For most of us, if we are asked how much money we have (perhaps by a bank or credit union that is considering lending us money), answering the question isn’t terribly difficult. Look up a bank account or two, add a brokerage account if we are fortunate enough to have one, and we go from there.
For our State government, apparently it’s not so easy. Not only do the state accountants need to deal with general funds and the money there, but we have hundreds of special funds—little pockets of money held for different purposes. Sometimes there’s an associated bank account, sometimes not. Sometimes there is a law establishing the special fund, sometimes not (agencies can and do establish funds administratively).
In an attempt to keep track of the money, the Legislature passed a law requiring agencies to report on the special funds they have, and then they sent the State Auditor to check up on the agencies to make sure they did that. According to the Auditor’s reports, some of which we have covered in this space, sometimes agencies comply with the law, sometimes not. And there are no real penalties for disobeying the law—the Auditor can’t put a delinquent director in the imu at the next luau with a pig roast, for example.
Does it matter? Well, consider Auditor’s Report No. 20-08, which concluded: “More than $483 million in excess moneys may be available to be transferred from 57 special and revolving fund accounts to the General Fund without adversely affecting programs.” That report followed another report, No. 20-06, which “identified $2.28 billion within 257 accounts associated with departments’ special and revolving funds that either had no financial activity during the past five fiscal years (FY2015 through FY2019) or had fiscal year ending balances that were significantly more than necessary to support the associated programs, based on the funds’ average outflows over the past three fiscal years.”
There are idle funds holding money. Lots of money. And this is only for the funds that the Auditor knows about.
If our government wants to take extreme measures such as cut back on core services and ask Joe and Jane Taxpayer to dig ever deeper into their pockets, there better not be millions or billions of dollars just laying around.
So, what we need to do is something a little more radical to make sure we know where the money is.
Let’s pass something that says that ALL funds—general, special, or revolving, statutory, administrative, or anything else—are maintained by the Department of Accounting and General Services (DAGS), the folks who are supposed to cut all or most of the State’s checks now. Agencies can spend the funds to the extent they can do so now, but DAGS gets the bank statements. (Of course, if the Legislature doesn’t like the extent to which a certain agency is spending money, it can change the law.)
If an agency tries to pull the wool over DAGS’ eyes, the responsible party can be punished for theft. People can go to the hoosegow for that. By the way, our law (HRS sec. 708-830) already defines theft to include “failure to make required disposition of funds.”
Once we have a single agency responsible for keeping track of all the State’s money and measures in place to ensure that other agencies aren’t stashing cash in a closet somewhere, we should be able to figure out how much money we have. Then we, as the public, can have more confidence that our government can figure out its financial condition and tell us in the public the truth about it.
I have some surprising information to pass along. There is a phantom service attached to your credit card you’re not supposed to know about. Here’s the deal – if your credit card ends up on the Dark Web and gets used by a cyber criminal, after you notice the transactions and cancel the card, they can still keep using it! Crazy, right? Here’s how.
Recently this happened to me on one of our business accounts, a Chase Visa card. I first noticed some suspicious, low-value transactions of $5 or less coming from the Google Play store, then later from Amazon. This strategy is called “tapping” where the thief tries to use the card a few times to make sure it works before the big score.
Luckily I had specifically requested that all transactions over $1,000 require phone authorization (I recommend you do the same) and it was a good thing too. A few days after the “taps” I received a call from Chase asking if we had authorized over $3,000 in charges to a convenience store in South Africa! Wow. That’s when I cancelled the card, a new one came in and I thought “disaster averted” – right? Wrong.
Only a few weeks later the “tapping” started again. How was this possible? Chase has a phantom service automatically enabled on all of their cards called “Digital Wallet.” If the card number is entered into a popular online service such as Google Play, Apple’s App Store, Amazon, Microsoft and Xbox Live and later the card number is changed, Chase will automatically give them the new card number so that they can keep charging it. Furthermore, Chase will allow charges to be made on the old, cancelled card number for up to 90 days after it has been shut down. The account rep mentioned that this practice is not unique to Chase and is followed by most major card companies.
The Takeaway
If you notice suspicious charges showing up on your credit card, before requesting a new one, be sure to ask the rep about this phantom service. The links below can help you investigate, but there may be a specific buried service with your bank, like I discovered with Chase.
