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Creating Jobs Should Be High on the Agenda

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By Lowell L. Kalapa

It seems that the pot is beginning to boil as more and more people are turning their “thumbs down” on the state’s economy and are questioning the accomplishments of the state legislature.

As if the seven-year slide in the economy isn’t enough of a “wake-up” call, apparently lawmakers were more distracted by BIGGER issues like same-sex marriage, high-three pension benefits, and no-fault auto insurance. While all are issues worthy of lawmakers’ attention, the one issue that affects every single taxpayer and family in the state is the state’s economic well-being.

At a recent reunion of high school classmates, a number of old friends expressed their opinion that it seems that lawmakers have been holding their breath for years, hoping that the economic recovery was just around the corner. Even the Council on Revenues [Hawaii state government’s official revenue forecasting body comprised of private and public sector economists] mistook the over-withholding of state personal income taxes in 1994 as a signal that the economy was turning around. But alas, those were all “error” messages, and now even the most astute economist doesn’t feel very confident that a turnaround in the economy is in the near future.

As businesses become more leery of what the future holds, they downsize, cut back, and generally are “hunkering down” for the long term. As a result, jobs are being lost or hours are being cut and families are struggling. Bankruptcies soar, businesses close, and families move out of state.

Aside from the measure that addresses the pyramiding of the general excise tax on real property leasing, few of the other “tax incentive” bills will have much of an effect on Hawaii’s overall economy or for that matter on the majority of Hawaii’s taxpayers. Meanwhile tax relief measures that could help to turn around the economy are being rejected because they would “lose” substantial tax revenues at a time when lawmakers are struggling to balance the budget.

But instead of dealing with the budget problem as they should, lawmakers are merely finding alternative sources of funding to keep government going at the same size and pace it has for the last seven years. Stealing from the state highway fund, dipping into the dwelling unit revolving fund, and raising fees merely postpones having to deal with the real problem that government is just too big for taxpayers to support.

Instead of truly downsizing government, returning those hard-earned tax dollars back into the economy, state leaders are just finding other ways to get their hands on more and more of the economic wealth. If Hawaii businesses are to create the jobs that people need to survive, they have to have the capital that is integral to job creation. High taxes, burdensome government red-tape, and unconscionable delays in processing licenses, permits and zoning changes have to go. All of these stumbling blocks cost businesses money.

One observer countered the other day that businesses continue to whine the same song they sing now when times are good. The observer noted that the story was the same even when times were good in the post statehood days through the robust 1980’s.

Apparently the point missed by this observer is that no one paid attention to the complaints when times were good so that now when things aren’t great, it is even harder to address those issues. In fact, to some degree, businesses are at fault. When times were good, most businesses didn’t complain, but endured because despite the structural problems with the economy, they were still able to make a profit. But had those structural problems been addressed, perhaps Hawaii would not be in the current mess.

The bottom line is that if Hawaii is to create the jobs its people need, it must begin to address these structural problems and barriers. And yes, it may mean less revenues for government, but then again, should one ask the question whether or not that much government is necessary?

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