The endowment of a $2.6 billion budget surplus, largely banked from federal pandemic relief funding, has loosened some constraints on spending by Hawaii’s new governor, but only to a point.
The spending priorities of Gov. Josh Green and of the Legislature are laid out in an $18.9 billion state budget that comes up for a vote of the full House this week. Now that the halfway point of the session has been passed, the budget’s ultimate form will hinge on answers to key questions.
How much can be invested in new or existing big-ticket programs, and how much should be left in reserve to hedge against economic uncertainty?
On that front, the latest news from the University of Hawaii Economic Research Organization is a mixed bag. In a report issued last week, UHERO projects slowing growth this year, but also concludes that Hawaii will avoid even the mild recession that some anticipate for the U.S. in 2023.
That’s more optimistic than previous reports, but still should resonate as a warning to lawmakers, who should move legislation fulfilling more targeted needs.
For example, Green’s proposal to eliminate the general excise tax on food and over-the-counter drugs seems to have stalled. Its opponents rightly worry that curbing tax revenues too much will hurt the state’s finances in the long run. The administration estimates the revenue loss at $119.1 million.
What should fare better this session are measures aimed specifically at helping working families. The House favors the approach in House Bill 954, which adds cost-of-living adjustments to income-tax brackets and personal and standard exemption amounts.
This is a benefit to all in inflationary times, but especially to those in lower-income households. Tax reform should help to shore up budgets for households with incomes falling below what the Aloha United Way calls the ALICE threshold.
The acronym stands for Asset Limited, Income Constrained, Employed — the working poor, and those who may tip into that class. The ALICE group, unable to pay for basic needs such as housing, medicine and child care, alarmingly was up to an 44% of Hawaii’s population, according to a 2022 report.
Raising prospects for these people is aimed at helping them fend off homelessness and other social problems that quickly become part of Hawaii’s costliest and most persistent problems.
So several of these more focused bills, especially those that broaden existing tax relief programs, deserve further discussion. Senate Bill 55 would increase the income thresholds and credit amounts of the tax credit for low-income renters.
Part of HB 954 also addresses lower-income taxpayer by expanding the earned income tax credit for working families. And HB 493 would amend the income brackets and credit amounts of the refundable food/excise tax credit, helping families that spend a disproportionately large share of their income on groceries.
There is also a bid, HB 233, to replicate the federal child tax credit that paid out monthly to low-income families during the pandemic. Lawmakers would need to assess carefully the state’s capacity to sustain such a broad-based credit without imperiling critical expenditures.
These would include funds for workforce development in the state’s universal preschool initiative. Strengthening the educational foundation for keiki should pay off in a generation, with more becoming self-sufficient and able to give back to the community.
Other updates:
>> Lawmakers again have blocked the Office of Hawaiian Affairs’ bid to develop high-rise housing on its Kakaako waterfront land. It was the right decision to keep building heights and density lower in the makai area.
However, the proposal by House Speaker Scott Saiki to consider providing an alternative site for OHA residential development should be under discussion. And it’s encouraging to see funds allotted for needed site improvements at Kewalo and for an environmental impact statement.
>> The idea of a “green fee” to fund management of natural resources has survived in SB 304. It would establish a $50 visitor impact fee program within the state Department of Land and Natural Resources.
A visitor who opts in would pay a fee through a website or mobile app for a license enabling entry to state-owned sites; further details would be spelled out in DLNR rules. A voluntary program seems the right approach at this stage of launch.
>> Legalizing the possession of up to one ounce of marijuana for recreational use is the aim of SB 669. At a time of concern about the impact of substance abuse generally and the health effects of vaping on teens, this idea seems counterproductive; the bill should be killed.
>> Hawaii’s orientation favoring gun control is moving ahead, as it should, in HB 984, restricting firearms in specific locations.
If there is a common thread running through the bills that should become law, it is an emphasis on improving prospects and reinforcing safety for people in the community — without undermining the economy that supports it.
