The State of Hawaii’s tax collections continues to significantly decline.It is good to see that some legislators are not looking at raising taxes to make up for the budget shortfall (it will be political suicide for any politicians advocating raising taxes in a election year). On top of that, the taxes the legislature raised last session have not brought in any new tax revenue.Thus the legislature will have its work cut for itself to solve this budgetary crisis during the upcoming session.
(Related item : Should The Legislature Increase The General Excise Tax To Balance The Budget ?
The first thing the legislature will attempt to do is strip the counties of their share of the transient accommodations tax.
“In the Senate, Sen. Donna Mercado Kim, Ways and Means Committee chairwoman, said yesterday she would introduce a bill next year taking $40 million from the counties’ portion of the hotel room tax.”
If the legislature strips this funding from the counties it will be like dropping an atomic bomb on their respective budgets. The counties will have to resort to raising property taxes, furloughing workers, and cutting services to make up for the funding shortfall.
Hawaiian Telcom’s bankruptcy proceedings to address their bankruptcy reorganization plan started yesterday. It should be interesting to see how this plays out.Their preferred reorganization plan is facing stiff resistance from unsecured creditors.
Hawaiian Telcom will be facing significant hurdles even if they successfully exit bankruptcy and receive the necessary approvals from the Hawaii PUC.
Lastly, I got in touch with videographer John Sefick. He has posted YouTube videos where he interviews people opposed to the proposed Thirty Meter Telescope for Mauna Kea. He is going to try to interview me regarding the TMT project sometime in December.
There is an important difference between a decline in revenues and “haven’t brought in any new tax revenue.” i.e. Without the tax increase the decline in revenue would have been even more.
Sure, at some theoretical point taxes can be raised to the level that economic activity declines and revenues plummet, but that is not the situation at hand after the most recent tax increase. Revenues would have been down without that tax increase—and down more than they are after the tax increase.