Monday | May 30, 2016
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Instill priorities for precious tax dollars

They’re off and running, Congress and the state legislature that is. Each bright, shiny and eager face will have an agenda to deliver to his or her constituents back in their home districts. And that means money.

In years past, when the nation and the state had resources to blow, no one paid attention as constituents clamored to have lawmakers fund new programs. Now the awful truth has come home to roost — there is no such thing as a free lunch. Someone has to pay for the services provided by the federal government.

By allowing tax rates to rise on the wealthy top 4 or 5 percent of Americans to avert the “fiscal cliff,” Congress and the administration merely “kicked the can down the road.” Around the end of next month, the same cast of characters will lock horns over the issue of whether or not to raise the debt ceiling to cut spending even further. Some argue that if the debt ceiling is not raised, we won’t be able to pay our troops, those with student loans will go into default, and beneficiaries of Social Security and Medicare will not see their benefit checks arrive in the mail or credited to their checking accounts, and the economy will slip into a financial abyss. However, no mention is made about what could happen if the nation continues to accumulate more debt because it continues to spend.

Fortunately, the state of Hawaii cannot adopt a deficit budget and spend money it does not have. That doesn’t mean that state lawmakers have control over the pace of spending. Hawaii is already faced with a huge tab for the unfunded liabilities of state pension and health care systems. This yoke around the neck of lawmakers has not been addressed in recent years but is estimated at more than $22 billion. It continues to grow by the day as more and more public employees retire.

These obligations are unfunded, in large part, because past generations of lawmakers have taken the monies that should have been paid toward this obligation and used those funds to initiate new programs and services — services and programs that perhaps were not as critical to the health and safety of the community as others such as education, child welfare, sanitation inspection and vector control. A vocal group of constituents demanded that lawmakers provide these services and they acquiesced.

The problem is that just as much as these lawmakers believe they must respond to their constituents’ demands, they must also recognize that they have a duty to ensure that tax dollars are spent wisely and efficiently, yielding the best services possible. Elected officials at all levels of government must set priorities for what few dollars are available.

Setting priorities not only means deciding which services are most critical to the health and safety of the community, but also that when the funds run out, elected officials have the courage to say no to unnecessary programs. This may be difficult, but the alternative is saying yes to more taxes and fees. Teachers are already calling for another “penny on the sales tax.” After all, it is only a penny. Similarly, the advocates of early childhood care and education are calling for another “penny.” And while it only sounds like a paltry “penny,” it means millions and millions of dollars ripped out of the state economy that could otherwise be put toward its expansion and growth, creating jobs and activities that would generate the necessary tax revenues.

Instead of falling into their usual habit of spending more of your tax dollars and then trying to figure out how to raise more money, lawmakers should be required to recommend a reduction or elimination of a current program or service on a dollar-for-dollar basis before adopting a new program or service. After all, Hawaii taxpayers already bear one of the heaviest burdens in the nation. It is time for overburdened taxpayers to demand elected officials also represent them and do their part to rein in the spending or else Hawaii will also reach a “fiscal cliff.”

Lowell L. Kalapa is the president of the Tax Foundation of Hawaii.