation. And, as a matter of fact, Grassroot has been on top of this, many different areas, but this aspect. You had features that, why are we leaving Hawaii? I remember that wasn’t that long ago. So this isn’t breaking news from UHERO and others.

Kent: That’s right. And at first they thought, oh, maybe people are coming back. It was interesting, last year there was a snag in the census numbers having to do with immigration or something. 

But when we look at the numbers more clearly now that just came out last week, we can see, no, no, it’s a big outflow. They’re still leaving.

Hamada: I think it was a number of about 22,000 plus at about a 1.5, 1.7% of population. And that we’re second-to-last in the country with that amount of outflow. It’s in the northeast, I can’t recall. 

Kent: Yes.

Hamada: But staving that off, I know, I have two kids. Fifty percent of them are gone, are leaving. Zoe’s here to finish school, and she has a wonderful career opportunity to bolster her next steps. But she’s going. She’s gone. 

Kent: Yeah.

Hamada: I shared that out of 10 kids in our family, that seven had left for the mainland. 

Kent: Yeah.

Hamada: That’s amazing. And this is over the last 20 to 24 years. It’s not just, you know, recent. We’ve been suffering from this, Joe, for so very long. Why do we stay in place? Why?

Kent: Well, we can’t if we want to change things. The only way to change is to change. If lawmakers continue, just like you said, when’s the last time there’s been a spending cut? Well, I hope that there’s one this year. 

I mean, lawmakers really need to do the right thing. There’s a few lawmakers who seem to at least be saying that they want to cut back or limit spending, and they’re afraid of raising taxes. Because remember, this is an election year. 

Hamada: Yeah.

Kent: So, you know, I think they could actually get re-elected by, you know, running on a campaign of, “Look, we saved the tax cuts.” 

So let’s, you know, give them the good ideas to be able to win their election.

Hamada: It’s interesting. Would you identify them as Republicans or Democrats?

Kent: Well, it would be mostly Democrats, of course. But Republicans, some too, have their own favored spending ideas. 

I mean, we’ve got spending ideas. We’re supposed to be cutting, and they’re — I went through the list of new spending ideas. I mean it’s like, you know, hundreds and hundreds of different bills. 

I mean, these are things like give a pay raise to private sector construction workers. I guess they were jealous of the public sector workers, so they’re like, “Hey, we want a pay raise too. And we want, you know, extra time off, and paid [time] off for everyone, and free school lunches. And, you know, a new ambassador to Canada.” Or, you know, like why do we need this stuff?

Hamada: It’s pretty amazing. And I don’t want to — we have a few minutes left, and I don’t want to fall into this thing where I’m a one-note pony, you know. 

Kent: Oh yeah.

Hamada: But, the amazing thing, the thing that we’re talking about now, we talked about three decades ago. 

And the different machinations within leadership. There was a brief respite when Linda was in for two terms, during her second term had the greatest number of two-party system elements. And that was gratifying because at least debate, discussion and more was on the table, and there was a bit of accountability. 

But until we reach levels where we have parity, dude. I don’t see it, I don’t see it changing. 

And my last thing, and I’ll turn the rest of the time over to you, I have always viewed politics to be two-sided. One is emotional and the other is practical. And our side of the aisle of thought, not necessarily party, is getting killed emotionally. 

You mean you want to take money away from babies who can’t eat? And so that plays so hard, plus objectives for our youth are being told: Get a state job. Work for the government. 

Kent: Right.

Hamada: And I don’t know how we break that.

Kent: Yeah. Well, I like to think of Hawaii as a three-party system, actually. You’ve got the Republicans, you’ve got the moderate Democrats, and you’ve got the progressive Democrats. You know, and they’re — actually all three of these elected groups are kind of even, evenly represented throughout the Capitol. 

And so it actually, it’s kind of interesting that the moderate Democrats right now are the ones who are trying to argue for keeping the tax cuts and trying to, you know, argue for limiting spending. Now, this is talk right now. It all has to be talk until something is passed. But I hope they put their money where their mouth is, though.

Hamada: See, as long as we have elections where four out of 10 registered voters show up, they know it. We all know politics is a numbers game. Campaign contribution dollars, votes, etc. 

