By Lowell L. Kalapa
Next year’s state income tax return is going to get a little more crowded as a result of actions taken by this year’s and last year’s legislatures.
Frustrated that there isn’t enough money to fund all of the pet programs they would like, lawmakers have resorted to collecting money voluntarily from you the taxpayer by placing check-off boxes on the tax return.
Taxpayers probably are already familiar with the Hawaii Election Campaign Fund check-off which has been around for more than 25 years. This check-off asks the taxpayer if he or she would like to have $2 of their income taxes deposited to the campaign election fund to provide candidates with funds to run for office. The intent of the check-off was to encourage candidates to adhere to campaign spending limits.
Whether or not the public campaign dollars really were effective in capping spending on election campaigns is subject to debate. However, interest in contributing to the Hawaii Election Campaign Fund has waxed and waned over the years. Ten years ago the check-off generated nearly a half million dollars for the fund. Last year, that amount had fallen to $281,000.
A couple of years ago, concern over the lack of maintenance of Hawaii’s school facilities drove lawmakers to establish a collaboration of volunteers and professionals in the construction industry to do minor repairs on schools facilities throughout the state. However, because the program needed some funding, lawmakers adopted a check-off on the income tax return which allows taxpayers to contribute $2 of their refund toward the Hawaii School-Level Minor Repairs and Maintenance Special Fund.
In the first year of being on the return, the School-Level Repair check-off collected about $107,000 from taxpayers. While some may argue that some money for school repairs is better than no money, the amount collected in the first year represented less than half of what advocates of the check-off estimated when the bill was being considered by the legislature.
Then last year, lawmakers were moved by the tale of the library with no books in Kapolei and adopted another check-off, this time for libraries. That check-off will be on next year’s return and will allow taxpayers to contribute $2 of their state tax refund toward the libraries’ special fund. The money can be used to pay for staff salaries and other operating expenses of the state library system.
This year, lawmakers decried that not enough money was available to fund the spouse and child abuse and neglect programs of the state. Never mind the fact that special funds set up in the judiciary and the department of human services already receive an earmarked portion of marriage license fees and fees from copies of birth and death certificates as well as for copies of marriage licenses. Lawmakers wanted to pander to spouse and child abuse advocates and approved yet another check-off where taxpayers can contribute $5 of their refunds toward programs which address domestic violence and spouse and child abuse and neglect.
Another measure which failed to garner lawmakers’ approval but made it pretty far in the legislative process would have allowed taxpayers to designate $1 for a beach restoration fund. Others that didn’t make it quite as far would have established check-offs for mental health and substance abuse, state parks, and to pay for the underground conversion of utilities.
A survey by the Federation of Tax Administrators found that the states that utilize check-off programs have been experiencing a decline in the amount of moneys designated though the check-off mechanism. The survey also found that due to the administrative costs associated with the check-off programs, states which currently have the check-offs are looking to adopt expiration clauses and other means to remove the less productive check-offs. And it seems that is what is happening in Hawaii with the Election Campaign Fund check-off and that is probably what will happen with the new check-offs as the novelty wears off.
What the check-off does for elected officials is let them off the hook in funding some of these very worthy programs. They can then use money that would have been spent on these programs for other purposes all the while effusing the point that they have done something for school repairs or libraries or spouse and child abuse.
In the meantime, the tax form and the tax department have become nothing more than very expensive collection agents for these programs. And you, the taxpayer, end up paying the added cost of collection.