THE ISSUES AT HAND

Making a Difference The Hawaiian Way

  • Everyone deserves a fair chance to succeed. Our nation’s success was built on the founding principles of unlimited opportunity, quality education, commitment to hard work, and the freedom to pursue our dreams. Hawaiians embraced these same principles, yet a one party monopoly has thwarted the cause of prosperity.  What happened to these principles in our beautiful State? Rob Burns is dedicated to fight to keep this foundational promise each and every day, to ensure that the community is advancing towards meeting these founding principles.

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The following are research comments and information from a Non-Partisan think tank in Hawaii called the "Grassroot Institute", a government watchdog think tank, dedicated to helping Hawaii keep watch on what works and what doesn't.  It's an awesome resource; and, as they say, "I couldn't have said it better myself"....
 

A Productive Population in Decline

Hawaii residents have been moving away from the islands in droves in recent years; in fiscal 2019, more than 13,000 people departed — the highest negative net migration ever.


Why are so many people leaving the Aloha State? 


We think it’s mostly because of Hawaii’s limited opportunities, brought on by high taxes, excessive regulations, unaffordable housing, exorbitant consumer prices and other factors that make up its back-breaking high cost of living.

HONOLULU, Jan. 4, 2022 >> Hawaii’s population declined by 0.7% between July 2020 and July 2021, the third greatest per capita population decline in the country, according to new data released by the U.S. Census Bureau.[1]

Hawaii trailed only New York, at -1.6%, and Illinois, at -0.9%.

Hawaii’s net loss of 10,358 residents in fiscal 2021 marked the fifth year in a row that the state has shown a population decline, according to the Census Bureau’s population estimates program.[2]

In December 2020, census data showed Hawaii’s population declining by 8,609 in fiscal 2020 and 7,487 in fiscal 2019.[3]

“Hawaii is one of the most beautiful places on the planet, yet residents continue to leave in search of better opportunities elsewhere,” said Keliʻi Akina, president and CEO of the Grassroot Institute of Hawaii. “If there are any state or county politicians who are not yet aware of this fact, let us hope that this latest information drives the point home.”

According to the census data, Hawaii had 1,441,553 residents as of July 2021, compared to 1,451,911 the previous year.[4] This included 15,904 births and 14,648 deaths, for a “natural increase” of 1,256. The Bureau also estimated a net inflow of 1,077 people — including both immigrants and United States citizens returning from abroad — moving to Hawaii from international locations.

All of the decline, then, came from continuing out-migration to the mainland, with the difference between people moving to and from the mainland equaling negative 12,603.[5]

Early last year, 2020 census returns showed the state’s population increasing from 2010 to 2020 by 7%.[6] The timing and composition of this increase remain poorly understood, pending ongoing Census Bureau evaluation of the 2020 census and review of its population estimates for the previous decade, results of which are expected later this year.

In any case, the underlying reasons for Hawaii’s population loss persist. All data point to a steady out-migration of Hawaii residents to the mainland throughout the past decade, increasing since 2016, and continuing this past year.[7] For the most part, the reasons come down to Hawaii’s high cost of living, lack of housing and lack of job and business opportunities.

According to a 2019 survey by Pacific Resource Partnership, the main reasons people cited for leaving Hawaii were its high cost of living, 86%, and the high cost of housing, 83%.[8]

In 2020, the U.S. Bureau of Economic Analysis provided data showing Hawaii’s cost of living as the highest in the nation, 12% greater than the national average.[9]

In 2021, the BEA found that Honolulu was one of the most expensive metropolitan areas in the country, with a cost of living 13% higher than the average metropolitan area.[10]

The Grassroot Institute of Hawaii’s “Why we left Hawaii” series documents the stories of dozens of people who felt compelled to say “Aloha” to Hawaii. Here is what some former Hawaii residents had to say:

>> “Most of my family is still in Hawaii. A few are in different states. They moved for schools, low costs of living and higher pay,” said Pearl Hori, now a resident of Lacey, Wash.[11]

>> “I don’t believe we could ever afford to live there again,” said Kirk French, now a resident of Rural Hall, N.C. “We miss Hawaii though.”[12]

>> “[My family] moved to where housing and land is affordable. There are lots of job opportunities and better pay,” said Eric Lee, now a resident of Apple Valley, Minn.[13]

Said Akina: “With thousands of people leaving Hawaii each year, it is well past time that the Legislature focus on policies that will lower the cost of living and expand opportunities.  Lowering taxes, reducing barriers to new housing and pushing for Jones Act reform would be good places to start. We simply must create a better environment for our family, friends and neighbors, who right now seem to be seeing a better future for themselves just about anywhere but Hawaii.”

