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But It’s An Election Year, So Don’t Expect Any Miracles

posted in: Weekly Commentary 0
By Lowell L. Kalapa

(Released on 3/23/08)

It’s amusing to read of the Seattle ferry system’s woes which began when lawmakers repealed a motor vehicle registration tax back in 1999 that had provided an operating subsidy for the ferry system. Since that time, the ferry system has deteriorated both as far as operational reliability as well as the capital infrastructure.

No doubt Washington State officials thought they were doing motorists a favor by repealing the vehicle registration fee as they could return to their constituents and crow that they actually lowered taxes. Little did they realize that they pulled the leg out of one of the vital transportation links of the Olympic peninsula which not only inconvenienced commuters in and around the Seattle area but also impeded commerce by adding costs to the transportation of goods and deterred tourism in many of the areas surrounding Seattle. In short, where Washington lawmakers thought they were saving taxpayers and motorists a dime, they ended up costing the Washington economy millions in lost time, business and revenues.

That situation is not unlike the one faced by Hawaii lawmakers with respect to transportation. Lawmakers have known for some time that the state highway fund is faced with a fiscal crisis and that by the end of the year 2013 the fund will be on the brink of being broke. It certainly didn’t help when lawmakers took nearly $150 million from the state highway fund over the past decade to shore up an ailing general fund. And now when asked to pay it back, lawmakers have stubbornly refused to do so. What is tragic is that this time around both the general fund and the state highway fund will be in bad shape as the outlook for the economy begins to cloud over.

Although both the administration and the legislature held meetings on the fiscal crisis of the state highway fund, neither branch made any recommendation on how to address the looming shortfall in the special fund. It appears that neither branch wanted to be first on suggesting that taxes needed to be raised in order to bail out the fund. As a result, more than half way through this legislative session, lawmakers are again calling for another study.

One has to ask what are our lawmakers doing? Is it like Nero fiddling away the night while Rome burns? True to form, lawmakers are unwilling to make the hard decisions necessary to put government on course. In this case, motorists will continue to suffer potholes and bumpy roads while lawmakers shy away from addressing the problem of the state highway fund.

Some lawmakers have opined that it is not a matter of insufficient resources for the special fund, but that the highway division is inefficient in how it spends highway fund dollars. Well, that may be the case, but there certainly doesn’t seem to be any effort to reform the highway division. Sure every single department in state and county government could use improvement as the Pew project on state governments recently reported. So while lawmakers may want to pass off the highways’ fiscal problems on a poorly run project, they certainly don’t seem to be doing much about fixing the problem.

Given that it is an election year, don’t expect a miracle that lawmakers would go anywhere near raising taxes, especially the fuel tax with gas prices going through the roof and the cost of everything following soon behind. Oh, no, they would not think of burdening the poor taxpayer with higher taxes as the taxpayer struggles to cope with the higher cost of living! Or would they?

As reported earlier, lawmakers are considering raising the environmental response fee as much as five times the current rate. This is a tax on every barrel of crude that comes into the state to make gasoline at the pump and electricity to run your computers and HDTV’s. Because it is hidden from the retail consumers, lawmakers believe that they can get away with the increased fee, not realizing it will affect everything we buy and make as it is on the front end of the transaction chain which is subject to mark ups as things move along that chain.

Then there is the fee that will be imposed on all freight brought into the state, again at the front end of the transaction chain. This will drive the cost of everything up once again. So while it is an election year and lawmakers may not want to raise taxes, they are turning up the heat on taxpayers, albeit in the dark.

Lowell L. Kalapa is the president of the Tax Foundation of Hawaii. Mr. Kalapa’s commentary is printed each week in the Maui NewsWest Hawaii TodayGarden Isle News, and the HawaiiReporter.com.

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