BY PANOS PREVEDOUROS PHD – I am particularly jittery with the financial maelstrom in Greece, but our own back yard is in a very bad shape.
Take a look at this article: Hawaii State Liabilities Climb by 60 % in Two Years; Expert Calls the News ‘Shocking’
The article above says that Hawaii State Health Fund liability comes to … “a total of $14.0 Billion. (These numbers are for July 1, 2009.)” It is likely much higher right now. The article does not include the liability for government employee pensions (city, state and UH system.)
State Budget & Finance Director Kalbert Young is quoted as follows: “Credit downgrades impact taxpayers because they translate to higher interest rates and borrowing costs. As a result, taxpayers will have to pay more for government or they will have to accept a larger portion of their taxes going towards debt.”
His statement sounds like a single blow, but it’s really a quadruple blow to us:
1. We need to pay more taxes to pay back the debt, so we’ll have less take-home income.
2. More of our taxes must go to pay down the debt and less will go to services and infrastructure maintenance and expansion.
3. The lower bond rating and higher finance charge means that the same infrastructure projects will cost more.
In addition to their direct impact, points 1, 2 and 3 combined mean fewer jobs because we will have less to spend as individuals and families, less to spend on projects, and less to pay for services.
To sum it up, the two major local liabilities combined (health care and pension which are constitutionally promised to government workers) mean that each person in Hawaii now owes more than $50,000. Then there is the federal debt which is approaching 15 Trillion dollars which is 15,000 Billion dollars. Simply divide by 330 million for your own share of $45,500.
But wait! The City and County of Honolulu has signed a Consent Decree with the EPA to fix its sewers and provide Secondary Sewage Treatment. The cost is no less than $4,500 per person on Oahu.
Did you know that today you carry a “mortgage” in the amount of $100,000 (and climbing)? I’m afraid that’s not the end of bad news, because in reality only about one third of the people pay substantial taxes. It is these people that will shoulder the debt burden. A household with two high income earners (say, a combined income of about $150,000) has a “second mortgage” of about $500,000.
Right now in Hawaii, the only uku-billion project that is discretionary and “deletable” is the rail. If rail gets into construction, it will cost well more than seven billion dollars and will open a hole to sink tens of millions of dollars for annual operations. Let’s not forget this: Given how tough things are going to become for us, a dollar spent on rail is a dollar not spent on a number of critical needs.
A few links of stories that may interest you:
Honolulu Heavy Rail Is an Energy Black Hole
Rail Construction Delays Will Take Decades to Counterbalance
Honolulu Vehicle Registrations — Taken for a Ride
Volt, Prius or CRV? Numbers Make the Choice Obvious