Here in the City and County of Honolulu, lots of people are out of work, especially in the hospitality industry. At some point the economy will reopen, and people will start occupying hotels again. Then, according to a proposal before the Honolulu City Council, we force the hotels to rehire people to their old jobs. Or comparable ones.
The proposal is called Bill 80. One of its first provisions says, “A hotel employer shall recall to active employment the same number of employees in substantially the same classifications as the hotel employer’s active workforce on March 1, 2020, adjusted by the ratio the occupancy of the hotel bears to 100 percent. A hotel employer must clean and sanitize every occupied guest room every day and must employ a number of housekeeping employees to ensure that this standard is met.”
The bill then mandates that an employer offer its laid-off employees all job positions which become available for which the laid-off employees are qualified. Qualified means that the employee held the same or similar position at the enterprise at the time the employee was laid off, or the employee is or can be qualified for the position with the same training that would be provided to a new employee.
The positions the employer would need to offer would need to be in the same classification or job title with substantially the same employment site (with some exceptions), duties, compensation, benefits, and working conditions as applied to the laid-off employee before March 21, 2020.
The provisions in the ordinance could be enforced by private lawsuit, and if the employee wins the employer would need to pay the employee’s attorney’s fees.
So far, the hotel workers’ unions are pushing the bill and are getting individual employees (or former employees) to testify in favor of it. The hotels are screaming bloody murder. The bill has been cleared by one Council committee, paving the way for it to receive a public hearing before the Council.
One of the fundamental questions this bill raises is, how far does government power extend? We as a country brag about the free enterprise system in our economy. But is it really free when government can dictate who to hire and how much to pay?
We raised concerns about minimum wage legislation which is, when you look at its structure, a prohibition upon hiring unless the employer can pay a certain amount. The upshot is that employers are given a disincentive to hire. The same can be said here. Would hotels really want to reopen if the government shoves hiring decisions down their throats?
There are also sovereignty issues. Our federal government has a National Labor Relations Act, and the Supreme Court held in San Diego Building Trades Council v. Garmon, 359 U.S. 236 (1959), and many cases since, that the Act displaced state and local power to regulate broad aspects of labor relations. We also have a State Department of Labor and Industrial Relations, and various statutes that regulate the balance between management and labor. If those statutes are to have meaning, counties arguably should not have the power to upset that balance.
It seems to us that rehiring and recall decisions should not be made by a government less acquainted with the economic damage that has befallen employers as well as employees. The weighing of woes, the back-and-forth, and the agreements can and should be made at the bargaining table.
And while we’re at it, perhaps we should be re-examining other employer and employee mandates, including payroll taxes, to see if they really are necessary or are at an appropriate level, especially when the normal management-labor dynamic has been scrambled by the pandemic.
Here at the Tax Foundation, we watch our state government, and we howl a lot. Often, we don’t know if our message is being heard, or if it’s being taken seriously.
A few weeks ago, we complained that multi-million dollar projects undertaken by state and local government could sink into “standardless spending” because the law controlling the State’s procurement process, Hawaii Revised Statutes chapter 103D, had been ripped out and thrown to the side according to the Governor’s Thirteenth Supplementary Proclamation that was signed on September 23 (the wholesale suspension of the procurement code can be traced back to the Sixth Supplementary Proclamation that came out on April 25).
Hawaii Revised Statutes chapter 103F, which governs procurements for health and human services, was similarly suspended.
In mid-October, I received an e-mail from an executive at a major Honolulu public relations firm. The firm was assisting with one of the major multi-million-dollar government projects. “The state’s lifting of procurement is solely for emergencies related to COVID-19 and the [government project] is operating fully under the procurement code,” it said. The executive added that the Department of Accounting and General Services, which issues the State’s checks, was also following the rules and was not using the COVID-19 emergency to sidestep them.
“The problem,” I replied, “is that it’s not generally known whether and to what extent agencies … are using the procurement process notwithstanding that the Governor’s proclamation states that 103D is suspended in full. We hope that the agencies are not applying the suspension arbitrarily or based on vague criteria like ‘we think it’s related to COVID-19.’”
