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Let’s resolve to put the state on a diet

ft standing on digital scales for weight management. Measurement instrument in kilogram for a weight-reduction plan management

By Keli’i Akina

The begin of a brand new 12 months is historically a time for resolutions and self-improvement. So, in that spirit of private progress, it’s time we have interaction in some brutal candor about an issue in our state that’s tough to disregard, Yes, Hawaii’s state finances must go on a weight-reduction plan.

I admit, the previous two years have been robust for all of us. Who hasn’t placed on a couple of kilos since March 2020, when most of us had been ordered to hold round the home extra  — the place our fridges are positioned — in an effort to cease the unfold of COVID-19?

But Hawaii’s state finances had been packing on the kilos lengthy earlier than the coronavirus lockdowns began; its present ballooning determine is the results of years of indulgence and unhealthy habits. 

If something, 2021 was a wake-up name. Some state policymakers really began to contemplate consuming a couple of contemporary greens, which on this case means spending cuts. But then state tax revenues got here in greater than anticipated, the federal bailout added more cash to the coffers, and most of them went proper again to snacking on high-calorie tax {dollars}, avoiding balanced budgeting as if it had been an precise treadmill.

In releasing his government supplemental finances for fiscal 2023, Gov. David Ige introduced that Hawaii’s rebounding economic system has resulted in “astounding” tax revenues. As a consequence, I’m glad to say, he says he’s not planning any tax will increase. 

But the Legislature is a wild card, and I’m fairly certain a few of its members have completely different plans. The fact is, nonetheless, that one of the simplest ways to extend state revenues is just not by way of tax hikes, however by way of insurance policies that develop the economic system. The state can reap way more by way of financial progress than it may by way of a rise in taxes, as the primary 5 months of fiscal 2023 simply proved. 

During the 2021 legislative session, too lots of our lawmakers refused to see this and easily went forward and elevated our taxes, additional burdening Hawaii’s companies and taxpayers.

The panic over the attainable loss in revenues attributable to the lockdowns was so extreme that the Legislature took away the county shares of the state transient lodging tax, leaving the counties to levy their very own TATs, which all have performed.

Combined with the state’s basic excise tax of 4%, plus the 0.5% county GET surcharges on Kauai, Oahu and Hawaii island, which vacationers additionally pay, the Aloha State now has the very best vacationer taxes within the nation, topping out at 17.75% — not precisely preferrred to assist Hawaii’s ailing tourism trade get better.

But again to the bloated finances: At current, the state is a finances windfall, because of greater tax revenues and an infusion of federal support funds. But relatively than revert to its typical unhealthy habits, the state ought to resolve for 2022 to slim down and obtain good well being. As any health guru will let you know, step one towards enchancment is to cease the unhealthy habits. 

No extra saddling future generations with excessive debt. Don’t postpone paying down unfunded liabilities. Don’t borrow extra for brand spanking new initiatives. Post a reminder on the fridge to not increase taxes on Hawaii residents or companies. Even higher, search for methods to chop taxes and decrease the price of dwelling, maybe by working extra with the personal sector to ship sure public providers. As I stated, one of the simplest ways to supply tax revenues is thru financial progress. 

Sure, it gained’t be straightforward; vital self-improvement is normally a significant problem. But we’re not seeking to put the state finances on a crash weight-reduction plan. 

We need state policymakers to embrace a way of life change for 2022, one that may result in a more healthy, happier and extra affluent Hawaii for generations to come back.
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Keli’i Akina is president and CEO of the Grassroot Institute of Hawaii. This commentary was Akina’s weekly “President’s Corner” column for Jan. 1, 2022. If you wish to have his columns emailed to you regularly, please name 808-864-1776 or e mail information@grassrootinstitute.org.

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