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HAWAII BUDGET

A Future That Benefits Everyone

Hawaii lawmakers are wracking their brains about how to balance the state budget, only this time, the problem isn’t too little money, it’s too much. And maybe some of it should go back to Hawaii taxpayers.

Here’s the background: Gov. David Ige drafted his proposed state budget for fiscal 2023 thinking that tax revenues for fiscal 2022 would be 4% greater than the previous year, based on projections from the state Council on Revenues. But on Dec. 20, he revealed that revenues for the first five months of fiscal 2022 had increased by 27.3%.

If that pace continues, the state could see up to $1.7 billion more in tax revenues than originally expected, according to Grassroot Institute of Hawaii calculations — and that is not counting the $1 billion Hawaii received in federal American Rescue Plan aid for the fiscal 2022 budget and the additional $286 million in such aid for fiscal 2023. It also does not include the $2.8 billion Hawaii is to receive from the recently enacted federal Infrastructure Investment and Jobs Act.

How could this windfall benefit Hawaii taxpayers?

Hawaii’s Constitution requires that any “excess revenues” be given back to taxpayers, if the revenues are over 5% for each of two successive fiscal years. That is exactly the situation we are in today, as the state’s revenues increased by 8.1% in fiscal 2021 and are projected to show a 6.3% gain by the end of fiscal 2022.

Unfortunately, the state Constitution doesn’t specify exactly how much should be returned, which is how lawmakers were able to give just $1 back to each taxpayer in 2008, when the constitutional requirements also were met. Then-Sen. Sam Slom rightly called the puny tax rebate “demeaning.”In the current situation, a more respectful option could be for the state to distribute $1 billion of its recent windfall cash to Hawaii’s 734,673 taxpayers, or $1,361 per taxpayer.

That would be a welcome amount for most Hawaii taxpayers, who have suffered considerably under two years of lockdown orders that have damaged all manner of economic activity in the state, squashing businesses and spiking unemployment.

But there is a hitch: Over the years, the constitutional tax-refund provision has been amended to also allow excess revenues to be saved for a rainy day or be used to pay down debt or unfunded liabilities.

In other words, the excess funds could be used to pay down Hawaii’s $26 billion of unfunded liabilities or $13.6 billion of bond debt, or they could put it into the state’s rainy day fund, which, in fact, is what Gov. Ige is proposing to do, to the tune of $1 billion. All would be good moves, although Ige’s preference to replenish the rainy day fund, in particular, would prevent that money from being refunded to taxpayers.

However, even if the windfall were not refunded directly to taxpayers, there still would be plenty of room to lower state taxes, which would be a refreshing change from the deluge of tax-hike proposals we see each year.

Moreover, supporting tax cuts would be in step with Hawaii citizens, 70% of whom believe their taxes are too high, according to a recent poll of nearly 1,000 Hawaii residents conducted for the Grassroot Institute by marketing research firm Anthology.

At the very least, lawmakers should not add to the state’s tax burden, and the governor, to his credit, has stated that he is not planning any tax increases for fiscal 2023, which starts in July.

Ultimately, a tax refund and tax reductions would help Hawaii the most in the long run, since our economy typically ranks as one of the costliest places in the nation to start a business. Any gesture favorable toward economic growth would foster general prosperity and pay dividends in the form of greater tax revenues.

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BUDGET SURPLUS... REALLY?

Financial Benefits for All Residents

Imagine your brother was facing a bad financial situation. 

Things looked bleak for a while, and the family came together to help him out. Eventually, he got through it, thanks in part to generosity from his siblings. Now, not only is he out of trouble, but he has money to burn. What would you tell him to do with his extra funds?

Chances are you would tell him to pay down his debts, put some away for a rainy day and give some back to the family that helped him out. 

The last thing you would suggest is that he go shopping or spend it on a few shiny new toys.

It’s basic economic common sense, and it applies just as much to our state government as it would to the hypothetical brother.