Then I find out that two days before I received the email, the Governor had issued a Fourteenth Supplementary Proclamation, in which the language suspending the Procurement Code was radically changed:
Chapter 103D, HRS, Hawaii public procurement code, [is suspended] only to the limited extent necessary to procure goods and services in direct response to COVID-19; to procure goods and services using funding that must be expended on or before December 31, 2020; and to procure goods and services not in direct response to COVID-19 but for which certain procurement requirements cannot reasonably be met through the regular procurement process due to the emergency.
Similar language was used to walk back the suspension of chapter 103F from a suspension in full to a suspension to the limited extent necessary to deal with the emergency.
Apparently, someone had been listening to our howl in the woods and had done something about it.
It may be that the Governor’s intent all along was to suspend the procurement code only where the pandemic emergency required quick action, which seems to be shown by the wording in the initial emergency proclamation that came out on March 5. Things may have gotten lost in translation by the time we got to the Sixth Supplementary Proclamation.
But legal effect comes from the words on the current document, not from the 15 or 16 documents that came before. I am still chalking this one up as a win for the howl in the woods.
Let’s first start by stating the obvious. We’re in trouble.
According to the latest forecasts put out by our Council on Revenues, we have a state budget hole of more than 2 billion dollars.
This has to be made up somehow.
The Legislative Auditor’s staff was busy at work trying to find idle cash parked in obscure special funds. They found some, but raiding it will be a one-time fix.
The Governor is talking about furloughing employees for 2 days a month for four years, beginning in December, to shave roughly 10% off state payroll costs. He has also asked the executive departments to come up with another 20% in cost reductions.
Not much has been said about “revenue enhancement,” things like increasing taxes, suspending exemptions, lopping off tax credits. At least not yet. We fully expect the Legislature, when it opens next year, to be flooded with revenue enhancement proposals. The question then becomes which, if any, will have enough traction to go all the way through the legislative process.
One very important step that takes place before the Legislature convenes is, of course, the general election. That’s when we find out who will be in the Legislature.
Once we figure that out, we then need to remember a few things if we’re going to think about how to balance the state budget.
About half of the operational spending from state government is considered fixed costs. This includes interest payments on money that the State has borrowed in the past, and payments to support the retirement and health benefits that are due State workers who have vested in the benefits, whether or not they have left the State. Governor Ige skipped this year’s payment to the retirement system and health fund, but it’s not something we recommend doing, and there is no way it can be done year after year. We already owe our creditors and our workers, and the debts need to be paid.
A long time ago, soon after the new hotel room tax became law in 1986, state government committed to sharing some of its wealth with the counties. The amount of this sharing has been the subject of fierce and ongoing debates over the last decade or so, but there always has been sharing. Until May, that is, when the Governor by proclamation shut down the law that required our hotel room tax to be shared with the counties. That move perhaps eased the problem at the State level but is now causing pain at the county level.
If and when lawmakers look to taxes as the means of patching the leak, they are going to find that only two tax types bring in enough money to make an appreciable dent in the budget: the general excise tax and the individual income tax. Most of you probably already knew that the general excise tax, which is imposed on all business in the State, brings in lots of money, primarily because it is imposed on almost everything that moves and may be imposed many times in the economic chain that leads up to the retail sale of a product or service. What you might not have known is how much the individual income tax rakes in. In fiscal 2019-20, for example, it brought in $2.3 billion compared with $3.4 billion in GET collections. Of that, $2.1 billion came from withholding tax on wages.
We’re in trouble, and the way out of this mess is a complicated one. How will the pain be shared? If you have an opinion on the matter, you can go to the ballot box, you can speak with your elected officials, and you can encourage others to do the same. Will you be one of the people who make things happen? Will you simply watch what happens? Or will you be part of the mass of people who have no idea what is happening?
Imagine that you wake up one day to an awful toothache, and you march into your dentist’s office.
But then your dentist says, “Well, you tell me your tooth hurts, but can you prove that you have a cavity?”
“Um … no,” you reply.
“Well, then, get out! You’ve just wasted my time. I’ll be sure to send today’s bill to you personally, not your dental insurer, for this outrage.”
Similar logic (if you could even call it logic) is being used at our Office of Hawaiian Affairs (OHA), and that argument has become an issue in the upcoming election for OHA Trustees.
