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Cashing In All Our Chips

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By Lowell L. Kalapa

A couple of hundred thousand here, a million there, several thousand there, and pretty soon it adds up to real money – $77 million to be more specific.
That’s what lawmakers were doing a couple of weeks ago, plucking excess funds from this or that special fund to refill the general fund pot. You see, it is a heck of a lot easier to steal the money they like to spend instead of tightening the fiscal belt. And that is unfortunate, for while lawmakers have declared these special fund moneys to be “in excess” of what is needed to run the programs for which the taxes or fees were earmarked, it means that either those programs will have to be curtailed or deferred or that taxpayers are paying too much for that particular program or project.
For example, domestic violence advocates cheered some ten years ago when $9.00 of each marriage license was earmarked for two different spouse and child abuse funds in the department of human services and in the judiciary. Well, lawmakers will sack those funds for about $850,000 to help balance the budget this year. If those funds are not necessary to underwrite the spouse and child abuse programs, then everyone who took out a marriage license in the last couple of years overpaid for that license.
Then there is the $900,000 that the animal quarantine fund will have to surrender to help balance the general fund spending plan. Again, did taxpayers who were required to quarantine their pets pay too much in fees and will quarantine officials reduce the amount of fees they charge?
While many of these special funds were created so that a specific program could be guaranteed funding without having to be rated against other programs that were general fund financed, the fact that excesses have accrued underscores the fact that earmarking taxes, fees or other resources which have no direct relationship to the services or products of the program ultimately will create a mismatch of resources to program needs. In the case of the marriage license fee, one has to ask what is the nexus or relationship between being married and abusing one’s spouse or girl friend? Does one have to be married to be in an abusive relationship?
Similarly, the $500,000 which is proposed to be taken from the judiciary computer system special fund comes from administrative fees levied in the court system. What does the volume of court filings that are subject to this administrative fee have to do with establishing a computer system for the judiciary? Some might argue that the filings reflect the demand for services that can be alleviated with the computer system. Without a direct relationship to the program being funded, there is no way one can determine whether or not the earmarked fee will generate sufficient revenues or in this case create “excess” funds above the needs of the program.
However, that is not to say that all special funds are bad. The criterion that differentiates a “good” special fund from a “bad” special fund is the relationship between the user and the benefits received. Programs which are now special fund financed but used to be underwritten out of the general fund are not appropriate. Those programs represent a circumvention of the constitutional spending ceiling.
The most egregious is the raid of the highway fund which is underwritten by highway user taxes such as the fuel tax, the motor vehicle registration fee and the motor vehicle weight tax. These are funds that are used to repair roads and bridges throughout the state. The 16 cents per gallon fuel tax adds to the cost of gasoline, the price of which lawmakers are currently trying to cap to hold the cost of that commodity down.
This is not the first time that the state highway fund has been raided. In fact, over the past eight years more than $143 million has been taken from the highway fund to shore up the general fund. If lawmakers see these highway moneys in excess of the highway needs, then why don’t they lower the fuel tax rate to help reduce the price highway users pay at the pump?
Instead, capital improvements and repairs and maintenance to the state highways have been deferred. With each passing year of deferral because the fund has been sacked, the condition of state roads will get worse to a point where those roads will be beyond the point of repair, requiring replacement instead. That will cause an even greater burden on highway users in the future.
This raid of special funds begs for a wholesale overhaul and repeal of many of them as they obscure the true cost of government in Hawaii.

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