Just over a year ago, things looked bleak for Hawaii’s finances. The coronavirus lockdowns had devastated our lives and economy. Lawmakers were expecting drastically lower revenues and preparing for major budget cuts. In the panic, they seized the counties’ share of the transient accommodations tax and hoped that federal relief funds would help bail the state out of its financial crisis.

At the time, my colleagues and I at the Grassroot Institute of Hawaii repeatedly advised lawmakers to focus on policies that would grow the economy. Under the circumstances, even a slight bump in the economy would have led to a dramatic increase in revenues.

And that’s just what happened when the state finally did start opening up the economy. Tax revenues started pouring in and now the state is sitting on a $4 billion surplus. 

Simply allowing the market to operate helped create a windfall in state revenues, though there were other contributing factors, such as the funds from the TAT, the $750 million the state borrowed and then added to the budget as “revenues” and $1 billion in federal relief funds.

There also is the current inflation rate of 7.5%, which is boosting tax revenues due to businesses increasing their prices and thus paying more in taxes.

What is going to happen to that surplus? Will it be used responsibly or will it be spent on our ever-expanding state budget?

As the legislative session draws to a close, this has become the $4 billion question.

At the beginning of the year, Gov. David Ige called for a tax refund of approximately $100 per taxpayer. The Grassroot Institute applauded the idea, but suggested that the refund be substantially increased so that approximately $1 billion of the windfall be returned to the people.

After considering and rejecting a different refund bill, the Legislature has returned to the issue in SB514. But the amount of the refund remains undecided.

On Thursday, the Honolulu Star-Advertiser quoted the institute’s testimony on the bill, in which we reiterated our support for a higher refund:

“‘The governor hoped to add about $110 million to the economy via a refund of $100 per taxpayer and dependent,’ said Joe Kent, the organization’s executive vice president. ‘However, we suggest that, given the amount of its budget surplus, the state return at least one-third of the windfall, or about $1 billion, to the taxpayers. That would equal approximately $1,361 for each of Hawaii’s 734,673 taxpayers. As we noted, the state can afford to do far more than a mere $100 each for Hawaii taxpayers, who have gone through so much in the past two years.’”

In addition to giving money back to taxpayers, the state should also pay down some of its unfunded liabilities. After all, $750 million of that windfall is borrowed, and paying it off earlier will save us money in the long run. 

Some of the money could also be used to pay down the state’s unfunded pension and health-benefits debts. Think of it as investing in the future. This way, our children and grandchildren won’t be stuck with a higher bill.

Then there’s the rainy day fund. If we’ve learned anything from the lockdowns, it should be the importance of budget restraint and a healthy rainy day fund.

Some legislators claim that the refund has to be small, due to federal rules about how coronavirus recovery funds are spent. Those rules restrict the states from using the funds to offset a reduction in taxes. 

However, two recent court cases — Ohio v. Yellen and West Virginia v. Yellen — have successfully challenged the mandate at the district court level as an unconstitutional overreach of federal power. The cases are now at the appellate stage, but the early wins suggest that Hawaii lawmakers should not be shy about returning some of the windfall to the people.

Pay your debts, save for a rainy day and give back some of the excess. It’s as true for the state’s windfall as it would be for any of us. 

Just because the state’s budget goes into the billions of dollars doesn’t mean our lawmakers should not be held to the same principles of responsible spending and saving as the average family — especially when the money they are spending comes from our pocketbooks in the first place.

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THE RAILWAY TO NOWHERE

Who's accountable?

There so many good reasons to be skeptical about Honolulu’s still-under-construction rail project that it’s surprising the City and County of Honolulu was even able to get this wildly over-budget undertaking off the drawing table.

What are some of those reasons?

Well, to start with, it has long been known that large public infrastructure projects (“megaprojects”) often well exceed the official estimates of how much they are expected to cost. And by now, of course, the barely half-completed Honolulu rail venture is expected to cost at least three to four times more than was originally estimated by its proponents, with the most difficult stretch of construction still looming ahead. [1] [2]

Among other reasons? How about that:

>> It’s been a colossal traffic and business nightmare for West Oahu residents for years as its construction has slowly snaked toward Downtown Honolulu from empty former sugar lands in Kapolei. [3] [4]

>> It will do very little, if anything, to solve the horrible freeway rush-hour gridlock between West Oahu to Downtown Honolulu, which was the initial reason it for being built. [5]

