The money that would be saved - $54.7 million in the next fiscal year - would pay for the $53 million tax-relief package the governor is proposing to assist hotel owners, first-time home buyers, Kauai and Molokai businesses, college students, low-income taxpayers and persons caring for elderly family members.
Budget Director Earl Anzai, explaining the proposal to the House Finance Committee, noted that if the state retirement system's annual earnings fall below 8 percent, the state and counties are required to make contributions to reach the 8 percent level.
The administration wants the law changed so that the earnings standard includes the book value of the securities that remain in the retirement system's portfolio, in addition to the value of the stocks and bonds sold. This is the way individuals calculate the value of their portfolios. Anzai said it rarely happens that earnings in both categories fall below 8 percent, so state and county contributions could be reduced.
The budget director's other major point was that the retirement system's unfunded liability has been inflated by unrealistic assumptions about employee pay increases. Until a bill was enacted last year, pension contributions were based on projected 6.5 percent annual raises. That has now been reduced to 4 percent, which is still unrealistic although an improvement.
All people who hope to receive a pension upon retirement want as much money locked into their pension funds as possible to ensure that they get what's coming to them. It would be irresponsible as well as politically hazardous to weaken the state retirement system, but the Cayetano administration proposal seems to fall far short of that. It appears that the system could absorb the proposed reduction without damage and thereby leave funds available for other important purposes.
Casino gambling would be a short-sighted answer to Hawaii's economic problems - a gamble with huge stakes.
Bizarre religious sects cannot be permitted to violate the law, but they should be entitled to the same treatment as more accepted faiths. Government approval cannot be a requisite for the practice of religion.
Rupert E. Phillips, CEO
John M. Flanagan, Editor & Publisher
David Shapiro, Managing Editor
Diane Yukihiro Chang, Senior Editor & Editorial Page Editor
Frank Bridgewater & Michael Rovner, Assistant Managing Editors
A.A. Smyser, Contributing Editor