State Legislature: Budget work is only half of it

While Hawai‘i’s legislative leadership is crowing loudly about their proclivity in spending the COVID-19 disaster money, balancing the state budget and avoiding public-worker layoffs and salary cuts, there is far too much still going undone.

The 2020 Legislature is expected to adjourn very soon rather than tackle the many additional challenges facing our collective community. Essentially, we are being told that the help and solutions needed now must wait until May of 2021.

Legislative leadership no doubt will claim “there’s no money” or “it’s a federal problem and there’s nothing we can do about it,” or “this can wait until next year.” The truth is that with a little creativity and just a touch of political courage, there is much the state Legislature can do about a wide host of issues facing us NOW.

Space does not allow me the room to list all that Hawai‘i’s legislative leadership could accomplish today simply by adjusting state tax policy, but for starters, here are some low hanging fruit:

• Eliminate the state income tax currently due on unemployment benefits and the $600 per month “Federal Pandemic Unemployment Compensation.” This is the least our state government can do to help make up for the pain caused by the gross mismanagement of the unemployment application and implementation process;

• Make “rent reductions and unpaid rent” a deductible expense for tax purposes, thus rewarding landlords who forgo or voluntarily reduce their rents to long-term tenants. Landlords would then receive a tax benefit above and beyond simply not being taxed on the income;

• Create a punitive sized (as in very big) new tax on lending institutions (and related businesses, law firms, collection companies, etc.) that institute foreclosure proceedings on any Hawai‘i properties for a period of X years following the start of the COVID-19 stay-at-home orders;

• Eliminate the general excise tax on fresh food (not prepared food or processed food) and long-term-rental income, thus reducing the cost of living for all residents while supporting local agriculture and healthy meals. The term “fresh food” is utilized here to avoid interstate commerce and tariff restrictions. Obviously, both “fresh food” and “long-term-rental income” would need to be defined in law to maximize the public benefits;

• Support small farms that actually sell food for local consumption by exempting them from collecting or paying any GET whatsoever (on purchases or sales). This effectively reduces the cost of all of their expenses (equipment, seed, water, etc.) by 4.5%, and gives their agricultural products a similar price advantage in the marketplace;

• Implement a significant (as in punitive), short-term increase in the transient accommodations tax to further deter incoming visitors until appropriate screening and testing protocols can be developed and implemented. The tax could then be reduced but ultimately utilized as a “throttle” of sorts to control the number of visitors according to each island’s carrying capacity. This basic concept was presented by Tim Halliday, the chair of the Department of Economics at the University of Hawai‘i Manoa in the online news publication, Civil Beat;

• Dramatically increase the tax on rental cars while retaining kama‘aina rates. This would result in less traffic on the highways as visitors would spend more time within designated resort areas. Funding realized from this tax should be dedicated to supporting mass transit.

There are many ways that Hawaii’s legislative leaders could amend state tax policy to make life better and more equitable during these COVID-19 times. In addition, there is a long, wide-ranging list of public-policy initiatives that have already undergone 50% of the 2020 legislative session. This work will be effectively dumped in the trash should legislative leadership decide to adjourn without completing the task before them.

Now is not the time to do the minimal, close up the shop and go home. Hawai‘i deserves better.

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Gary Hooser formerly served in the state Senate, where he was majority leader. He also served for eight years on the Kaua‘i County Council, and was the former director of the state Office of Environmental Quality Control. He serves presently in a volunteer capacity as board president of the Hawai‘i Alliance for Progressive Action (HAPA), and is executive director of the Pono Hawai‘i Initiative.