Is Your Bottom Line Smarting Too?

Rick Hamada
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Wednesday - May 11, 2011

The close of the 2011 Hawaii state legislative session will be remembered for not being particularly memorable.

Yes, there was a great deal of activity: frazzled lawmakers trying to find money for their constituents, frenetic negotiations between the House and Senate trying to reach various compromises and, by the way, the comparatively uneventful activation of civil unions gave some form and shape to a seemingly disjointed session. Despite being somewhat meandering, the session did address some highly publicized issues.

There wasn’t a more dominant theme this year than balancing our state budget. Facing a burgeoning $1.3 billion budget shortfall, lawmakers were tasked with not only balancing the finances, but also the sentiments of various interest groups who stood to lose a lot depending on the decisions made.

Yes, organized labor had a vested interest with the HGEA negotiations and contract vote. But there were others who had previously enjoyed a “shall fund” status before our economic travails.

Human service organizations came out en masse to demonstrate their political relevance and vie for their piece of the ever-shrinking financial pie. It wasn’t only governmental agencies that were compromised, but community organizations such as Easter Seals Hawaii saw their ability to provide de rigueur service diminished because of state budget restrictions.

At the end of the day, it appeared lawmakers punted. We saw an approximate $600 million in budget reductions, but they were countered with about $600 million in “revenue enhancements,” the new euphemism for tax and fee increases. It’s like telling a doomed convict on the guillotine that he’s facing “anatomical redistribution.” The Hawaii taxpayer was spared the tax equivalent of the guillotine: an increase in the general excise tax. Although threats to increase the broadest, yet most regressive tax did not materialize, the elimination of tax exemptions in various industries was a definite financial hit. All you need to do is ask contractors and airline executives what this will mean to their bottom line. Ultimately, they will tell you, it’s not just their bottom line, but your bottom line, too. Ouch, I think my bottom line is smarting.

The fly in the proverbial ointment is the next report from the Council on Revenues, due May 22, which will reveal just how much our revenue projections for the future will be then juxtaposed with the budget that was recently passed by the Legislature. If the COR predicts collections will be on the uptick, then worries should be mitigated. But if the COR submits a report that revenue will be down, then the dollar dance begins in earnest. The Legislature has pretty much given Gov. Abercrombie everything it has to give. If there is a widening in the chasm of disparity between the state and the COR, look for Abercrombie to jump in and effect additional reductions in spending, or a special call-to-order of the Legislature to possibly enact more tax increases (oops, I mean “revenue enhancements”).

The salient question at the conclusion of this legislative session is: Are we doomed to a future of additional taxes and an increasing reduction of services?

Now is the time to truly embrace decreased expenditures while refusing to increase taxes on the populace. Perhaps, at some point, we will actually find a state government that focuses on core, fundamental services while empowering its constituents by allowing them to retain more of their hard-earned cash.

Until that day comes, take a number. The line at the guillotine is getting longer.

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