If Earmarking Proposal is Adopted, Hawaii Tax Increase is Guaranteed

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Nearly 20 years ago, the Hawaii State Legislature, flush with cash as a result of a booming economy, began a practice that has plagued integrity of state finances.

Not only has it jeopardized the fiscal integrity of the state, but it has also insured that taxpayers continue to bear a heavy tax burden in Hawaii.


Embarrassed by riches that were accumulating in the state general fund – to the point where the surplus topped $650 million – lawmakers searched for ways to hide this fact from taxpayers.

After all, lawmakers reasoned, it is much more difficult to raise taxes than it is to lower them. So why should they give any of that surplus back?

But the media, as well as legislative observers, kept on raising the issue of why the Hawaii State Legislature had to hang on to all of that surplus while taxes continued at rates that had not been changed since the mid 1960s.

The ingenious policymakers looked for ways to hide their embarrassment of riches and came up with the strategy to earmark those surplus dollars into special funds.

Lawmakers figured that once the money was