In September 2018, the OHA Board of Trustees, at the urging of At-Large Trustee Keli’i Akina, engaged a national accounting firm to conduct a contract and disbursement review, looking for indicators of fraud, waste, and abuse. The accounting firm’s report was issued on December 4, 2019, at a cost of $500,000.
The report and a summary of the report put together by Trustee Akina’s staff highlighted a number of “red flags,” or potential problems. Here are some examples.
Various places in the report, including at pages 70-72, discuss a $2.6 million grant made to Akamai Foundation to conduct a Native Hawaiian self-governance election, including independently monitoring the election and funding self-governance activities after the election was concluded. The money was supposed to be paid out in five tranches. But Akamai Foundation asked that all funds be paid out at once, before the nonprofit incurred a large portion of the costs, and OHA did so (in violation of its internal policies). The election was cancelled, leaving the auditors wondering whether some of the funds disbursed were really needed or actually spent for the requested purposes.
Page 121 of the report discusses a contract with Mid-Continent Research for Education and Learning. OHA paid $349,527 for consulting services. Neither the procurement documents nor any deliverables could be found. But of course the money went out the door.
On the day the report was issued, a statement of OHA’s Chair of the Board Colette Machado and Chair of the Committee on Resource Management Dan Ahuna said, “While this report observed indicators of potential fraud, waste or abuse, it did not identify actual instances of fraud, waste or abuse.”
Thus, on a recent PBS Insights candidates’ forum, Keoni Souza, who is running for OHA Trustee-At-Large against Akina, said, “Do I think there was a waste of $500,000? Absolutely.” OHA Chair Machado then doubled down by saying, “Keli’i, you tried to find the smoking gun. And there was none. It’s on you now.”
Has your tooth stopped hurting yet?
Just to be clear: CliftonLarsenAllen, the accounting firm issuing the report, is not the police, is not the FBI, is not law enforcement. An accounting firm can’t arrest people, throw them in jail, or otherwise find that they have committed illegal activity. We have previously urged OHA to turn the report over to law enforcement. Apparently, that hasn’t happened because, well, there is no smoking gun so why trouble law enforcement?
In the beginning of the aftermath of Twitter and Facebook’s censoring of the story about Hunter Biden and the provable collusion between then-Vice President Joe Biden and a Ukrainian oil executive – all facilitated by Hunter, the issue of censorship is front and center.
Twitter and Facebook hide behind the shields afforded them both by the First Amendment right to free speech on the one hand and the protection from litigation granted to social media outlets under Section 230 of the Communications Decency Act on the other.
These controlling and arrogantly run outlets are running rough shod over the dissemination of information free from consequence or accountability.
Several Senators have called the CEOs of Twitter, Facebook, and Google on the carpet, but I put it to you – and to them – they should include Amazon…and here’s why.
Black author and documentarian Shelby Steele has produced a raw but necessary documentary titled, “What Killed Michael Brown,” examining the charge of systemic racism in the United States. It centers on the killing of Michael Brown in Ferguson, Missouri in 2014, two years before President Trump took office.
But Steele’s submission to have his documentary offered on Amazon, one of the biggest home entertainment outlets in the world, was denied. Amazon said Steele’s offering, “doesn’t meet Prime Video’s content quality expectations and is not eligible for publishing at this time. We will not be accepting resubmission of this title and this decision may not be appealed.”
I am embedding the trailer here for your examination.
Whether you agree with Steele’s premise or his conclusions is beside the point being made here.
If we, as a nation, continue to be socially engineered by social media and media companies that employ censorship, propaganda by omission, and the obstruction of a free exchange of ideas, then we are not only doomed, freedom and liberty are lost to the ages.
We stand at a moment when Orwell’s 1984 is not only upon us, it has been hybrid with The Hunger Games and we are living it: the redefinition of words and phrases, the institution of classes, justice applied by demographic, rigged elections, and a sensationalist, corrupt media.
If we are to have a second revolution or a second civil war in the United States it needs to be on the battlefield of ideas and the fight must be for freedom of thought, speech, ideas and expression.
To lose this battle it to lose the Republic, and that means to lose it all.
