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Biting the Bullet Now to Insure the Future

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By Lowell L. Kalapa

This week and next the dog and pony show of the state budget department will be making the rounds with lawmakers to all the Neighbor Islands to lay out the administration’s plan to balance the budget in the wake of forecasted shortfalls in tax revenues.
At the heart of the administration’s bailout plan is a taking of the funds in the hurricane relief fund. It is estimated that there is more than $213 million sitting in the fund at this moment. That scooping of the hurricane relief fund along with a doubling of the liquor tax is the administration’s solution to the state’s budget woes.
Administration officials believe that everything has been done to “right-size” state government. They also believe that any more cuts to government services will shake public confidence and retard the economic recovery the administration predicts will happen by the end of this year. They argue that people have come to expect the services provided by state government and any reduction will further hurt public confidence.
Obviously the administration believes that the size of government and how state government is, is just how people like it. Thus, the belief that government has been “right-sized” translates into plain English meaning that no more reform of government is necessary. Read another way, it means that the administration wants to maintain the status quo. And the excuse is that if there are any more reductions in the size of government, there won’t be economic recovery.
Go figgah! While all the rest of the economy is downsizing, re-configuring how they do business so that they can stay in business, government is proclaiming that any downsizing in its operation is going to stall economic recovery. So to keep government at a status quo level, administration officials are going to steal the money that they promised would be put aside to provide a resource should Hawaii experience another hurricane and they propose to double the tax on that root of social ills, alcoholic beverages.
If there is anything creating cynicism among taxpayers and voters, it is the insincere and disingenuous, much less cavalier, attitude public officials have toward the hurricane relief fund. When the fund was established, the idea and the promise was that it was a way that homeowners could secure hurricane insurance protection required by lenders. It was established to provide the “back-up” coverage against any disastrous hurricane that might hit the state.
This not the first time that public officials have gone back on their word. All one has to do is to remember the “commitment” lawmakers made to education little over ten years ago when they earmarked $90 million for educational facilities at the behest of the state administration. It took only two years before lawmakers went back on their word and took the $90 million because state revenues started to shrink. Sure, they replace the $90 million of cash with $90 million in bonds or borrowed money.
Did that pot of money make the schools any better or improved the facilities? No, instead it insured that education officials didn’t have to be held accountable for not delivering the promised improvements in school facilities. Because educational officials did not have to come back to the legislature each year to “beg” for their construction money, they didn’t have to justify how they had spent the previous year’s allocation of $90 million. In the end, the legislature finally realized that educational officials couldn’t deliver those facilities any faster and cut the allocation in half.
So if lawmakers accede to the administration’s proposal and take the funds from the hurricane relief fund, voters have every justification to have no confidence in them. It will just reinforce the belief that public officials are not be trusted and certainly are not leaders in this community.
And what about the argument that government is the “right size?” Just look around and one doesn’t have to look far to see how tax dollars are being wasted and how government regulation makes it all the more difficult to live and work in Hawaii.
And what about doubling the tax on liquor? Wasn’t the argument a few weeks ago that the doubling of the liquor tax was necessary if the state capital gains tax rates were to be reduced and the inheritance tax eliminated? Gee, just who can you believe these days?

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