Renewing Fight Against Gov. Abercrombie’s Pension Tax Proposal

Representative Barbara Marumoto
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Representative Barbara Marumoto

BY MICHELE VAN HESSEN – Last legislative session (January-May 2011), Rep. Barbara Marumoto, R-Kahala-Kaimuki, opposed Gov. Neil Abercrombie’s proposal to tax pension income. Today, she pledged that she will continue to fight it next session too despite the dire financial straits of the State.

The Governor proposed a tax on adjusted gross income of over $37,500 that included pensions.


Although it did not pass in the 2011 session, the House strongly supported a pension tax on individual income over $100,000 AGI.

The Senate opposed this tax as did the American Association of Retired Persons (AARP).  Rep. Marumoto said that those in opposition feared that, if the bill passed, the income figure could drop down in future years – to $50,000 or $37,500.

Rep. Marumoto, Rep. Gene Ward and others in the Republican Caucus recently sponsored a briefing on Hawaii’s Debt Crisis.  The news turned out to be much worse than expected.  That’s because many figures are not reported.  So Legislators do not get a true picture of Hawaii’s financial situation.

For instance, the annual audit report (CAFR) lists a liability of almost $1 billion for the State retirement system (ERS) when the actual liability counting “unrelated compensation” is closer to $9 billion.

The state employee health system lists no liabilities, but the Institute for Truth in Accounting estimates the debt at $5.1 billion.  The total unfunded pension liability plus the EUTF cost amount to a staggering $22 billion or $25,000 for each man, woman and child in Hawaii.

In an op-ed in yesterday’s Star-Advertiser, Colbert Matsumoto reported that the ERS unfunded liability is $7.1 billion and the EUTF was underfunded by $14.7 billion in 2009. Whatever the differences, it spells a big headache for Hawaii’s taxpayers.

The Director of Budget & Finance Kalbert Young said that the State hopes to issue bonds for construction projects, but has been unable to do so because the CAFR for 2010 has not yet been issued.  I hope it’s come out since then.

In addition to Hawaii’s debt crisis that burdens each person in the State with $25,000 of debt, the State budget is facing a $1 billion shortfall in 2013.  Despite the massive financial problems, Rep. Marumoto has pledged to fight the pension tax as well as several other taxes that would heavily impact senior citizens.