Editorial: Legislature must be fiscally prudent, hold departments accountable
Members of the state Legislature, which just convened in its 2019 session, are looking around, somewhat nervously.
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The nation in general has enjoyed a long period of an improving economy, one that has strengthened further in the last few years.
But now members of the state Legislature, which just convened in its 2019 session, are looking around, somewhat nervously. They are watching for signs that a recession could be around the corner, when families already facing trouble making ends meet could fall into poverty. And these people could join those already relegated to homelessness and life on the streets, some driven there otherwise by illness and addiction.
There is no clear prognosis yet of a decline. The economy, buoyed last year by the effect of corporate tax cuts, has been resilient so far to the winds of change, everything from trade tariffs to the lingering government shutdown. But it may be more fragile than we know, so cushioning the fall may be wise.
That may explain the existence of common threads between what Gov. David Ige has proposed in terms of budget resources — a sizable investment in capital improvements — and the focus top lawmakers have already placed on working to head off economic decline and poverty.
If legislators approach this prudently, they will take care to balance expenditures against revenue limitations, continuing to seek ways to capture outstanding tax revenues that are owed to the state.
There may be new sources that should be tapped to feed state coffers. Vacation rentals top that list, although lawmakers still await some action at the county level to regulate these properties adequately before taxation should begin.
Further, they should approach tapping private-sector employers with caution. Legislators here, as in many other states, are discussing the raising of the minimum wage. This will have an immediate impact on businesses — the small-scale mom-and-pop establishments occupying the most vulnerable sector.
The national conversation about raising the minimum wage to a “livable” level stems from the growing income disparity between the wealthy and the lower-income groups. Hawaii’s minimum wage has risen over time to $10.10 per hour. This places the islands ahead of some states, though generally those with a lower cost of living.
In some places, a distinction between urban, suburban and rural rates was enacted. Making the political case for that scheme here would be difficult, as it could enlarge the wage gap between Oahu and other islands.
Another approach: New York City will distinguish between what large employers and small employers must pay their workers. Hawaii lawmakers should be open to discussing that kind of rule, given the number of small businesses in the local economy.
Generally, Republicans oppose a mandatory minimum-wage increase, but in the more liberal political environment of Hawaii, even the minority caucus has signaled cautious support. State Rep. Gene Ward said the GOP stance is to back increases by “reasonable” increments — a rational position.
Ige has said, rightly, that he would not consider the proposals by some for a boost to $17 per hour. His intent will become clearer on Tuesday in the delivery of his State of the State address, but he did say he is contemplating something closer to $15.
Even that would need to be stepped up carefully, or the repercussions that critics highlight — lost jobs, shuttered businesses — could be borne out, especially if the economy falters.
In his own opening-day remarks, House Speaker Scott Saiki pointed to another compelling need of the state: affordable housing. Saiki listed among his goals working with the governor to see that the $200 million in cash and $300 million in tax credits for affordable housing are implemented.
In addition, Senate President Ron Kouchi applauded Ige’s proposed budget request for more than $2 billion to be spent on state construction projects. This, Kouchi said, could help the state weather the slowdown in private construction.
The roster of projects should take at least a modest bite out of the backlog of construction repairs and improvements that seem especially consequential in the state’s schools and university systems.
Lawmakers also need to press education officials to explain how they intend to improve their flawed system of tracking projects, a failing that led to a drastic underestimate of the cost of deferred maintenance for facilities.
And they should call on Ige to explain why a $30 million allocation for homeless “ohana zones” has yielded little innovation in this area. Some concrete results are due.
That said, there is no reason that the tensions between the legislative and executive branch, which erupted during the 2018 election cycle, should continue to fester. Yes, there will be disagreements aired in the confirmation of Ige’s Cabinet. And yes, their priorities don’t align perfectly.
But as Saiki said himself, “Problem solving requires hard work, reflection and, most importantly, compromise.”
The public is hungry for all of that, and it’s time for lawmakers, and the governor, to deliver.