Hawaii state budget (2008-2009)
From Sunshine Review
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Hawaii faced a $2 billion budget gap. Gov. Linda Lingle said she wants to avoid tax increases. Instead, the Governor calls for cutting state worker benefits to plug the gap in the state budget.[1] Some lawmakers have proposed increasing the state's tourist tax to increase revenue, however, Gov. Lingle said promised to veto any legislation that increases transient accommodation or personal income taxes. [2] The governor emphasized that the budget will have to be balanced through cutbacks instead[3], some of which include possibly reducing state employee wages and benefits by $278 million. [4]
[edit] Impact of budget woes
- Main article: State budget crisis, 2009-2010
- Hawaii's unemployment is the highest that it has been in 30 years.[5] In February 2009 the rate was reported at 6.5 percent. The number of job seekers more than doubled from 2008 and the number of available jobs shrank by 3.4 percent. Job losses, in February, were experienced in construction, -900 jobs; leisure and hospitality, -600 jobs; financial services, -300 jobs; and trade, transportation and utilities, -100 jobs. [6]
- In light of a declining revenues and a national recession Hawaii officials announced that the state will have to drop it's universal child health care program. As of November 1,2008 there were approximately 2,000 children enrolled. The program provides coverage from 18 months to 18 years old and is estimated to have cost $25.50 per child per month. [7]
- In April 2009 officials announced that due to declining revenue approximately 21 layoffs of political appointees would be necessary, however, the number is far less than the 374 state government jobs previously anticipated. [1]
- Current tax increases under consideration in order to reduce the state's budget deficit include: residents earning more than $150,000 would pay higher state income taxes and cigarette smokers would pay 40 cents more per pack.[1]
- Due to declining revenue state lawmakers are pushing for a large increase in the tax visitors pay on hotel rooms and want to divert tourist revenue from the counties to the state. Additionally the proposal would permit counties to charge a new 1 percent retail sales tax in return. The accomodations tax is estimated to increase from 7.25 percent to as high as 12.25 percent. [2]
[edit] Budget background
Hawaii operates on a biennium, covering two fiscal years at a time. A fiscal year begins on July 1 and ends on June 30 of the following year, however the biennium begins July 1 of odd-numbered years. According to the state Constitution, the Governor is required to submit to the Legislature a budget that includes proposed expenditures and anticipated revenue for the upcoming biennium. [8] Both the Senate and the House of Representatives are required to make any necessary changes or adjustments to the budget until the bill is passed in both houses. Then the document is passed to the Governor before it is enacted into law. The Governor is required to submit a balanced budget that does not include a carryover deficit. [9]
[edit] Budget figures
The following table provides a history of Hawaii's expenditures and gross domestic product (GDP).
| Fiscal Year | Expenditures (billions) | GDP (billions) |
|---|---|---|
| 2000 | $8.2 [10] | $40.2 [10] |
| 2001 | $8.8 [10] | $41.8 [10] |
| 2002 | $9.4 [10] | $43.5 [10] |
| 2003 | $9.6 [10] | $46.4 [10] |
| 2004 | $9.9 [10] | $50.4 [10] |
| 2005 | $10.5 [10] | $54.9 [10] |
| 2006 | $11.0 [10] | $58.7 [10] |
| 2007 | $11.5 [10] | $61.5 [10] |
| 2008 | $12.1 [10] | $64.5 [10] |
| 2009 | $12.7* [10] | $67.7* [10] |
- NOTE: The figures for FY 2009 won't be finalized until the end of the fiscal year.
