Uncertainty regarding federal funding, which accounts for 17 percent of Hawaiis $17 billion executive budget, makes it more important than ever that Hawaii has the ability to make data-driven decisions on state tax and budget policy to ensure the choices we make are efficient, effective, and equitable. To that end, the new Hawaii Budget and Policy Center (HBPC) has released its first publicationa Budget Primer that serves as an entry-level course covering the components of the state budget, how it is created, and the priorities and choices it reflects.
Hawaiis budget is a powerful foundation of daily life and a demonstration of our states priorities and values. It sets out where we get our money and what and who we spend it on. It dictates the investments we make in our schools, our environment, our health, and our economy. It is the blueprint for Hawaiis current and future prosperity and is an economic engine in itself, making up 20 percent of the states gross domestic product.
While federal budget decisions may be made that are outside our control and preferences, we can craft state and county budgets that align with Hawaiis values and aloha spirit. The HBPC Budget Primer serves as a starting point for a new effort to pull together data and information relating to the budget so policy makers, community leaders, and interested citizens can make better informed budget and policy decisions.
Takeaways from the Budget Primer include the following:
- Hawaii is last in the nation in terms of percentage of our state budget that comes from federal sources, suggesting that Hawaii may have an opportunity to attract more federal dollars to support state programs.
- State government spending accounts for 20 percent of the gross state product (GSP). In combination with county budgets, 26 percent of the GSP comes from Hawaii-based government.
- Hawaii residents with the lowest incomes pay almost twice as much of their earnings to state taxes than people with the highest incomes.
- The states biggest source of tax revenue is the general excise tax. The GET appears to be deceptively modest (4 to 4.5 percent) if seen as a sales tax but, because its an excise tax applied to virtually every transaction, the multiplied effect would equal a sales tax of 10 to 11 percent.
- Hawaiis property taxes, which are collected at the county level only, are at the lowest rates in the country.
An electronic copy of the Budget Primer and more information about HBPC are available at www.HiBudget.org.
For more information, contact:
Beth Giesting, Director
Hawaii Budget & Policy Center
The nonpartisan Hawaii Budget & Policy Center is a State Priority Partner, a project of Hawaii Appleseed and affiliated nationally with the Center for Budget and Policy Priorities. It focuses on economic opportunity for all Hawaii residents, especially low- to middle-income families struggling to make ends meet. Its work addresses budget and policy issues, conducting trustworthy unbiased research and identifying strategies to improve economic fairness and opportunity.