Rebate amendment on November ballot


POSTED: Tuesday, April 20, 2010

Voters will decide this fall whether to give the state Legislature the power to divert money intended for tax rebates to help finance a “;rainy day fund”; for economic emergencies.

The Hawaii Constitution requires the Legislature to provide taxpayers with either a refund or tax credit when the state runs a budget surplus for two years in a row.

Taxpayers received a $1 tax credit this year at the same time that the state is running a deficit, because of its previous surplus.

A bill cleared both the House and Senate on Friday, putting a constitutional amendment question on the ballot in the November general election. Constitutional amendments cannot be vetoed or approved by the governor.

If the amendment is approved by voters, the Legislature would have the discretion to issue rebates and determine how much money to put into a special rainy day fund—the second one for emergencies.


The idea is similar to one Gov. Linda Lingle proposed in her State of the State address in January. Administration officials, however, say they do not like the Legislature's version.

In testimony last month, Linda Smith, Lingle's senior policy adviser, and Georgina Kawamura, state budget director, said the governor's plan was better because it required the state to save at least 5 percent of a two-year budget surplus.

“;This would ensure that a steady source of revenues would be available ... during periods of economic difficulty and would provide an alternative to raising taxes at a time when the people of the state can least afford it,”; advised Kawamura.

“;Under this constitutional amendment it is unlikely any funds will be deposited into an emergency budget and reserve fund in the foreseeable future,”; Smith said.

Lowell Kalapa, Tax Foundation of Hawaii president, said the Legislature does not have the self-discipline to save money that it could spend.

“;This proposal is nothing more than patronizing to the idea of 'savings' for a rainy day while doing away with the mandatory refund credit,”; Kalapa said in testimony.

The current constitutional requirement that money be returned to taxpayers in times of a surplus served a purpose, Kalapa said.

“;It serves to remind people of just how much money the state is keeping for itself while maintaining the high burden of taxes,”; he said.