[edit] Ideas about why the crisis exists
- Tourism is a large portion of the state's tax revenue. However, in a report from the state business and tourism department revealed that visitor arrivals for February 2009 declined 12.7 percent compared to the same month in 2008 and visitor spending fell 15.9 percent, or by $161 million, to $852.5 million. February 2009 has marked one of the worst months for tourism in 18 years. [11]
- In April 2009 officials reported that state revenues are off 6.3 percent through the first nine months of fiscal year 2009, a sharper decline than the anticipated 5 percent. [12]
[edit] Proposed actions
[edit] Governor Linda Lingle
In the Governor's latest spending proposal Lingle suggests using $90 million in stimulus dollars slated for education towards the state's FY 2009 budget shortfall. An additional $22 million in stimulus funds would be used towards the budget gap for FY 2010. According to Gov. Lingle the state Department of Education has continuously experienced budget increases and insisted that her plan would make the agency "whole" by restoring money that otherwise would have to be cut because of the budget shortfall. [13] For state workers, Lingle estimates that her budget plan would trim labor costs by $278 million for the next two fiscal years. [14] Some lawmakers have suggested increase tourist taxes however the Governor stated that she would veto them should they cross her desk. “The transient accommodations tax, the general excise tax or the income tax -- all three would hurt our recovery,” Lingle said. “They would drive unemployment up, and they would put a bigger burden on families and businesses." [3]
[edit] Republicans
Despite a looming budget deficit and the state's need for new revenue sources considering the decline of the tourism industry, Republican lawmakers said that they are against tax increases. State House Minority Leader Lynn Finnegan and Rep. Kymberly Pine said that the Republican plan is focused on initiatives that protect businesses, create jobs, and eliminate or lower taxes. "We agree with the governor that we should not be raising taxes and we should be trying to not lay off employees," Finnegan said. "We need to make sure people stay employed and we don't have more taxes that make it hard for them to stay afloat." [12]
[edit] Democrats
In an attempt to reduce tax increases and layoffs Democrat lawmakers are pushing legislation that would increase tourist taxes. "It wouldn't impact our residents. It would be those who would come here as visitors," said Senate president Colleen Hanabusa. "The bulk of the population needs as much protection as we can afford." A 1 percent increase in the tourist tax is estimated to generate $30 million in annual government revenues. [2] Gov. Lingle stated that she would veto any tax increases that may cross her desk. "This is way too early to draw these lines in the sand," Rep. Marcus Oshiro said. "I don't think she's dealing with reality. Her budget is based upon the assumption that she can work out something with labor, find additional savings in the budget, not lay off anyone, and not raise any fees or taxes. [15]
[edit] Economic Stimulus Project
Hawaii is expected to receive $2 billion from the $787 billion dollar economic stimulus. [16] All told, the federal stimulus plan would create or save 15,000 jobs in Hawaii, based on White House estimates.[17]
For more information on how the federal stimulus funds are being used in the state of Hawaii, visit the state recovery website.
According to preliminary reports, Hawaii is expected to receive:
- $125.7 million for state and county highway improvement projects [18]
- $76.5 million for improvements to Kahului Airport and Honolulu International Airport [18]
- $43.8 million for county bus transit systems improvements [18]
[edit] Budget transparency
[edit] Legislation
House Bill 122 was enacted on July 11, 2007 by the legislature without the signature of the Governor. This bill mandated creation of a searchable grant and contract sight for state expenditures over $25,000.[19] However, the site failed to launch by the established deadline of January, 2009, and it has since become apparent that there are no plans to launch a transparency database.[20] New transparency legislation, (Hawaii Senate Bill 659 (2009)), was enrolled to the Governor on May 8, 2009.[21]
[edit] Government tools
The following table is helpful in evaluating the level of transparency provided by a state spending and transparency database:
| State Database | Searchability | Revenue Source | Expenditures | Contracts | Employee salary |
|---|---|---|---|---|---|
| None | n/a | n/a | n/a | n/a | n/a |
[edit] Limitations and Suggestions
HB 122 limits disclosure to recipients of $25,000 or more. The federal-level legislation set the same limit, so surely a single state such as Hawaii should have a lower threshold. The Legislature should act to reduce or remove this barrier.
