» » » Ignoring the Financial Situation

Ignoring the Financial Situation

posted in: Weekly Commentary 0
By Lowell L. Kalapa


Despite all the media coverage and all the speeches by public officials telling us how bad the shape of the state’s finances are, there continues to be those who totally ignore the fact that the state has no money. The requests for additional funding are predicated on a variety of reasons from compliance with court-ordered consent decrees to the need to support those who truly cannot support themselves.
 

 

 

Public officials have known about the lack of funding for at least the past three years and have been warned about the shrinking revenue growth for longer than that.

       Although it is understandable that those in the general public or special interest groups perhaps do not understand the gravity of the state’s financial situation, there is no excuse for state administrators and state lawmakers. Public officials have known about the lack of funding for at least the past three years and have been warned about the shrinking revenue growth for longer than that. Yet it seems that they have selective hearing or they have turned off their hearing aids when it comes time to talk about funding programs of interest to them.

For state administrators, it appears that they have not shifted gears into realizing that they need to find solutions to problems in their departments by coming up with new and innovative ways that utilize existing resources. The mantra of state administrators continues to be: “Just give us more money and we can solve the problem.”

But faced with the reality that there is little or no money left in the pot, lawmakers on the money committees have begun to push back. On the Senate side, the money committee chairs have asked department heads to define the mission of their departments and programs and to set measures of effectiveness by which lawmakers can then judge whether or not they are achieving their goals. While this is a step forward in the right direction, with the financial situation as dire as it is, perhaps lawmakers should preface their questioning of the departments with an inquiry as to how much do the departments think they can cut back their budgets and how they can achieve it without jeopardizing the health, safety and welfare of the community.

What is scary is that some lawmakers still believe that there is some untapped source of money out there that they can still tax. One lawmaker, for example, thinks that a nickel per barrel tax on petroleum products imported into the state is an ideal target for a tax increase, because no one will know the difference except perhaps the “big oil companies.” And certainly she is correct, no one will see the direct imposition of the tax as it is paid by the importers of the products, but don’t fool yourself, the importers – in this case the “big oil companies” – aren’t going to absorb that cost. They will promptly pass that additional cost on to their customers who, in turn, will pass the added cost on to us as consumers. So who are we kidding, instead of lowering the cost of living so we can all survive in Hawaii, a lawmaker is proposing that we yet again have higher costs with which to cope.

Lawmakers are not alone in this pursuit of new funding sources. Special interest groups are again targeting the state conveyance tax on real estate as well as a possible surcharge or additional charge on capital gains to fund their programs. Others are looking at the “sin taxes” on alcoholic beverages and cigarettes to fund their favorite programs..

 

 

 

What is scary is that some lawmakers still believe that there is some untapped source of money out there that they can still tax.

       While these targeted tax increase proposals may be politically palatable, any and all of these efforts ignore the basic underlying problem with state government today. It is much, much too large for this economy to carry. Even if these targeted tax increase proposals will hit only a small segment of the economy, it is that much more economic wealth that is devoted to government rather than the expansion of the private sector.

It certainly boggles the mind that public officials have not taken the cue that this a whole new ball game. Certainly the message isn’t clear from the top as evidenced in the Governor’s task force proposal which makes sparing mention of government downsizing. With leadership like that, it is not hard to understand why bureaucrats continue to think they can just ask for more money.

Print Friendly, PDF & Email

Leave a Reply