Bill to boost excise tax for education dies

A proposal to increase the state excise tax to boost funding for Hawaii public schools and the University of Hawaii will not get a hearing in the state House and appears to be dead for this year.

Senate Bill 1474 would have increased the state excise tax to 4.5 percent from 4 percent to provide hundreds of millions of dollars in extra funding each year for higher and lower education, but House Finance Chairwoman Sylvia Luke said Thursday she will not consider the measure.

“Right now the Legislature should show the public that we have a good handle on accountability for the expenses, and I do not feel that the (Department of Education) has done enough to tell the Legislature that these are the ways that we’re using the funds for student achievement or for public school improvement,” said Luke (D, Punchbowl- Pauoa-Nuuanu).

“I think there needs to be a lot of work for accountability before we increase any taxes,” she said.

The bill was backed by the Hawaii State Teachers Association, which cited a 2017 analysis by the state Department of Business, Economic Development and Tourism that found Hawaii’s education expenditures as a share of state and local government spending is 27.3 percent, the lowest in the nation.

Corey Rosenlee, president of HSTA, said that by far the largest expense for public schools is employee salaries. “At the end of the day, that’s where the vast majority of the funding goes, and when you adjust for the cost of living, teachers in Hawaii are the lowest paid in the nation,” he said.

“Our educational assistants and our custodians literally are living in poverty, so if accountability is the issue that they want to solve before they increase funding, then they should put accountability measures into any funding bill, and they have the power to do so,” Rosenlee said.

The raw dollar value of the state’s per-pupil spending is $12,855, which ranks 17th in the nation, but that does not take into account the state’s high cost of living, according to HSTA.

According to the state Department of Taxation, SB 1474 would have raised nearly $388 million in extra funding for higher and lower education in the year that begins July 1, and raised more than $432 million the following year. That extra tax revenue was to be deposited into special funds set up to support public education.

Earlier this month the Senate approved SB 1474 in a 21-3 vote, with Sen. Breene Harimoto absent. Sens. Lorraine Inouye, Gil Riviere and Laura Thielen voted against the bill.

The bill was supported by the state Democratic Party and state Superintendent of Schools Christina Kishimoto.

The bill was opposed by Rod Becker, director of the state Department of Budget and Finance, who said his department “does not believe that (an excise tax) rate increase is needed nor warranted at this time.” He said in written testimony that the excise tax is regressive and that an increase would harm the state’s most vulnerable residents.

It was also opposed by the Chamber of Commerce Hawaii, the Hawaii Association of Realtors and the Hawaii Food Industry Association.

Last year the teachers union pushed for an amendment to the state constitution to give the state the power to tax real property to support public education, but the state Supreme Court ruled the ballot question was invalid before the public had a chance to vote on it. The court decided the ballot question was not sufficiently clear to put before voters.

The proposed constitutional amendment appeared on general election ballots anyway because the ballots had been printed before the court ruled, and the public voted overwhelmingly against the measure.

“When the ConAm was thrown out by the court, the problem didn’t go away,” Rosenlee said Thursday. “Our main goal is to make sure that we give our keiki quality schools and that (they have) quality teachers. The job of how to fund it should be the role of the Legislature.”