[edit] Economic Stimulus Transparency
- The Economic Recovery and Reinvestment Act of 2009 designated $787 billion to be spent throughout the U.S. Of that $787 billion stimulus package, it is estimated that 69%, or over $541 billion, will be administered by state governments.[22]
- It is estimated that Hawaii will receive at least $650 million in federal funding.[23]
- The economic recovery website for Hawaii is available here.
[edit] Support for creation of a database
The National Taxpayers Union, Citizens Against Government Waste, and the Grassroot Institute of Hawaii supported transparency legislation (House Bill 122 and Senate Bill 1689).[24]
Hawaii Senate Bill 659 was introduced by Senator Les Ihara.[25]
[edit] Public employee salary information
None.
[edit] See Also
Hawaii taxpayer-funded lobbying
[edit] External links
- Model transparency legislation from the American Legislative Exchange Council is available at this link.
- Grassroots Institute of Hawaii
- Hawaii Department of Budget and Finance
- Hawaii government spending
- FB 2007-2009 Executive Biennium Budget
[edit] Additional reading
[edit] References
- ↑ 1.0 1.1 1.2 Associated Press,"Hawaii proposed budget calls for minimal layoffs," April 8,2009
- ↑ 2.0 2.1 2.2 Associated Press,"Hawaii lawmakers consider more tourist taxes," April 15,2009
- ↑ 3.0 3.1 KHON2,"Governor Will Veto Taxes; Furloughs On The Table Again," April 8,2009
- ↑ Associated Press,"Lingle pushes budget, opposition to higher taxes," April 12,2009
- ↑ KHON2,"Unemployment Rate Hits 30-Year High," March 27,2009
- ↑ Honolulu Star Bulletin,"Unemployment hits 12-year high," March 28,2009
- ↑ Associated Press,"Hawaii ending universal child health care," October 17,2008
- ↑ The Hawaii State Constitution,"Budget process," retrieved April 15,2009
- ↑ INPUT,"State Budget Process," retrieved April 15,2009
- ↑ 10.00 10.01 10.02 10.03 10.04 10.05 10.06 10.07 10.08 10.09 10.10 10.11 10.12 10.13 10.14 10.15 10.16 10.17 10.18 10.19 US Government Spending,"Hawaii State and Local spending," retrieved April 15,2009
- ↑ Chicago Tribune,"Hawaii's business battered," April 13,2009
- ↑ 12.0 12.1 Honolulu Advertiser,"Hawaii Legislature plans tax hikes to ease budget deficit," April 15,2009
- ↑ Associated Press,"Hawaii gov plans to use school money for budget," March 26,2009
- ↑ Honolulu Star Bulletin,"Lingle wants to cut state workers' pay," March 26,2009
- ↑ Honolulu Advertiser,"Lingle vows veto on taxes," April 9,2009
- ↑ KITV,"Stimulus Plan's Include $2B For Hawaii," January 28,2009
- ↑ American Recovery and Reinvestment Act,"Impact," retrieved April 15,2009
- ↑ 18.0 18.1 18.2 State of Hawaii,"Hawai'i' to receive $246 million in federal stimulus funds for highway, airport and bus transit improvements," March 16,2009
- ↑ govtech.com, "Taxpayer Group Applauds Hawaii's Passage of Spending Transparency Bill," July 16, 2007
- ↑ Honolulu Advertiser, "Web site to track spending shelved," January 28, 2009
- ↑ Measure history, Senate Bill 659 (2009)
- ↑ National Taxpayers Union, "A Letter to the Nation's Governors: Ensure Transparency and Accountability by Posting Stimulus Expenditures Online," March 10, 2009
- ↑ Wall Street Journal, "Stimulus Spending by State," April 9,2009
- ↑ National Taxpayers Union, "Taxpayers Support Creating Grant and Contract Database in Hawaii," April 13, 2007
- ↑ Measure history, SB 659 (2009)
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