Tax cut was only first step toward healthier Hawaii economy

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By Keli‘i Akina

As any doctor will tell you, one lifestyle change isn’t necessarily enough to improve your overall health. 

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So it is with cutting taxation and spending.

Gov. Josh Green — who is also a doctor, by the way — put Hawaii onto the path of a healthier fiscal lifestyle earlier this year when he proposed implementing the largest personal income tax cut in state history. 

The plan was wisely approved by every single member of the Legislature, and now is expected to save Hawaiii taxpayers upward of $7 billion by 2031. This will ease our high cost of living and possibly stem the tide of residents who have been leaving every year because they no longer can afford to live here.

But we have to do more. If we really want to improve our state’s financial health and ensure that our islands will become a place where we can all thrive and prosper, we need to better control state spending. 

If the state continues to spend more and more each year — outpacing, even, the growth of Hawaii’s private sector — the positive impacts of the tax cut will get whittled away. 

Remember, the state budget has grown by nearly $1 billion for each of the last three years, which suggests there is definitely room to rein in government spending without reducing essential services.

I understand there are many demands on the state treasury, including continuing to help Lahaina recover from the wildfires of August 2023. 

In addition, revenues of the state are always uncertain. As we all know, just one natural disaster or other terrible event can throw everything into a tailspin.

Fortunately, there are many ways we could tackle the state’s budgetary excess without looking at extreme cuts. There are, for example, many vacant state government jobs that are unlikely to ever be filled that could be eliminated. 

We also could consider a reasonable across-the-board budget cut and reductions to grant-in-aid funding, as some lawmakers suggested in the wake of the Lahaina wildfires. 

Or our lawmakers could cut funding to the controversial Hawaii Tourism Authority, as I’ve suggested before, which would save taxpayers more than $60 million a year.

The bottom line is the 2024 personal income tax cut is just one step toward a healthier fiscal lifestyle for Hawaii. 

Now, rather than compromise that admirable display of self-control, our lawmakers should also exercise spending restraint to further improve the economic health of our state.

I’d say it’s just what the doctor ordered.
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Keli‘i Akina is president and CEO of the Grassroot Institute of Hawaii.

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