WMTA Shares these commentaries, without taking a position unless otherwise noted, to bring information to our readers
To view the archives of the Tax Foundation of Hawaii's commentary click here. Weekly Commentary For the Week of February 18, 2019 Squirreling Away Money at the Dept. of Transportation By Tom Yamachika, President Well, it looks like the Hawaii State Watch Doggie has woken up from his nap. A: Hey! Keeping watch is hard work! Q: Undoubtedly. So what are you reading there? It looks like an Auditor’s report — “Review of Special Funds, Revolving Funds, Trust Funds, and Trust Accounts of the Department of Transportation.” A: Oh, yes. It’s an outrage. Q: What’s the problem? A: Well, you know that the DOT is telling the Legislature to raise taxes. Fuel tax, vehicle weight tax, registration fees. Taxes, taxes, taxes. Q: So how are they different from any other government agency? A: The auditor found that they have lots of money lying around. More than $120 million in accounts that haven’t been even touched for five years. Q: And they’re asking for more. A: And that’s not all. A few years ago, the Feds got mad at them because they had close to a billion dollars in unused federal money. The Feds gave us money to work on roads and bridges, and it wasn’t getting spent, so they were saying, “Why should we give you more money if you can’t spend what you have?” Q: But they have been working the backlog down over the years. A: Come on. More than a hundred million that hasn’t been touched for years? Makes me want to bite someone. Q: Jeez! Don’t look at me so intensely when you’re saying that! But didn’t they say that most of the money is a reserve that they have to keep around for their airport bonds? A: Hey, if the bond agreement requires millions to be held in reserve, DOT should have been able to point to the part of the bond agreement saying that. Did they? No! And there’s more. Q: There’s more? A: There’s a law that says that DOT has to report all of their funds to the Legislature. They’re not supposed to squirrel away their money. Q: So how much did they fail to report? Enough to buy a few bags of kibble? A: More than $120 million. Q: Different from the $120 million that they found lying around? A: There’s some overlap, but mostly in addition to the idle $120 million. Q: Did DOT say why those accounts weren’t reported to the Legislature? A: Airports Division said that the Airports account the Auditor identified had no money in it anyway and they forgot to report it. The other divisions didn’t say anything. Q: Not even “Oops,” eh? But they did report some of their accounts to the Legislature, right? A: Yes, but not accurately. The Auditor found that Highways Division’s fund reporting was inconsistent and sometimes inaccurate. For example, a fund reported as “Revolving & OHA” was actually five different funds, and none of them were related to OHA. Q: Oh, man. Whatever can we do about that? A: I’m going to bite someone on the schnozzola. Q: If you can reach it, that is. You’re only a 7-pound doggie. A: Details.
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WMTA Shares these commentaries, without taking a position unless otherwise noted, to bring information to our readers
To view the archives of the Tax Foundation of Hawaii's commentary click here. Weekly Commentary For the Week of February 10, 2019 Creativity Abounds At Our Legislature By Tom Yamachika, President This week, we are continuing our coverage of creative tax-related bills at our legislature. The Hawaii State Tax Watch Doggie is taking a nap at the moment so I’ll continue without him. Let’s start with the revenue raisers. SB 1373 raises the GET rate. At least that one is straightforward and easy to understand. SB 1474 raises the GET rate a little more, but this would fund the DOE and the University of Hawaii. How much are the rate increases? 0.3% and 0.5%, respectively, but if the bills move the number probably will be amended. Next! HB 1459/SB 1463 enacts a carbon tax, which we have written about before here and here, and replaces the current fuel tax and the barrel tax. HB 1287 and HB 1579 just enact a carbon tax, leaving the other taxes on fuel in place, although HB 1287 says that half of the tax is to be refunded to taxpayers through the income tax system. SB 1114 requires a tax clearance to be obtained before getting or renewing any professional or vocational license in Hawaii. Given that we require licenses for more vocations and occupations than many other states (and are the most burdensome to licensees), coverage would be broad. But it would create minimal benefit in exchange for the extra time and paperwork for the law-abiding citizens, who we hope are most licensees. SB 1361 increases the estate tax for taxable estates over $10 million. At least that’s what it says now. SB 1362 increases the conveyance tax for the sale of homes over $2 million. Gone forever are the days it was just 0.05% of the sale price (5 cents per $100 of value). And then let’s not forget tax credits. Many lawmakers are sponsoring credits to encourage desirable social behavior—I think. HB 1215 awards a tax credit for people who live within 10 miles of their working place. I have my doubts about that one. People already have lots of motivation to live close to work. (It’s called “traffic.”) If