Author’s Note:I returned to Hawaii in June 1998 after two and a half years with UNICEF – six months in Fiji and two years in Cambodia. The East-West Center, located on the UH campus in Honolulu, had graciously provided me with an office to edit 20 years of personal journal entries while contemplating my next adventure. My landlords also welcomed me back to a quiet, refurbished apartment – with spectacular views up to steep mountains and deep valleys, misty with passing showers and rainbows, and down to the sea, sunsets and the lights of Waikiki – indulging in the artist’s lifestyle in the beautiful Hawaiian Islands.
Hawaii was the perfect refuge. But, even ‘paradise’ can become a bit ordinary, and the time had come for a change of scenery. So, once again, the ‘Land of Aloha’ was the springboard to Asia as I ventured off into the exotic hideaways and popular tourist havens of the Far East with none other than Gary – my old buddy from our Western Samoa days.
He’s a former semi-pro footballer, body-builder – not totally gone to fat, but complete with gold chain and perpetual grin, chuckle and lust for good times, especially with ‘the babes and a few beers.’ What a trip! It was quite exhausting trying to keep up the pace with Gary – too damn much beer, a steady stream of women, and no sleep!
Map of Southeast Asia, Wikipedia Commons
Gary had left a successful career as an educator to travel overseas and experience different cultures. He decided he would “rather have a passport full of stamps than a house full of stuff and a big bank account.” Having traveled widely and lived and worked in several developing countries, Gary understands the profound impact total immersion in another culture can have on one’s world view and outlook on life.
As the Senior Field Officer with the Western Samoa Red Cross Society, Gary poured his heart into his work, which included organizing events and raising funds tirelessly for a range of international youth health and development programs. He credits his overseas experiences for having helped him develop greater empathy towards other nationalities, particularly developing countries, which made his personal problems seem tiny by comparison. Gary has also clearly had a thirst for adventure, and claims that “if I didn’t have some crazy travel stories to tell, then I did something wrong.” So, here are a few of those ‘wild and crazy’ stories.
Our night flight over the Gulf of Siam was lit up with the lights of fishing boats positioned in patterns – as if we were flying ‘over’ the stars. It was an eerie but beautiful sight as these constellation-like patterns dotting the sea below merged with the horizon and the night sky filled with the ‘real’ stars and constellations. In Bangkok, we joined a couple of my Thai friends on several occasions for some nice dinners out with plenty of good local food and drink. Before heading home each night, we would drop Gary off at Patpong Road – Bangkok’s infamous ‘Entertainment District’ – where he continued the festivities well into the night.
Street vendor selling dried squid, Thailand
From Bangkok, we headed to Bali, Indonesia – and to Kuta Beach, a popular tourist area, where we enjoyed tons of delicious and incredibly cheap local food and drink. We soaked up the fresh air, sun and surf, and joined the lively parade of nocturnal revelers that filled the streets, restaurants, bars and cafes at night. The delicious grilled tuna steaks, avocado shakes and cute local waitresses were not to be forgotten.
I crashed early each evening and let Gary carry on into the night, taking full advantage of the bar scene and vibrant night life, beside himself with pure pleasure. Unfortunately, he claimed to be unable to remember a few nights – too drunk. However, he did recall waking up at least once with a broken condom – man! Anyway, I did my best reminding him to be careful.
Jim with a group of Balinese Dancers, Bali Island, Indonesia
The weather was blazing hot in Bali, and also at the Gili Islands – a group of three tiny islands located off the coast of the nearby island of Lombok. It was the height of the rainy season and the humidity was stifling. But the boat trip to Lombok Island and then by bus through the dense jungle, past traditional villages and finally aboard a small, local boat to the Gilis was thrilling. Automobiles and motorized traffic are prohibited on the Gili Islands, so the preferred method of transportation is by foot and bicycle or the horse-drawn carriage called a cidomo.
Each of the three idyllic islands has its own unique character. The two smaller islands offer peaceful tropical island retreats. But of course, and at Gary’s bidding, we opted for the larger and more heavily touristed “Party Island” – and that it was! Beer flowing, music thumping, mushrooms – people tripping, partying all night. This would have been my last choice – so it was a different experience for me. But we had fun, and Gary was stoked!
