And We Aren't Moving People Around Because?
By Tom Yamachika, President On March 5, our Governor issued a Proclamation declaring our current state of emergency. The proclamation suspends several laws, including chapters 89 and 89C, HRS, relating to collective bargaining and public officers and employees excluded from collective bargaining, to the extent necessary to, among other things, “provide for the interchange of personnel, by detail, transfer, or otherwise, between agencies or departments of the State.” This proclamation is signed by both the Governor and the Attorney General. On April 3, the Director of the Department of Human Resources Development told a Special Senate Committee that the Departments of Defense, Health, and Agriculture have said they need help. This is in addition to the DLIR and DBEDT, which support labor and business. He also says that the Governor hasn’t decided how to implement the suspension of the collective bargaining laws. (Earlier that same week, he was quoted as saying he was unaware that the collective bargaining laws were suspended at all.) He says that the call has gone out for volunteers to lend a hand at other agencies. Also, on April 3, the Governor’s chief of staff told the same committee that the Attorney General is researching whether it’s possible to redeploy workers who have been told to stay home with pay. Wait a minute. We have to pay people not to work when other departments urgently need help? From the very first proclamation, the Governor’s Office and the Attorney General contemplated this very issue, namely how to “provide for the interchange of personnel, by detail, transfer, or otherwise, between agencies or departments of the State.” That proclamation suspended the collective bargaining laws to the extent they were in the way. So, we had some brain power focused on how to move people between departments – an issue they were anticipating – and now they aren’t doing it but instead are paying people to stay home? If, as I suspect, the plan was to move bodies around during the emergency, but the plan was walked back after someone expressed some doubt, I think there needs to be more decisive action. It brings back memories of Mauna Kea – which we wrote about a few weeks ago. Why do we expect the problem to be solved, or partially solved, by volunteers? If you were paid the same amount to (1) stay home and not work, or (2) stay home and work and/or come in to work, which would you do? Certainly, there are some with a compassionate heart and an altruistic spirit that would choose #2. However, I suspect that they would be in the minority. We need to lay down the law. State workers whose talents are needed in another department need to go there and not make a fuss. Those who think they are being treated unfairly can sort this out when we aren’t in a state of emergency. If the perceived problem is a state law that requires us taxpayers to pay for no work, let’s suspend that law, because it is impeding efforts to deal with the emergency. State workers who don’t want to work and don’t qualify for special paid sick leave under the new federal laws can use their vacation time – most have plenty of it – for that purpose. In other words, those who want a vacation use vacation time. Those who want to help our State get through this emergency should do so and be paid for it. They will be much better off than thousands of us in the private sector who either can’t work (a server in a restaurant, for example) or can’t get paid (such as the owner of a small business that has been ordered closed). But we just can’t afford to pay people for nothing, especially now.
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Worst Return on Investment. Again.
By Tom Yamachika, President Recently, the online site WalletHub published a 50-state study called “2020’s States with the Best & Worst Taxpayer ROI.” ROI, of course, is the acronym for “Return on Investment.” The site derived its ranking by comparing two variables: total taxes paid per capita, and overall government services. Total taxes paid per capita was a fairly straightforward calculation. The authors divided the total tax take by the state’s population aged 18 and older. In that statistic, Hawaii ranked 49th out of 50 states. The 46th through 48th states were Minnesota, Vermont, and Connecticut; the one state to beat us was North Dakota. All of those states, however, ranked highly in overall government services, and avoided a dreadful ROI score. To get a score for overall government services, the ranking process was more involved. Researchers compared 30 different metrics in such areas as Education (including metrics for the quality of the school system and the public high school graduation rate), Health (including metrics for quality of public hospitals and average life expectancy at birth), Safety (with metrics for crime rates and fatalities per vehicle mile), Economy (with metrics for median annual household income and poverty rate), and Infrastructure & Pollution (with metrics for quality of roads and bridges and water quality). Hawaii ranked 35th in Education, 13th in Safety, 22nd in Economy, and 11th in Infrastructure & Pollution, giving it an overall rank of 35th in government services. It turns out that with the bottom-scraping score in tax burden and middle-of-the road ranking in overall government services, Hawaii ranked 50th (out of 50) overall. Its rank was the same as last year. California