Lingle fails to give credit where tax-hike credit is due
Economist Paul Brewbaker recently noted the role tax increases are playing in the state's improved budget outlook, but Gov. Linda Lingle has been mum about that.
Hawaii now chugs into a new fiscal year, hoping that the twin engines of tourism and government spending will drive the economy forward.
Economist Paul Brewbaker is cautiously optimistic, which while better than cautiously pessimistic, is still open to a fistful of "on the other hand" caveats.
As chairman of the state’s Council on Revenues, Brewbaker’s predictions have extra weight, but his last report to Gov. Linda Lingle has an interesting twist.
Among the reasons Hawaii’s balance sheet is back in the black and the state’s tax collections increased is because of new tax laws.
Of course, this is not rocket science. If you raise taxes, the chances are you will take in more money. It doesn’t work forever, of course, because if you raise taxes too high, everyone leaves or the economy is hammered so much that there isn’t anything left to tax.
The interesting thing about this tax twist is that Lingle is ignoring the taxes-help-float-the-economy part of the news and instead is bragging about Hawaii’s new robust economy.
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"Tax collections for the first 10 months of the fiscal year have improved," Lingle noted in a report last month.
She added that Brewbaker’s council, which had forecast a 2.5 percent decline in revenues, "now points to positive growth."
The brightened tax collection picture was enough for Lingle to announce that state taxpayers would get their state tax refunds earlier. She then went on to mention everything except the tax increases.
"We have remained focused on being fiscally responsible, turning our economy around, getting our residents back to work and setting the foundation for a stronger future," Lingle said.
Not mentioned were the five tax bills passed by the Legislature and singled out by Brewbaker as reasons for the improved economic picture. Two of the five were bills that Lingle had vetoed and then overridden by the Democrats.
Remember the barrel tax, the one that raised the tax on an imported barrel of oil from 5 cents to $1.05? The barrel tax will raise $22 million a year and has already triggered a 2-cent increase in a gallon of gas. The other tax is a tax on estates of more than $3.5 million.
How state revenues would fare if Lingle’s vetoes were not rejected is still open to debate, but it does show that sometimes tax and spend is also tax and balance.
