It’s not weird, it’s constitutional

The Governor of the State of Hawai‘i made his last official “State of the State” address on Monday, January 24^th. David Ige, who is the current Governor, is in the last year of his second, and last term in office.

There are many elements of his speech that this blogger can focus on. But, instead, let’s look at the “big story” that came from the speech – the $100 tax refund for each taxpayer in Hawai’i and their dependents.

After the speech, a fellow pundit who watches politics closely reached out and asked if the proposal was “a weird idea”.

The response back was “No, it’s a constitutional idea.” And then went on to explain that it was in the state’s constitution that after so many years of budget surpluses, the Legislature shall provide a tax refund to the taxpayers of Hawai‘i.

Here is the actual wording of the item in the Hawai‘i State Constitution, Article VII, Section 6 entitled “Disposition of Excess Revenues”,

Whenever the state general fund balance at the close of each of two successive fiscal years exceeds five percent of general fund revenues for each of the two fiscal years, the legislature in the next regular session shall provide for a tax refund or tax credit to the taxpayers of the State,

Hawaii Constitutuion, Article VII, Section 6, original

Now it changed in 2010, thanks to a ballot measure that amended the state’s constitution, that the state legislature has the option to deposit the surplus into accounts that would become supplemental funds during economic downturns. This is the language added,

[O]r make a deposit into one or more funds, as provided by law, which shall serve as temporary supplemental sources of funding for the State in times of an emergency, economic downturn, or unforeseen reduction in revenue, as provided by law.

Hawaii Constitutuion, Article VII, Section 6, 2010 amendment add

So if you add the initial statements from Governor Ige, that he wanted to put a billion dollars into the rainy day fund, juxtaposed to his State of the State message on the $100 per taxpayer refund, you get the sense that two things are happening.

First, the state is flush with cash, big time. Because as of this writing, the idea of putting away a ton of cash into the rainy day fund is still being proposed.

But second, the idea of stashing away all the money without giving any of it back to the taxpayer probably would have elicited a shrug from people, some grumbling but then everyone would have moved on. But giving them money…hey now, that puts smiles on faces.

And after eight years of general sighing from the people about their Governor, with the last two of them being during COVID, giving the people something at the end may give the people a little less bitter of a taste in their mouth in Ige, in the long run.

Will Ige at the end have his cake (stashing a billion into the rainy day fund) and eat it too (giving all the taxpayers a $100 refund), we shall see what the Hawai‘i Legislature has in mind as it proceeds with its work over the next couple of months.