was 49th in ROI this year, ranking 45th in tax burden and 34th in services. North Dakota, the only state to beat us in tax burden, ranked 2nd in services but still finished with a ROI ranking of 48. At the other end of the spectrum were New Hampshire, South Dakota, and Florida, ranking 1st through 3rd in ROI. One of the WalletHub experts, a professor of accounting at Monmouth University in New Jersey, had some interesting observations. When asked, “What’s the most common way local governments waste taxpayer dollars?” he said, “Corruption and favoritism with state funded projects along with allowing labor unions to negotiate unaffordable compensation and benefits for their members [are] attracting votes from those who benefit while discouraging taxpayers from staying in high tax states.” He also observed, “States such as Wisconsin have faced reality and eliminated benefits including inflation proof retirement plans and lifetime medical insurance to save their states from financial disaster like New York, New Jersey and California face.” Another expert, a vice president of a college in Missouri, wrote, “All government entities need to spend money as though it is their own. It often seems as though government employees are not critically reviewing expenditures as to whether they are necessary or whether the expenditure should be done with a different vendor that might be less expensive and more effective.” Those of you who know about the politics in our state, do you think that any of these comments sound familiar? We citizens who are dragged around by the scruff of our necks and squeezed until our pockets are emptied would do well to make sure we are getting value for the government we have. If we don’t speak up, we’ll get the government we have and not the government we want. Lead. Grant Relief. Don't Take More. Please.
By Tom Yamachika, President We are in trying times now, folks. Much of the state is closed. The Capitol and many government offices, including the Department of Taxation, are locked down. People are working remotely when they can, and we are too. In the middle of all of this, our Governor is telling people not to come to Hawaii. That may be certainly justifiable from a public health perspective. It does, however, have severe economic effects for us. According to a recent article from the Pew Charitable Trusts, the state most reliant on tourism is Nevada, where 16% of its economy (based on 2018 numbers) depends on it. We are next with 10%. Other states that ranked high were Vermont, Florida and Tennessee, all at about 6%. Currently, we are projecting a $300 million decline in tax collections and a loss of 6,000 jobs in the service industry. This may reverse in six to nine months or so, according to the Pew article, because once the crisis passes people will want to travel again, away from the homes they have been cooped up in. The Federal government, including the IRS, is helping out with a just-passed law that makes sure that workers in general can get paid leave for child care and sick leave for themselves, and gives medium to small businesses a tax credit to help them pay for these benefits. What can we expect out of State government? So far, the response from the Department of Taxation is that all tax deadlines are being maintained. No change. Perhaps it’s disappointing, but it’s realistic in that the federal government can print money while state governments can’t. The economy is hitting the skids and tax revenue is screeching to a halt as well, which may put us into a disastrous spiral. Government continues to trundle along, and the workers that are keeping it moving need to be paid. But the money to do it in the short term is not going be coming from tax collections. So, what can we expect? First, we can expect government to scrutinize favored industries about dialing back tax and other benefits that were previously granted. Legislators already have started to do this. Second, we may see renewed vigor in what used to be semi-earnest attempts to raise taxes and fees. Several revenue-raising bills used to advance in the legislature, presumably to keep the bill supporters happy, and then would die at the last minute in conference committee. This time, the outcome may be different. Third, we may see attempts to appease the general public by advancing relief bills. Maybe we will see proposals to lessen the waiting time for getting unemployment insurance benefits, or to extend tax filing or payment deadlines, or provide additional benefits to employers whose workers couldn’t come in to work. Those might advance in the legislature when the legislature resumes, and then die at the last minute. “Oh, we don’t have the money to provide such benefits,” they may say, with justification. Our take on the problem is this. Raising taxes and fees will put a damper on the economy at a time when we should be doing everything in our power to support it. As the American Legislative Exchange Council put it in 2018, “Data clearly shows that low tax burdens enhance a state’s chances of performing well economically. On the other hand, a high tax burden reduces a state’s chances of performing well. Of course, other policy variables impact economic performance, but tax burden is most consequential.” We urge lawmakers to resist the urge to follow the somewhat cynical predictions made above. Lead. Grant relief. Don’t take more. Please. |
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