And there’s one thing that I’m sure you’re following as well at Grassroot is about election reforms and the fact that we have federal investigators that are looking, targeting if you will, [Chief Elections Officer] Scott Nago, the Office of Elections, for the veracity of ballots cast and counted. That’s the first time in all my years that we have seen a real movement for change.

Kent: Yeah, that’s right. Well, and that’s happening because there is bipartisanship on the elections commission itself. And we actually have reformers on that commission.

Hamada: True that.

Kent: And so they’re trying to, like, open up the books, let’s make it transparent. What actually happened with all of these ballots that mysteriously vanished or where are they? 

So that just goes to show that a healthy debate and mix of ideas is really important for any democracy.

Hamada: Final thoughts in regard to the stewardship of Gov. [Josh] Green, the composition of the state Legislature, and their stated priorities for this session.

Kent: Well, Gov. Green is, I think, surrounded by his administration who might be scaring him with the numbers. But the numbers aren’t so scary, actually. I mean $300, $200 million [dollars] is all they need to cut in order to save this tax cut. 

You know, the budget fluctuates up and down by $200, $300 million from one draft to another. So this should be a cinch. I think his, you know, the people surrounding him need to remind him that it is an election year and the people really do need cuts in their taxation to keep those tax cuts that we were promised. And he could win big if he wanted to.

Hamada: He’s going to. Sorry to say. I mean, the reality of our state, the only thing that would change the dynamic, if there’s an individual who emerges that has a complete opposite side of strategy and policy but is beloved, respected and can articulate that message, because I’ll get back into the emotional side. I have not heard of one individual as of yet that is set to challenge Gov. Green from the GOP or any other outlet. 

And I’m not sure who that person would be. But it’s, that’s what I mean about people that are surveyed, they’re looking to the future, what the heck is gonna change?

Kent: Well, that’s true. And, you know, I like to think, though, that some politicians actually like to do the right thing just because it’s the right thing too, you know, beyond electioneering. And so I think that Gov. Green has a spark of that as well. Let’s hope so.

Hamada: Well, we’re going to stand by together, but Grassroot is going to be more active. Share with us what the mission is, how it’s accomplished, and when the big square building is … Do you have your own office? Do you have a residency? Can you send your mail there, Joe?

Kent: Well, we have, you know, 10 employees at the Grassroot Institute who are all busy trying to figure out the complicated matters — the stuff no one wants to do, like read all 2,000 pages of the state budget, for example. 

Hamada: Wow.

Kent: Because most people don’t have time to do this. Even lawmakers don’t have time to do this, by the way. 

Hamada: Wow.

Kent: And so, you know, being able to get the right information to the right person at the right time can actually have a huge influence.

And so that’s what we do. But we also need to educate not just lawmakers, but the public as well. So subscribe to our Instagram @GrassrootHawaii. And we try to break it down in funny meme videos, you know. That yes, you know, they’re funny, but they’re actually very important.

Hamada: No, I appreciate them. And that’s been the siren call for all these years, is to share information. 

There’s no way I should still be employed. I have a counter opinion to what is perceived to be the majority of people. I tend to be a little, maybe a little outspoken on a couple things. And it’s an AM radio station in the days of Siri and all this technological … Spotif[y] … and all this. There’s no way I should still be here.

And the only way it is, I agree with you, resonating with folks who love, care and are concerned about their home. And that’s what conversation is good for. 

I might sound negative of saying, “No way he’s going to lose.” Well, I’m just trying to be very practical and very real. But if we aren’t, then we may not have the full motivation to change what we can. So I’m very appreciative of what you and the team do.

Kent: Yeah, thank you.

Hamada: That information is key.

Kent: Well, let’s hope we inform the electorate so they act wisely during the election.

Hamada: Amen. Super Bowl, who are you picking?

Kent: Oh, sorry, not a football guy.

Hamada: You don’t need to know. Is the party at your house? That’s all I need to know.

Kent: Oh yes, yes, the party’s — no, someone else’s house. I’ll bring the wine. So yeah.

Hamada: I love that. I love it. Joe, let’s get together soon.

Kent: Yeah. Thanks so much, Rick.

Hamada: Really appreciate it. Thank you. 

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