Teachers taking a stand poster

BY MALIA ZIMMERMAN – Hawaii has among the overall highest tax burdens in the nation, and the Department of Education gets a good chunk of the revenue – nearly 50 percent of the state general fund budget or $2 billion per year in total expenditures from all sources.

However, some public school teachers and parents believe that is not enough. They have organized a campaign to increase teacher salaries with funding from a substantial boost in the state’s primary tax, the General Gross Income Tax.

On Tuesday, February 5, at a legislative hearing, teachers wearing white and red tee shirts that read “Teachers Taking a Stand: You cannot put students first if you put teachers last”, told House Economic Development Committee members they support a plan to raise the General Gross Income Tax by 1 percent with revenue set aside for their pay raises. Teachers maintain they need higher pay, better working conditions and access to new technology and a “penny” increase for education is not too much to invest. House Democrats on the committee agreed with the teachers and passed the measure – Rep. Gene Ward, the only Republican on the committee, was also the only vote in opposition.

But the GE Tax hike proposal is bringing strong criticism from Lowell Kalapa, president of the Tax Foundation of Hawaii, who said any GE Tax increase will raise the cost of living as well as the cost of doing business in the state.

“The General Excise Tax is perhaps the worse tax to increase as far as rates because of its broad-based application. Increases in the cost of living, as well as the cost of doing business in the state will drive more and more businesses out of operation and with them the jobs Hawaii’s people need,” Kalapa said.

The “penny” or 1 percent increase teachers aim to add to the GE tax will equal a 25 percent increase to the rate.

“For teachers who have requested this increase in the tax to fund their salaries, they should acknowledge that they are just making it worse for everyone as the cost of food, shelter, clothing, transportation and every other essential household item will increase making it harder for all families to survive,” Kalapa added.

Kalbert Young, the director of the state Department of Budget & Finance, said the administration is opposed to the plan.

While the tax increase would bring in an additional $400 million to $600 million, depending on the state’s economic activity, it would burden the general population, Young said, adding “we don’t see that imposing that level of tax burden for one purpose.”  The state administration is not backing any proposals to increase the General Excise Tax this year, Young said.

Gov. Neil Abercrombie with State Budget & Finance Director Kalbert Young (photo by Mel Ah Ching Productions)

Hawaii is the only state in the nation with a General Gross Income Tax, which is a tax charged on every transaction of goods and services in the state. On Oahu, the rate is 4.5 percent, while the neighbor island counties have a 4 percent rate.

Hawaii has no sales tax, but the GE Tax adds up to at least a 12 percent sales tax if it was converted, according to Kalapa said, because of a pyramiding effect.

Meanwhile, the state and the teachers’ union, the Hawaii State Teachers Association, continue contract negotiations. Negotiations have broken down on several occasions, with the union describing the process as “long and difficult.”

“It comes down to what type of education system do we want, and are we willing to make the necessary investment?  For the sake of our students we need to be honest on what the State is committed to,” said HSTA President Wil Okabe.

In late January, the state negotiations team told the Hawaii State Teachers Association “that it cannot responsibly accept its latest proposal, which would cost the State $1,050,445,815 over four years, mostly in additional compensation and benefit expenses.”

The HSTA countered that the state “inappropriately” included the cost to repay the 5 percent pay cut that teachers took when the state was facing financial difficulties, for a total of about $180 million, and returning that “is not a raise.”

House Economic Development Committee listens to testimony from parents and teachers about increasing the state’s GE tax to fund teachers’ salaries

“Simply put, teachers surely must be worth more than 2 percent,” Okabe said. “This contract is about fulfilling a promise to restore pay cuts, but also valuing and investing in teachers as being essential to the future of our students.”

Kalapa said teachers do have a legitimate complaint that should get attention from lawmakers and state Board of Education members, “because teachers are being asked to do more and more administrative paperwork and are spending less and less time in the classroom.”

“If nothing else, the funds that are being appropriated to the DOE are failing to reach the classroom because of the top-heavy administrative structure of the department that demands reports and schedules and evaluations to justify the role of administrators,” Kalapa said.

“The frustration of classroom teachers is that they spend too much time filling out forms and reports and not enough time in the actual classroom. Unfortunately, with more than 25% of the general fund budget, the Department of Education still cannot get it right. Until it does, there is little justification for an increase of financial resources let alone an increase in the General Excise Tax,” Kalapa added.

Comments

comments

SHARE
Previous articleGov. Abercrombie Unveils Early Childhood Action Strategy
Next articlePearl City Man Indicted for Child Pornography Offenses
Malia Zimmerman is the editor and co-founder of Hawaii Reporter. She has worked as a consultant and contributor to several dozen media outlets including ABC 20/20, FOX News, MSNBC, the Wall Street Journal, UPI and the Washington Times. Malia has been listed as one of the nation’s top "Web Proficients, Virtuosi, and Masters" and "Hawaii's new media thought leader" by http://www.thewebstersdictionary.com Reach her at Malia@hawaiireporter.com