Following the golden rule … of budgeting

by Keli'i Akina, Ph.D., President / CEO, Grassroot Institute of Hawaii

I have some good news to share with you: All of Hawaii’s county mayors have released their proposed budgets for the next fiscal year, and most appear to be fiscally responsible. 

Could the Grassroot Institute of Hawaii’s spending principles finally be taking root with elected officials?

Let’s start with Honolulu, which has the largest county budget. There, Mayor Rick Blangiardi has requested an operating budget of $3.97 billion for the 2027 fiscal year. Compared to the current operating budget of $3.94 billion, that’s only a 0.075% increase. 

Mayor Blangiardi has also promised not to raise property tax rates, even though property valuations increased by about 1% over the past year, which is a huge win for taxpayers. And his administration has committed to belt-tightening measures such as reallocating funds from vacant positions.

For Maui County, Mayor Richard Bissen has proposed an operating budget of $1.24 billion for the 2027 fiscal year. Compared to the current operating budget of $1.26 billion, that amounts to a stunning decrease of 1.4%. 

As for Maui’s property taxes, the county’s revenues are expected to be about the same, while property valuations are expected to decrease. This means the county could see increases in some property tax rates.

Meanwhile, Hawai‘i County’s Mayor Kimo Alameda has proposed an operating budget for the 2027 fiscal year of $967 million. Compared to the current operating budget of $953 million, this is a 1.4% increase. In addition, county property tax revenues are expected to increase by 1.6%. 

Last but not least, Kauai County Mayor Derek Kawakami has proposed an operating budget for the 2027 fiscal year of $365 million. Compared to the current operating budget of $347.1 million, this unfortunately amounts to a 5.2% increase.

If the Kauaʻi County Council doesn’t rein in spending, such an increase would exceed official expectations for inflation, and is even higher than estimates of personal income grown put forth by the Economic Research Organization at the University of Hawai‘i.

I mention that because smart government budgeting is when spending does not exceed the rate of personal income growth. This is often referred to as the “golden rule” of fiscal policy.

Some economists have recommended instead that budget increases should not exceed the rate of inflation. But in either case, the bottom line is that the government should not spend more than it will bring in. 

Overspending leads to tax hikes that increase cost of living — something no one in Hawaii needs.

It’s nice to see our elected officials engage in sound budgeting, but they still have a long way to go.

E hana kākou! (Lets work together!)