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Wednesday, August 20, 2014         

ON POLITICS


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No person's wallet is safe while Legislature is in session

By Richard Borreca

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It was Sisyphus who was condemned by the Greek gods to forever push a boulder up a hill, only to have it roll back down — and it is House Speaker Calvin Say who is trying for a fourth year to fix the state budget by repealing $275 million in tax exemptions.

While Sisyphus's task was done in relative isolation, Say's quest for more tax money must be done while being pecked to death by lobbyists.

"The fallout from this is everyone hates me," Say said during an interview.

Last Friday, Say, usually reticent to publicly anger, chewed out a series of lobbyists speaking against his nearly two dozen tax exemption bills.

Opponents say their clients need the tax breaks to help their industries. The list of industries touches on almost everything in Hawaii that turns a buck.

There's a tax exemption for airlines like Continental and Hawaiian; there's exemptions for oil refineries, for call centers, convention centers and subcontractors.

"I was lecturing them, telling them we have to share the pain," Say said.

During the Friday hearing Say admonished, "All you folks looked at was just for your own interests."

The discussion really is about which bad-tasting medicine are you willing to swallow to help the state survive.

All the choices are going to be painful. Taxing pensions, for instance, is likely to move ahead; if not in the form first proposed by Gov. Neil Abercrombie, who wanted to tax pensions for single people taking in $37,500 a year, then in some form.

House Finance Chairman Rep. Marcus Oshiro is asking that the pension tax start at $200,000 per couple.

"We are not affecting the broad middle and upper middle class," Oshiro says.

He, like Say, admits that taking money from people always causes a certain amount of fallout.

Taxing the wealthy, Oshiro says, is what the state has to do.

"I go with the true democratic, progressive taxation policy: To him who has much, much is expected. It is a basic notion of fairness," Oshiro said during an interview.

Some who have much don't see it as at all fair when the state budget is still growing. It appears to be just a slight increase, about $500 million over two years in a $10 billion-a-year budget, but still it is more money.

There are questions that instead of just taking money from citizens, the state still needs to cut in order to deal with the budget deficit.

Lowell Kalapa, Hawaii Tax Foundation president, testified during the tax exemptions hearing that getting more money won't really forestall the state's fiscal crisis.

"Adding to the cost of business in Hawaii may just stall the state's economic recovery, prolonging the downturn in state revenues," Kalapa said.

Calling removal of the tax exemptions "desperate measures that underscore the depth and breadth of the financial crisis that the state faces," Kalapa said killing the tax exemptions would "destroy the economic base of the state."

Left out of the discussion so far is what the public employee unions will do. Last year the furloughs cut salaries by about 10 percent. This year Abercrombie is looking for a 5 percent savings, but nothing will be sure until collective bargaining is finished.

Meanwhile, watch your wallet because a lot of folks at the state Capitol already have their eyes on it.

Richard Borreca writes on politics every Tuesday, Friday and Sunday. Reach him at rborreca@staradvertiser.com.

 






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