Yes, Hawaii Can Afford The ‘Green Affordability Plan’
by Keliʻi Akina
Prominent Hawaii legislators have questioned whether Hawaii can afford Gov. Josh Green’s proposed tax cuts that would comprise one of the largest — if not the largest — package of tax cuts in state history.
The quick answer is, yes, we can afford them — and thank you very much to the governor for making them one of his key initiatives during his first year in office.
Such tax cuts in Hawaii are long overdue and could help stem the tide of Hawaii residents who have been leaving the islands in droves over the past half-dozen years due to our inordinately high cost of living — of which taxes are a major component.Gov. Green’s “Green Affordability Plan” would boost existing tax credits and create new ones, increase the state income tax standard deduction and personal exemption and automatically adjust certain parts of the tax code to inflation.
It’s a complicated plan, to say the least. It isn’t as straightforward as simply cutting the tax rate, but I appreciate that the governor recognizes tax relief is critical to Hawaii’s future.
As to the question of whether the state can afford such tax relief — amounting to about $315 million — doubters have noted there is a recession on the horizon, and it might be impossible to cut taxes without also cutting spending.
Well, the answer to that, of course, is that it’s always a good time to cut taxes and cut spending. But don’t take just my word for it.I put the question to Luis Salaveria, director of the state Department of Budget and Fiscal Services, who was one of the featured experts on the governor’s plan at a recent luncheon sponsored by the Grassroot Institute of Hawaii.
“Simply, yes,” he responded. “In fact, I will go as far as to say that we can’t afford not to do it because really, what we’re sitting on right now, are unhealthy ending balances.”
By “unhealthy ending balances,” Salaveria meant the state’s budget surplus of about $1.9 billion. He said that is money that could be put toward lowering taxes, paying down liabilities or increasing government services.“If you own a business, and you see that you’re just sitting on cash, and all you’re doing is sitting on cash, you’re not putting that money to work. … It is not the intention of [the] government to sit on cash,” he said.
Salaveria’s answer was echoed by Seth Colby, tax researcher and planning officer at the state Department of Taxation, who also was featured at the luncheon.
So again, yes, the state can afford to give residents a tax break right now — and, as Salaveria said, it really can’t afford not to.
Just this month, we learned that as of July 2022, the state population overall declined by 2.1% compared to April 2020.
Our families, friends and neighbors who are leaving have not been doing so in search of a beautiful climate, spectacular scenery, wonderful recreational opportunities, great food or unique multicultural experiences. We have all those things here. It’s why Hawaii is considered to be a paradise on earth.
But factor in the state’s high prices for housing, food and utilities, its lack of job and business opportunities and its high taxes, and it’s no wonder so many folks have been saying “Aloha” to their island homes and communities.
Not only is their departure heartbreaking, but a declining population does not put our state on a trajectory for a healthy future.
Gov. Green’s “Green Affordability Plan” would not be a cure-all for Hawaii’s high costs, but it would help tremendously.
KELI’I AKINA, PH.D., is president and CEO of the Grassroot Institute of Hawaii
