Hawaii Still a Debt "Sinkhole State"
Hawaii remains among the worst 5 states for taxpayer burden of debt and continues to use overly optimistic accounting
News Release from Grassroot Institute
HONOLULU, Hawaii—August 19, 2014—Even Governor Abercrombie’s optimistic accounting couldn’t move Hawaii out of its “sinkhole” status. Truth in Accounting has released its annual “State of the States” report, a financial analysis of all 50 states that focuses on the key assets and liabilities of each state to determine the extent of that state’s “Taxpayer Burden” (the amount each taxpayer would have to pay to cover the state’s debt). Of the 41 states with Taxpayer Burdens—which are generally due to unfunded health and pension liabilities—Hawaii falls into the worst five in the nation. These “Sinkhole States,” which include Hawaii, Massachusetts, New Jersey, Illinois, and Connecticut, have the highest debt per taxpayer in the country.
Hawaii has actually improved its position slightly in this year’s report, though it was not enough to move it out of the bottom five. The calculated 2013 Taxpayer Burden of $27,000 is a decrease of $14,300 since 2012 report. The change is due to the initial meassures to pay down Hawaii’s unfunded liabilities.
However, as the Truth in Accounting report explains, citizens should be wary of the decrease, as it is partially the result of an accounting trick. By “pre-funding” $100 million of retirement health debt, the state was able to assume a higher rate of return, decreasing the size of debt from approximately $16 billion to $11.8 billion. For a state that is overwhelmed with debt, this illusory half-measure may create the false impression that Hawaii is taking steps to ensure fiscal responsibility when that is not the case.
“Hawaii citizens deserve a better explanation of the sudden and dramatic decreases in retirement health debt than ‘the actuaries calculated it,’ stated Donna Rook, President of StateDataLab.org. “Taxpayers still will have to pay the real debt when it comes due, in spite of different ways to estimate its potential value.”
“The hard truth is that this is not a problem that can be solved painlessly,” stated Keli’I Akina, Ph.D., President of the Grassroot Institute of Hawaii. “Our state’s unfunded liabilities represent years of promising more than we can afford, and no amount of fiscal sleight of hand can make it disappear. It is time for our leaders and decision makers to embrace fiscal responsibility and advocate for policies that will make a real difference in reducing the state’s debt.”
About the Grassroot Institute of Hawaii:
Grassroot Institute of Hawaii is a nonprofit, nonpartisan research institute dedicated to the principles of individual liberty, the free market, and limited, accountable government throughout Hawai`i and the Asia-Pacific region. Read more about us at http://www.grassrootinstitute.org/
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About Grassroot President Keli'i Akina
Keli’i Akina, Ph.D., is a recognized scholar, educator, public policy spokesperson, and community leader in Hawaii. Currently, he is President/CEO of Grassroot Institute of Hawaii, a public policy think tank dedicated to the principles of individual liberty, free markets and limited, accountable government. An expert in East-West Philosophy and ethics, Dr. Akina has taught at universities in China and the United States and continues as an adjunct instructor at Hawaii Pacific University. Dr. Akina is currently a candidate for Trustee at Large of the Office of Hawaiian Affairs in the 2014 General Election run-off.