Gov. David Ige on Monday said an agreement by lawmakers to triple his original rebate proposal to the state’s taxpayers and their dependents is “a great move for our community.”
He was referring to a tentative agreement reached last week by House Finance Chairwoman Sylvia Luke and Senate Ways and Means Chairman Donovan Dela Cruz to rebate $300 to taxpayers earning less than $100,000 a year and $100 to taxpayers making more than $100,000.
That could add up to a $1,200 rebate for a family of four.
“When I proposed the $100 rebate, it really was a recognition, I think, that all of us have worked through COVID and wanted a way to support everyone,” Ige said during a livestream, referring to a proposal he made in the beginning of the year. “I do support targeted relief for those who need it the most, and I know that the Senate and House is … looking at that.
“Safe Travels Hawaii has allowed us to accelerate our recovery, and we are seeing significant increases in the tax collections. And I do think we can afford to provide a rebate to those most in need, as well as to most in our community.”
Dela Cruz estimated the rebates would cost the state about $250 million.
Senate Bill 514, which unanimously passed the House Finance Committee with amendments on April 5, could be the measure used for the proposed rebates, and also for a deposit into the state’s rainy day fund. Two of 12 yes votes came from Big Island House members, Reps. Chris Todd of Hilo and Greggor Ilagan of Puna.
The bill, which currently doesn’t specify how much money taxpayers would be rebated or would be put in the fund, has passed two of three required House readings and is awaiting a third.
Lawmakers have resisted Ige’s call to deposit $1 billion into the rainy day fund, which had been used to cover budgetary issues brought on by the coronavirus pandemic, but have indicated a willingness to deposit a smaller amount.
“I think any amount between $500 million and a billion dollars would help us,” Ige said. “You know, I do bond presentations to rating agencies twice a year, and I’ve been focused on assuring them that we are looking at the long haul. We do know that the significant funds provided by the American Rescue Plan by the Biden administration has made a huge difference here in accelerating our recovery.
“But we also know that it’s not a bottomless pit, the federal government,” he continued. “And should there be another surge, we might be on our own. And that deposit into the rainy day fund assures us that, should we have another event like this COVID that dramatically impacts our economy, having $700 million to a billion dollars would be sufficient for us to get through even the most severe kinds of economic turmoil.”
Todd said he’s “open to discussion” regarding the tax rebates, and said his preference is “something similar to the model” Luke proposed.
“I think a lot of times people in government like to convince themselves that creating more government infrastructure or administration is necessary to affect change,” he said. “But a lot of times, we’d be better off just giving people money directly. If we’re looking for economic stimulus or just helping people to put food on the table, the best way is by just putting money into their pockets.”
Asked about the rainy day fund, Todd replied, “Around three-quarters of a billion or a billion is what you want to have rolled over year after year, just for the sake of our bonding, to make it less expensive for the state to borrow money for projects.”
“In terms of this year, I understand what the governor is trying to do — which is because the state accepted this federal aid money, there are certain obligations as to what you can do with that money,” he added. “And one way you can circumvent those obligations is to just park it in the rainy day fund. In future years, that money would be unencumbered.”
Todd said a glaring need is deferred maintenance and improvements for East Hawaii public schools, which he said were built to “plantation-era standards.”
An email Saturday from the Grassroot Institute of Hawaii called for taxpayers to receive a $1,000 rebate.
Joe Kent, the fiscal think tank’s executive vice president, cited Article 7, Section 6 of the state Constitution as a directive both for the refund and the rainy day fund deposit.
“This is taxpayer money,” Kent said. “And lawmakers have increased taxes for a decade, every year. And now, when we have way too much money, it makes sense to give some of that back. And the (state) Constitution says we’re supposed to give money back to taxpayers if the surplus is too high, which it is right now.”
Kent called a rainy day fund deposit “reasonable.”
“There’s about $300 million in the rainy day fund right now, so putting in another $500 million would probably be a good idea, because the Constitution also says if our revenues are too high, we need to shore up the rainy day fund,” he said. “We have more money than we’ve ever had in the history of the state, but let’s not forget that we have more debt that we’ve ever had, as well. And the Constitution says that we have to pay off our debts if we have a high surplus, as well.”
Email John Burnett at jburnett@hawaiitribune-herald.com.