The Legislature found $150 million. So where's our tax relief?

by Keli'i Akina, Ph.D., President / CEO, Grassroot Institute of Hawaii

The state’s behemoth budget bill is making its way through the Legislature, and I can’t help but notice that taxpayers seem to be the only ones expected to make a sacrifice for the sake of government spending.

Gov. Josh Green kicked off this year’s session claiming the state’s budget crunch is so bad that it justifies “pausing” the phase-in of the historic income tax cuts he signed into law in 2024. 

If that’s true, why has the Legislature put forth a budget that blows past his suggested spending by more than $195 million?

At first glance, the Legislature’s latest draft of the budget appears to appropriate only $43 million more than the governor’s most recent fiscal 2027 budget request. But that’s because lawmakers have suggested reducing the state’s debt service and health benefits payments by about $150 million. 

If it’s possible to simply grab $150 million out of those payments, why hasn’t that been offered up as part of a plan to save our promised tax relief? 

My colleagues at the Grassroot Institute of Hawaii have analyzed the latest draft of the budget bill and identified numerous increases in spending compared to the governor’s proposed budget. These include:

>> $30 million more in “general support for healthcare payments” than the governor’s request of $16 million.

>> $27 million more in spending on “natural and physical environment” than the governor’s request of $7 million.

>> $13.7 million more in funding for “ecosystem protection, restoration and fisheries management” than the governor’s request of $5.5 million.

On and on it goes, line item by line item, adding up to more than $195 million than the governor proposed. 

If lawmakers simply went back to the governor’s original budget and combined that $150 million cut in debt service and health benefits payments with some other reductions — such as eliminating vacant positions and returning to the general fund $58 million in special funds that are budgeted for the new Aloha Stadium — it seems to me they could easily save our income tax cuts and avoid passing any new tax hikes.

Other budgeting strategies to help preserve our tax cuts that I have previously shared with you include returning the budget to 2019 levels, adjusted for inflation, and freeing up long-unused or unlawful special funds. 

The bottom line is that state lawmakers were supposed to approach this year’s budget with restraint. Instead, they are poised to go on another spending spree. That’s the kind of budgeting that leads to tax hikes, a higher cost of living and a stagnant economy.

But it’s not too late for them to change their minds, or for Gov. Green to line-item veto spending increases as he has wisely done in the past.

E hana kākou! (Lets work together!)