Gary and Jim staying with Marie (center front) and some friends at her villa in Saigon
From Bali, we flew via Bangkok to Ho Chi Minh City (which is still referred to by the locals as Saigon) and were hosted by Marie, my Viet Kieu (French Vietnamese) friend at her beautiful French villa. Gary and Marie hit it off immediately talking import-export business, and Marie proved to be an excellent host and tour guide. She took us into the countryside and through the Mekong Delta region, along hidden canals through Cholon District (Saigon’s Chinatown) for nighttime shopping – including visits to her businesses, and to local markets, war museums and to the immense network of underground tunnels at Cu Chi. We had a great time!
‘Comrade’ Gary (and ‘Uncle Ho’ pictured above) at the Cu Chi Tunnels, Saigon, Vietnam
On to Hanoi, we headed for the congested madhouse of the city’s “Old Quarter” alive with beeping horns along the narrow, winding streets choked with a chaotic tangle of motorbikes and bicycles, and the ever-present pestering touts. Gary was nearly robbed and became totally lost that first night. I was enjoying a second bowl of noodles (Pho) when we became separated. But Gary managed to survive, especially with a Big Mac or pizza fix, whenever possible.
Best of all, it was really neat to experience it all through Gary’s eyes – like seeing everything for the first time. Otherwise, I would have been bored with just the familiar tourist stuff to do. Finally, we concluded our whirlwind three-week Asian tour with a trip to beautiful Ha Long Bay, a UNESCO World Heritage Site, which features thousands of steep, limestone karsts and isles in various sizes and shapes rising dramatically from the dark, green water.
Jim at Ha Long Bay, Vietnam
Travelling by bus from Hanoi through the countryside to the coast, we enjoyed good fresh air, amazing scenery and later, a boat ride through magnificent Ha Long Bay. So, after a dozen or so years of talking about it, we had finally managed our adventure through Southeast Asia! These good times stoked the adventure fires for more, which would lead to our South Asian travels in India, several years later. (Stay tuned for those stories, coming soon!).
Soon after Gary left Hanoi for the States, I met Thanh Huyen, a local newspaper reporter who wanted to practice her English. We shared the next several days and delightful evenings together in Hanoi’s historic city center, sipping chilled avocado smoothies and eating Pho by the shores of Hoan Kiem Lake – brilliantly lit up with lamp lights that shone across the water.
Jim and Thanh Huyen in Hanoi, Vietnam
Despite my nearly complete exhaustion following the full blast travels with Gary, I tracked down some of my aid worker friends in Hanoi who soon talked me into undertaking a more serious job hunt there. Indeed, upon walking into the UNAIDS Vietnam office, I was offered a short contract to do a rapid assessment of HIV/AIDS counseling and social support needs, which took me throughout the country from Hanoi in the north to Saigon in the south.
As I was finishing the intensive UNAIDS assignment, I interviewed one last key informant before leaving Saigon for Hanoi. She and her three Australian colleagues had just been sacked from an Australian Agency for International Development (AusAID) women and child health project based in Saigon, and the Australian government was under pressure to put a new team of international consultants in place. So, despite not being Australian (they must have been desperate!), I was offered a position on the Project – and it just felt so right!
Ngoc Son Temple, Hoan Kiem Lake, Hanoi, Vietnam
Back in Hawaii, I was also considering a position with the Hawaii State Health Department, but eventually opted to make the break for Vietnam. A familiar pattern of transition was once again playing itself out – each time, setting me free to take a new direction. This time, a whirlwind trip around Southeast Asia had set the scene for the next exciting chapter to open!
Stay tuned for more stories, coming soon!
You can read more about Jim’s backstory, hereandhere.
Recently, the University of Hawaii announced that it was going to take steps to combat the anticipated budget shortfall caused by our economic shutdown and the consequent drop in tax revenues.
Effective November 1, it will be paying its executive and managerial employees a lot less. Most of these employees, including chancellors, deans and some directors, will see a reduction of 9.23%. If after that reduction the employee is making more than $200,000, the portion over $200,000 will be further reduced by 11%.
University of Hawaii President David Lassner is taking a 20% hit to his own salary, which is now $395,004.
Those reductions are forecasted to save $2.2 million in fiscal year 2020-2021, and $3.4 million per full fiscal year that the reductions remain in effect.
That is an example of leadership in the face of the COVID-19 crisis we all face.
