Sunny climates and beautiful beaches aside, Hawaii is starting to experience some of California's growing problems. The national spotlight on California's deepening economic crisis continues to shine as its poverty rate rises and its finances slip down the drain. The sad thing is, much of California's problems are self-inflicted, and Hawaii's policymakers are turning to the same ill-wrought solutions that only exacerbate the situation.
California's unemployment rate is rising to over 12 percent, while the poverty rate in Los Angeles is a sobering 20 percent, or one in five people. Foreclosures and repossessions have rendered countless neighborhoods empty ghost towns. Once a shining beacon that attracted millions of immigrants around the world, California is now experiencing such a high level of outward migration that the state could lose a congressman by next year to adjust to its shrinking population.
It's no wonder, as California's business costs are 20 percent more than the national average, and its income and sales taxes are among the highest in the country. The state depends on the rich- those who provide investment and employment- for its income, forcing the top 1 percent of earners to shell out nearly half of its total income tax revenues. One can only expect people to leave in droves.
Hawaii's deficit is projected at $1.1 billion over the next two years. With a constitutional obligation to maintain a balanced budget, state lawmakers scrambled and decided to add a slew of taxes onto an already struggling population. (Hawaii's unemployment rate, currently over 7 percent, is at a 31-year high).
Is there any hope in Hawaii's future? California provides a glimpse of what Hawaii may look like in a few years, as the state government chose to follow in the Golden State's less than golden footsteps. Raising taxes on higher income earners? Check. Hiking conveyance and tobacco taxes? Check. Unionized state workers refusing pay cuts? Check.
Hawaii's problems are also largely self-inflicted, and its residents are taking the hit. Statewide participation in the food stamp program has grown by over 23,000 residents so that one in eleven people are now receiving food stamps.
With a short-sighted legislature foolish enough to pass tax increases as a solution to a gaping state deficit, Hawaii will only see higher enrollment in food stamp and other assistance programs. Hawaii deserves better, if only the government would give economic freedom and liberty a chance.
Pearl Hahn is a policy analyst for the Grassroot Institute of Hawaii
