State lawmakers don’t have to raise taxes to fund disaster response

from Grassroot Institute

Jonathan Helton, policy analyst for the Grassroot Institute of Hawaii, appeared on Rick Hamada’s KHVH radio show March 31 to provide insight into the state budget and proposed changes to previously enacted income tax cuts. 

Helton explained that House lawmakers “cut about $150 million from the governor’s budget and then added about $190, $195 million of their own spending,” resulting in approximately $40 million more spending than the governor originally requested. 

Budget cuts might sound like a good thing, he said. But he expressed skepticism about the nature of those cuts, noting that the House “cut $150 million from planned debt service and health benefit payments,” which he said are typically fixed costs that the state must eventually pay.

Helton’s discussion with Hamada also addressed how statewide flooding from recent Kona low storms might impact state finances and taxation. When asked about storm costs, Helton clarified that damage estimates aren’t reflective of actual losses to the state and emphasized that lawmakers “have a lot of room to be creative” in funding disaster response.

He suggested that lawmakers repurpose funds that are “sitting around in special funds, in vacant positions, in agencies that really probably shouldn’t exist” rather than raise taxes by pausing or canceling planned income tax cuts passed in 2024. 

“If any of that is taken away in some form or fashion, that represents a tax hike,” Helton said.  

He particularly emphasized the negative impact that could have on small business owners and entrepreneurs, arguing that “Hawaii needs more entrepreneurship, not less.”