In the meantime, state lawmakers and the Governor are proposing two-days-a-month furloughs for all state workers (except perhaps for first responders), which would if implemented save the State 10% of payroll costs. The furloughs are proposed to last for four years, which is how long it is forecasted to take before state government revenues reach pre-pandemic levels.
As expected, the government worker unions are not expected to take this lying down. “Your negotiations team met last night to discuss these developments and stands ready to advocate strongly for you at the bargaining table in the weeks ahead,” one of them told its members.
In a month, the votes of the people of Hawaii will be counted and we will have a freshly elected set of people to represent us both in our state capitol and in Washington, DC. These folks will be considering the furloughs and “other options” when the 2021 legislative session starts up in January.
“Other options” will naturally include taxes, or “revenue enhancement” as some politicians would say.
One option that has been actively talked about is suspension of general excise tax exemptions, similar to the two-year program that was in effect between the middle of 2011 and the middle of 2013. The Legislative Auditor’s office saw fit to price out those same exemptions, using 2018 data, in its Report No. 20-05. That way, lawmakers can picture how much extra money may come in if they decide to suspend the exemptions again.
There are a number of takeaways for you as a voter.
1. Vote.
2. Vote for people who you think will represent your interest as a taxpayer in the bloody battles – um, I mean deep policy discussions – that are sure to arise. The public worker unions will have representatives. You as a taxpayer should have one too.
3. Vote for people who you think will exercise sound and independent judgment when they are being called to take the votes that come out of those deep policy discussions.
4. Vote for people who you think will exercise true leadership to get us out of the economic mess we are in. Such as that which has been shown at the University of Hawaii.
Where’s All the Money?
For most of us, if we are asked how much money we have (perhaps by a bank or credit union that is considering lending us money), answering the question isn’t terribly difficult. Look up a bank account or two, add a brokerage account if we are fortunate enough to have one, and we go from there.
For our State government, apparently it’s not so easy. Not only do the state accountants need to deal with general funds and the money there, but we have hundreds of special funds—little pockets of money held for different purposes. Sometimes there’s an associated bank account, sometimes not. Sometimes there is a law establishing the special fund, sometimes not (agencies can and do establish funds administratively).
In an attempt to keep track of the money, the Legislature passed a law requiring agencies to report on the special funds they have, and then they sent the State Auditor to check up on the agencies to make sure they did that. According to the Auditor’s reports, some of which we have covered in this space, sometimes agencies comply with the law, sometimes not. And there are no real penalties for disobeying the law—the Auditor can’t put a delinquent director in the imu at the next luau with a pig roast, for example.
Does it matter? Well, consider Auditor’s Report No. 20-08, which concluded: “More than $483 million in excess moneys may be available to be transferred from 57 special and revolving fund accounts to the General Fund without adversely affecting programs.” That report followed another report, No. 20-06, which “identified $2.28 billion within 257 accounts associated with departments’ special and revolving funds that either had no financial activity during the past five fiscal years (FY2015 through FY2019) or had fiscal year ending balances that were significantly more than necessary to support the associated programs, based on the funds’ average outflows over the past three fiscal years.”
There are idle funds holding money. Lots of money. And this is only for the funds that the Auditor knows about.
If our government wants to take extreme measures such as cut back on core services and ask Joe and Jane Taxpayer to dig ever deeper into their pockets, there better not be millions or billions of dollars just laying around.
So, what we need to do is something a little more radical to make sure we know where the money is.
Let’s pass something that says that ALL funds—general, special, or revolving, statutory, administrative, or anything else—are maintained by the Department of Accounting and General Services (DAGS), the folks who are supposed to cut all or most of the State’s checks now. Agencies can spend the funds to the extent they can do so now, but DAGS gets the bank statements. (Of course, if the Legislature doesn’t like the extent to which a certain agency is spending money, it can change the law.)
If an agency tries to pull the wool over DAGS’ eyes, the responsible party can be punished for theft. People can go to the hoosegow for that. By the way, our law (HRS sec. 708-830) already defines theft to include “failure to make required disposition of funds.”
Once we have a single agency responsible for keeping track of all the State’s money and measures in place to ensure that other agencies aren’t stashing cash in a closet somewhere, we should be able to figure out how much money we have. Then we, as the public, can have more confidence that our government can figure out its financial condition and tell us in the public the truth about it.