anything, those of us who are forced by land prices to live out in the ‘burbs need relief from the punishing fuel taxes that need to be paid to keep the ol’ jalopy chugging along. HB 1216 awards a credit for people who run a business out of their own home. What’s the philosophy behind this one? Is it that people who run such a business must be impoverished because they can’t even afford to rent a proper office? I suppose small businesses need all the help they can get but drawing the line in this way is just odd. SB 1473 establishes a food expenditure tax credit. The bill says the credit is based on adjusted gross income, but there is no table or schedule to tell us what the amount of the credit would be. There is also language defining qualified food expenditures—the cost of food and dietary supplements count, prepared food and alcoholic beverages don’t count, anything coming out of a vending machine doesn’t count, and tobacco products don’t count. At present the credit doesn’t seem to depend on the amount of qualified food expenditures, so why define the term? If the answer is that individuals are supposed to keep track of their own food expenditures and then submit a credit claim after a year, I wonder if it’s realistic to expect any taxpayer to do that while following all the rules correctly. Good luck to all of us—no one’s safe when our Legislature is in session!! WMTA Shares these commentaries, without taking a position unless otherwise noted, to bring information to our readers
To view the archives of the Tax Foundation of Hawaii's commentary click here. Weekly Commentary For the Week of January 20, 2019 DOE’s Repair Backlog Is How Much Again? By Tom Yamachika, President In a budget briefing at the legislature at about this time last year, Department of Education officials reported that their backlog of repair and maintenance jobs was $293 million, and they were patting themselves on the back because it was a significant drop from the $392 million reported in 2010. This year, the backlog is $868 million – nearly triple the amount reported last year. It turns out there were issues with the way the backlog projects were tracked. For example, when initial design money was spent on a project, the project dropped off the pending list even though no contractor to fix the issue had been hired or paid. The words “gross incompetence” come to mind. In the private sector, this would normally be coupled with “heads will roll.” In our state government, however, it is notoriously tough to get someone fired. The only event in recent memory to trigger a shake-up was the infamous ballistic missile false alarm, which resulted in the resignation of an administrator and a co-worker, the suspension of another, and the firing of the button-pusher. What, then, is to become of those who designed and ran the systems that were supposed to be keeping track of the DOE’s maintenance backlog? The false missile alert happened in the blink of an eye and was over in 38 minutes. There was a lot more time put into compiling the DOE maintenance backlog data. There had to have been multiple levels of review when the DOE data was gathered, the numbers were crunched, and all the above was refined into a report or briefing materials presented to the legislature. And the result of all of this was a hideous lie told to our lawmakers. On the flip side, lawmakers had to have known that something wasn’t right. The University of Hawaii was reporting a deferred maintenance backlog of $722 million – but it has 10 campuses and the DOE has 256. Was UH that much more inefficient than the DOE (and if so, why hadn’t there been heads rolling at the UH)? Whatever the reasons, a maintenance backlog growing closer to the $1 billion mark at both the DOE and UH is cause for serious concern. Tough decisions about funding priorities need to be made, and by the people who need to have the state’s big picture in mind. And when I speak of “big picture,” I am not at all talking about lawmakers who simply say, “Oh, we don’t have enough money to run government, so we need to ask the taxpayers to make up the difference.” The big picture leaders need to have an understanding about the revenues as well as the expenses, so they can manage the economic engines that produce the money that we all need to get on with our lives. In the Star-Advertiser article that reported on this amazing revelation, it was mentioned that the DOE has built a new online database that will encompass all capital improvement and repair projects so errors like this won’t happen in the future and there will be more transparency. “People will have the ability to pull that information anytime,” an assistant superintendent is quoted as saying, but what he meant by “people” is legislators, Board of Education members, or school administrators. A “public version” of the database will be developed next year – probably with limited functionality. The folks who came up with that idea can’t even see that part of the big picture that says We the People are responsible for their paychecks and the funds necessary to get these projects addressed. Maybe they should be considered for head-rolling along with the geniuses responsible for underreporting the maintenance backlog in the first place. |
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