It has been called the Beltway Two-Step, even a Mexican standoff. It looks like we will once again get down to the wire to avoid the "fiscal cliff." With a deadline less than two weeks away and during the holiday season, we the public are anxious for a deal to be made.
The Maui Chamber of Commerce, along with many others across the nation, is urging Congress to enact legislation to avoid the fiscal cliff, recognizing how the automatic tax increases and spending cuts will hurt our economic recovery. However, we expect the fuse to be burned all the way down to imminent explosion before a solution is reached. We hope we are wrong, but this has been the recent pattern. Imagine the relief we would feel if a plan was given to us now.
While financial challenges would still exist, the cliff would be avoided, we would be comforted by the leadership, and we could then move on to fixing the root of our problems and addressing our debt. It would certainly be a welcome holiday gift that would ease many minds.
At home, as we prepare for the coming legislative session, financial plans are being addressed as well. Gov. Neil Abercrombie has proposed a $6.1 billion budget, which represents a 7.8 percent increase in the coming year, with a planned 11 percent hike the following year. This begs the question: How can we spend more when we already have colossal and growing unfunded pension and health benefits liabilities? Where is this money going to come from?
While the governor's budget notes that the Council on Revenues is forecasting moderate increases in tax revenues (at 3.9 percent in fiscal year 2014 and 4.9 percent in 2015) and seeks to modify some tax credits, we are looking to spend more than the projected increases when we have not yet dealt with our state debt. And, the more debt we have, the more it costs us in debt service.
In his brief, the governor does mention "Stabilizing the financial structure of the state of Hawaii by addressing the increasing long-term fixed costs such as unfunded or underfunded liabilities for public employee benefits." This is a good start; it is on the list under his "New Day Initiatives." But, we are looking for this to be a top priority and to see a strong, economically viable plan to bring down the debt without increasing taxes. The proposed budget seems to a better job of detailing the added positions and increased spending than it does explaining how we will pay down our debt to achieve desired fiscal strength.
Further, the Multi-Year Financial Summary General Fund projections for fiscal years 2012-2019 shows that we will spend more than we bring in by $224.1 million in 2014 and $148.3 million in 2015. More deficit spending? We too want to be optimistic about Hawaii's future, but feel the best way to ensure our growth and prosperity is to tackle the debt issues. If we allow them to plague us, we will continually be looking at increasing taxes, however hidden or innocuous they may seem.
Financial strength comes from solid revenue, low debt, and significant reserves. Let us ask lawmakers on both the federal and state levels to make reducing our debt and restructuring entitlement programs a top priority. It is a gift that will not only benefit us, but many generations to come.
Best wishes to you and your family for a wonderful holiday season. May 2013 be a year of great joy, prosperity, and working together to positively impact our community and state.
* Pamela Tumpap is president of the Maui Chamber of Commerce.