At the top of my list of pending laws this week are Maintaining the Effort Law, Law 611, and Law 815 of the Senate. If the budget approved by the Ministry of Education goes down from one year to the next, the law stands. The difference in funds is immediately taken from the general excise tax collections and put into a “trust fund to stabilize public education” which the Ministry of Education then “funds a program in the state budget ”.
And that’s not all. Another provision of the bill provides that the amount granted will automatically change to “the total portion of the Ministry’s annual funding from general government funds for the past ten years” when the state reduces the amount allocated to DOE.
How would that work? Let’s say the DOE is estimated at $ 2 billion this year, in fiscal 2022, which is 13.5% of the total state budget of $ 15.4 billion. General funding is estimated at $ 1.7 billion, which is 21% of $ 8 billion of total general funding spent. Let’s say the bill passes and that the DOE is estimated at $ 1.9 billion in fiscal 2023, which is 12.3% of a total budget of $ 15.5 billion.
Of the general funding, DOE will receive $ 1.5 billion, 19.7% of a total of $ 7.8 billion. The provisions in the bill would seize $ 100 million from general excise collections and pour it into the Stabilization Fund, and the budget would be unbalanced by bringing the general fund’s $ 1.5 billion to the average $ 10 – Annual proportion of the total general fund changed 21% of the $ 7.8 billion or $ 1.63 billion. So DOE would get $ 130 million more general funding than planned, and another $ 100 million would be pulled out of general excise collections. That $ 230 million would have to come at the expense of something else. Or a whole bunch of something else.
Calculations like these illustrate the creativity and length of time it takes for advocates of a particular activity to avoid the annual appropriation process.
Acquisition shouldn’t be difficult. With the help of our revenue council, the legislature determines how much money we are likely to collect. They listen as the various executive agencies and departments show them what their respective programs have achieved for the people of Hawaii. Lawmakers then decide which programs and services make how much of our hard-earned tax dollars, and we head off to another fiscal year.
However, this is not enough for some people who are absolutely fixated on finding a “dedicated source of funding” for their favorite program or department. A dedicated source of funding usually means the establishment of a special fund, which is more difficult for the police in the context of the appropriation process, and the recording of tax revenues before they can be counted with the other state realizations during the budgeting process. Dedicated funding sources can and can protect inefficient or questionable programs and spending.
Legislators argue that the legislature more than adequately oversees these special funds, even though they are not covered in the normal appropriation process.
But how does this explain results like Auditor’s Report No. 20-06 which found accounts of more than $ 75 million related to inactive specialty or revolving funds? Or Report No. 20-07, which found tens of millions of specialty funds that have grown in size over the years, indicating an imbalance between the so-called dedicated funding source and the programs and services that should be funded?
Or Report No. 20-08, which builds on Report No. 20-06 and makes the bold statement: “There may be more than $ 483 million in excess funds available to use from 57 special and revolving fund accounts without adverse effects on the General Fund being transferred to affect programs “?
The maintenance of the effort should be earned. If a program or service provides effective value to the people of Hawaii, it deserves our continued support. It should not be enforced through tax breaks, special funds and other gimmicks. We need to recognize that this “dedicated source of funding” rhetoric is leading us on the wrong track.
•••
Tom Yamachika is President of the Hawaii Tax Foundation.