Education plan
By Mike Yuen
is bad tax policy,
authority says
Star-Bulletin
Isle residents will face the prospect of higher taxes if the state Department of Education becomes politically autonomous and its board is given taxing authority, warns one of Hawaii's leading tax authorities.
Lowell Kalapa, president of the Tax Foundation of Hawaii, also said last night that what Senate President Norman Mizuguchi is proposing would likely create a new bureaucracy that would throw fiscal policy out of kilter.
What would happen, Kalapa predicted, is that the Board of Education, the state and the counties will each claim "that their source of revenues is insufficient to fund their responsibilities, and so up will go tax rates" as they seek to generate more funds.
"In the meantime, since each player -- state, county and BOE -- operates in a vacuum, each oblivious to the other's burden of taxes, only the taxpayer will know what truly high burden is being imposed," Kalapa said.
Hawaii is already one of the nation's highest taxed states, where the cost of living is about 30 percent more. And legislators, in an effort to lead the state out of its economic slump, are proposing tax breaks to high-technology ventures and for hotel improvements.
If the 13 trustees of the public schools are given control of the state income tax and the power to impose a retail sales tax, that will likely put the school board at odds with lawmakers in shaping a tax policy with any semblance of uniformity, Kalapa said in testimony at a Senate hearing.
Mizuguchi believes that if school trustees and the Department of Education are empowered to raise revenue, they will be accountable for lower education.
The state income tax, which generates about $1.15 billion annually, is a little more than what the state spends on lower education. But state Tax Director Ray Kamikawa noted that four-year tax cuts the Legislature approved last year will mean that income tax revenue will drop below expenditures for lower education.
Asked what would be the best approach, schools Superintendent Paul LeMahieu replied, "There is no best way." Improving the state's educational system requires a seriousness about education and a commitment to performance standards by students and teachers, LeMahieu said. He testified in favor of Mizuguchi's proposal, but cautioned that aligning authority with responsibility will not guarantee "a high-performing system." Mizuguchi's initiative does put that goal within reach, he said.
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