>> It has encouraged suburban sprawl rather than mitigated it, as was promised[6] [7]

>> All efforts so far to have the rail help pay for itself via so-called transit-oriented development (TOD) have failed to produce even just one commitment from private developers, nor have any private investors expressed interest in helping with construction costs. [8] [9]

>> It is unlikely to reduce Oahu’s carbon footprint, despite the best efforts of the few environmentalists who supported the project to suggest that it will[10][11]

>> It has been seizing private property along the rail route from innocent owners whose only crime has been to be in the way of this mammoth public works project, and whose only solace has been that their hardship of losing their lands, homes and businesses has supposedly been that it’s all for the greater good[12] [13]

>> It will be a burden on Oahu taxpayers for decades to come, even if the project were to be cancelled tomorrow, considering how much it’s already cost, and how long it it will take to pay off rail bonds or end the special taxes that have been imposed to help fund it. [14]

>> The money spent on rail has represented lost opportunities for both Oahu taxpayers, who could have been spending their money more wisely for their own personal needs, and the city, which could have been focusing more on improving the delivery of its other municipal services. [15]

>> It has destroyed — and promises to further destroy — Oahu’s natural beauty and likely many cultural landmarks from Kapolei to Ala Moana. [16]

And those are just some of the reasons to be skeptical about Honolulu’s still-under-construction, wildly over budget rail project.

But, of course, we live in a democracy, more or less, and all it takes is 50.1 percent of those who vote on any issue or for any candidate to call the shots.

And that’s almost exactly how it happened: Just a tad more than half of those who voted — who themselves consisted of only 32 percent of all eligible voters and 22 percent of all voting-age Oahu residents — cast their ballots in favor of the charter amendment authorizing rail. Suddenly, the massive infrastructure project was off and running. [17] [18]

And it wasn’t even a fair election!

As now-retired University of Hawaii law professor Randy Roth wrote in December, 2016, “City officials sometimes mischaracterized (former Mayor Mufi) Hannemann’s proposed metro-light system as light rail, which might have caused some citizens to picture something less expensive, less noisy, and less imposing than Hannemann had in mind.” [19]

And, too, once that city charter amendment was approved, more political shenanigans occurred during the campaign leading up to the 2012 Honolulu mayoral election, in which whether to cancel the rail project was a key issue. [20]

As many of us remember, anti-rail candidate Ben Cayetano seemed to have an excellent chance of prevailing in that contest over pro-rail candidate Mayor Kirk Caldwell … until the nonprofit Pacific Resource Partnership, representing the state’s largest construction union and more than 200 construction contractors, starting attacking Cayetano through an expensive advertising and publicity campaign alleging improprieties by the former Democratic governor. Cayetano subsequently lost the election, but later sued and won a legal settlement from PRP, which without admitting guilt publicly apologized to Cayetano and agreed to pay $125,000 in damages. [21]

But the real damage was to the future of Honolulu, whose residents now can plainly see that everything all the rail opponents warned them about has come or is coming true.

Sadly, things could have turned out differently, and for the better.

Decades ago, there was a movement called “small is beautiful,” epitomized by a book of the same name by economist E.F. Schumacher and another bookcalled “Human Scale,” recently reissued as “Human Scale Revisited: A New Look at the Classic Case for a Decentralist Future.”  The complete title of Schumacher’s book was “Small is Beautiful: A Study of Economics As If People Mattered.” Neither of the two books was particularly pro-free enterprise, but they did suggest, as their titles imply, that focusing on individuals and the little things is a better way to solve social problems than through size-large, centralized policy making. [22] [23]

This view aligns roughly with the views of “free market” theorists such as Friedrich von Hayek, Ludwig von Mises, Murray Rothbard, Milton Friedman and many others, who have always believed that working from the ground up, from the grass roots, is the preferred, more ideal way to accomplish goals that serve both individuals and society. [24]

And so it is that the most dubious thing about Honolulu’s proposed rail system is that it is, and always has been, a top-down, government-knows-best affair that has made it incredibly more difficult for real solutions to emerge from the grass roots that could address the complex problems it was intended to solve.

The above facts and comments outline the problems, I believe with my life and business experiences, I can help solve them.  I'm open to input from ALL sources, and the people of Hawaii.  Help me stem the tide of economic downfall coming at us.