Sly Legislators And The GET

Larry Price
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Wednesday - March 30, 2011
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Last week state Senate leaders privately polled their members and found support for an increase in the general excise tax, if necessary to balance the budget. It is interesting that they waited this long to discuss a budget deficit approaching $1 billion.

This strategic delay was a brilliant move for a couple reasons.

First, the financial environment has changed dramatically because of the disaster in Japan and its obvious impact on Hawaii’s economy.

Second, the timing of the Council on Revenues report earlier this month and another meeting called by the governor to include the impact of the disaster in Japan is expected to add to our budget deficit and the need for additional revenue.

Also not surprising is that House leaders didn’t jump on the bandwagon immediately, which gives the impression that they are really studying the matter.

That left a perfect opening for the governor’s office to announce that Gov. Abercrombie had asked the Council on Revenues to return and update its forecast in light of the potential impact of the Japanese tsunami and earthquake, and the unrest in Africa and the Middle East, which the council will do sometime in mid-April. It promises to be a spectacular, significant increase.

Again, almost perfect timing with respect to the budget-balancing act.

Why? Because there is little time for long, drawn-out debate on the best way to close the deficit.

What I’m suggesting here is to consider how slick our government leaders are at their craft. What they are about to pull off will make the passage of the Civil Unions Bill look like child’s play.

The plan is simple. Whenever establishing a commitment, a skilled politician will simultaneously plan a private way out, like not raising taxes, raising taxes or raiding any special funds such as the Transit Accommodation Tax. The politician will predictably reword the commitment to indicate that the conditions under which it was applied have changed. This will be attributed to information provided by another party (Council on Revenues-2011). He or she†will say something like, “Given what I have learned from the Council on Revenues, I see I am going to have to rethink my earlier position.” After a few days, “Given what I’ve told you about the budget situation and given this new information, I believe you will see that my earlier position no longer holds.”

In bureaucratic institutions, changes can be introduced as innovative experiments to see if they work before they are formally adopted. Additionally, anytime someone in power backs off a committed position, it’s important to help him or her to “save face” to avoid any possible damage to the other party’s self-esteem or to constituent relationships.

Something to watch for if you are violently opposed to a raise in the GET tax: If the budget-balance act is presented in conference committee, there is no opportunity for the public hearing process to happen, so those in opposition will not have the opportunity to state their opposition.

Of course, none of this is against the law. In fact, it will be considered a very sophisticated form of governing, and quite clever.

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