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No Fiscal Responsibility At All

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By Lowell L. Kalapa

Isn’t it ironic, deja vu if you will, that once there is money in the till, fiscal responsibility seems to fly out the window no matter who is in the driver’s seat. And that is just what is happening at the state capitol.
Not only have lawmakers – some, not all – decided that the floodgates of spending should be opened, but apparently various segments of the administration seem to have decided to stray from the fiscally responsible position of holding the line on spending. And not that all spending takes the form of appropriations, but it also includes spending out the back door through tax expenditures.
Joining the movie producers in the rowboat going upstream against fiscal responsibility is the department of business, economic development and tourism as they waddle their way over to the spending trough seeking even more generous tax credits for producers of film and television productions. Current film productions threaten to leave Hawaii unless they get more tax benefits and local government officials appear to be at the beck and call of these movie moguls.
There is nothing wrong with state or local government subsidizing such activities, after all the state has done so as far back as the territorial days when egg farmers got a break when lawmakers decided to exempt the production of mayonnaise from taxation. But the problem with using the tax system is that there is a lack of accountability for those tax breaks. Credits that have no definitive limits are subject to abuse and a lack of information. And that’s not just conjecture! Indeed, tax officials could not tell lawmakers or administration bosses just how big the dent is in the state treasure box created by various tax credits.
Tax credits are nothing but a bottomless barrel of handouts for which there is no accounting of just how much the state – make that you, the taxpayer – has given away to these activities. If public officials believe there is money to burn then they should at least acknowledge how much they are willing to spend on such activities. They should appropriate the money and tell taxpayers how much they are willing to spend on film production or high technology businesses or raceway parks as opposed to education, drug treatment or mass transit.
Speaking of mass transit, notice how elected officials are eager to take the credit for solving the traffic gridlock but deem the ultimate responsibility for raising the necessary resources – new taxes – a matter of homerule. Sure state lawmakers and administration officials would like to list the fact that they solved traffic problems in your neighborhood, but when it comes to raising the money to build that new highway or rail transit, they would rather have local officials take the blame for “raising taxes.”
It is deja vu in that this is exactly the same situation that occurred the last time around in 1990. The state sat on a huge surplus – more than $650 million – back in 1989, yet when it came to talking about raising the money to build mass transit on Oahu, they didn’t consider taking a part of that surplus to pay for mass transit. Instead, they punted the problem to the counties by giving them the option to raise the general excise tax rate by a half percent. But they still took the credit for solving the traffic problem.
So here state officials sit nearly 15 years later faced with the prospect of a windfall of tax revenues and instead of putting some of the new found wealth toward one of the more serious problems facing this session, they talk about giving the counties the option to raise the general excise tax as a way to fund mass transit. Hmmm, do state officials think the public is ignorant? Do they think the public can’t watch the bouncing white ball? Proposing to raise the general excise tax, be it by state or local officials, by lawmakers or the state administration, is still a tax increase. It is especially disappointing given the fact that tax revenues are on the upswing.
What it does tell taxpayers is that these elected officials are no different from those back in 1990. They want to keep their tax revenues to spend for themselves, and let other elected officials raise taxes to solve the problems that they would like to claim they solved.
Be it expenditures out the back door through tax credits and other breaks or punting the hard task of raising taxes to another arena, it is quite clear that elected officials have no intent of really dealing with the difficult problems at hand with what resources they already have. Instead, they want their cake and eat it too.
So much for fiscal responsibility and holding the line on spending and taxes. Giving away money with tax credits while calling for a tax increase to fund mass transit doesn’t sound like fiscal responsibility.

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