Don't rule out giving refunds to taxpayers

THE ISSUE Governor Lingle and Democratic leaders of the Legislature disagree on whether taxpayers should receive tax refunds.

STATE government's tax surplus of $574 million will be the biggest issue in this year's Legislature, but it will need to be reduced into various questions of need to determine if tax refunds are warranted. Governor Lingle has called for returning more than half the surplus to taxpayers, while Democratic leaders risk the tax-and-spend label by investing the entire amount in state projects.

Senate President Robert Bunda told the Star-Bulletin's editorial board that state needs in education and other areas would limit the average refund to only $100, not a large amount in most taxpayers' budgets. He is probably right in saying that most residents would prefer to see those dollars spent on improving the state's schools and other worthwhile purposes.

In his opening speech to the Legislature, House Speaker Calvin Say trivialized the Lingle proposal as providing a taxpayer "enough extra to buy another loco-moco every week or another plate lunch." Plate lunches cost $6 these days, amounting to more than $300 a year, a significant pick-me-up for many taxpayers.

Lingle and the Democrats arrive at their positions by determining the amount needed to repair the state's infrastructure and launch an energy program aimed at reducing dependence on fossil fuel. The shortage of funds during Hawaii's economic doldrums of the 1990s created a backlog of repairs.

Say has proposed spending $150 million of the surplus on repair and maintenance of public schools. The governor's supplemental budget calls for $40 million for school repair and maintenance and $50 million for school construction. Both sides propose spending much of the surplus funds on University of Hawaii structural repairs.

A large proportion of the budget surplus unquestionably should be spent on the school system. That does not mean that legislative action should consist merely of processing the Department of Education's wish list.

Say also proposed a $100 million "innovation fund" to stimulate economic development in the areas of life sciences, community health care, digital media, new technology, ocean sciences, telecommunications and alternative energy. Under such a program, he said, the state would help businesses launch approved projects. Similarly, he proposed subsidizing affordable housing.

One of Lingle's top priorities is a comprehensive plan to "establish Hawaii as a leader in the global, hydrogen economy" by opening the throttle on the state's renewable energy resources, such as sunlight, wind, geothermal and ethanol. A project aimed at using hydrogen as an energy source would cost more than $10 million.

The budget surplus provides opportunities that were unrealistic during economic adversity. But that should not lead to wasteful spending.