April 2006 | Online Edition
IT'S YOUR MONEY
Cash Surplus Leaves Little Respect for Your Money
By Lowell L. Kalapa,
Tax Foundation of Hawaii
With the state general fund awash in dough, there seems to be little respect for what taxpayers contribute in the way of taxes if legislative actions are any indicator.
With over $600 million forecasted for the state general fund surplus, lawmakers are looking at lots of ways to get their hands on the surplus to spend. A million here and a million there and soon that spending adds up to possibly spending the entire surplus. For example, a proponent of setting up an innovations partnership special fund convinced lawmakers to introduce a bill that would appropriate $100 million of general funds to be placed in this special fund.
In advocating for this fund, the witness noted that while lawmakers may think that $100 million was a lot of money, “in the high tech industry, $100 million is just a drop in the bucket.” While that may be true, $100 million goes a long way in repairing school facilities, insuring that the state hospital system remains open, or state boat harbors are maintained.
Then again, lawmakers are not shy about handing out money in the form of incentives as evidenced in the continued viability of the measure to grant movie and television productions a credit equal either to 15% or 20% of qualified production costs. Ah, but lawmakers point out that the tax credit is limited to $8 million per production. But who said that there would be only one production per year?
Then there is the plight of families where an elder member needs full-time care to the point where someone in the household has given up their job to stay at home to provide that care. Lawmakers want to hand out a tax credit of $1,000 per year to the caregiver as some sort of compensation for having to provide that care. Of course, the only type of care that would be compensated is care given to an elderly person. Forget it if the care is being given to a paraplegic under the age of 65.
And who said that the tax department is in the position to determine the type of care being given? Instead of handing out tax credits, supporting in-home care of the elderly is best left to the professionals in the field be it in the department of health or the department of human services.
Advocates of the caregiver tax credit seem to ignore the issue of quality assurance and make the assumption that all in-home care is best for the elder. And when one raises the fact that most elder abuse cases are perpetrated by a family member, they counter that elder abuse can occur in an institutional setting as well failing to realize that the tax credit is not being given out for institutional care.
If you think some of those ideas of spending the surplus are ridiculous, there is a measure to give “responsible” business corporations a discount on their corporate income taxes. One would hope that all businesses are Aresponsible and for those that are not, there are laws to prosecute those who don’t have the public interest in mind.
Public interest is defined as the “general public well-being, including but not limited to present and future generations, the economy, natural environment, public health, public safety, human rights, education and other human developmental opportunities, and the general well-being of the local, state, national, or world community.” Well, that just about takes care of everyone out there or so it would seem.
Unfortunately, the taxpayer seems to have fallen between the cracks, as lawmakers have not spent a lot of time discussing tax relief.
While the session is only at halftime, discussion needs to take place as to how much relief will be afforded taxpayers and in what shape that relief will be constructed.
And while the administration has proposed adding $55 million to the state’s rainy day fund as a prudent move to put money away for unforeseen emergencies, one has to remain skeptical about how that money will be used.
Since the rainy day fund was established in 1999 with the proceeds of the Master Settlement Agreement that mandates distributions from tobacco companies, lawmakers have viewed the fund as a slush fund that they can dip into whenever there isn=t enough money to fund ongoing programs. This allows lawmakers to avoid making hard decisions about which programs should be cut.
A million here, a million there, soon it adds up to real money. But hey, it’s your money. So you better let your lawmaker know how you want it used.
For more information, please call 536-4587 or log on to http://www.tfhawaii.org
Oahu's Real Estate Market is in Transition
By Walt Harvey (R), East Oahu Realty, ABR, CRS, GRI, SRES, ePRO, QSC
Home sales are slowing yet prices continue to rise. Momentum drives prices upward while the number of homes on the market increases and the time from listing to sale increases. These are signs of a transition market — and Oahu is in one.
Should I sell? Should I buy? What will the real estate market do next? These are the questions we hear daily and the answers are very simple.
Selling? Why? If you’re relocating off island, you need to sell soon. Price your home competitively and stage it so you’ll be the next to sell. Choose a company and agent that will market your home aggressively on the Internet.
The National Association of Realtors 2005 Profile of Home Buyers and Sellers found that 77 percent of home buyers used the Internet to search for a home, a 3 percent increase since 2004. Most buyers want to see multiple pictures and/or a virtual tour. Make sure the agent you choose to list your home is Internet savvy, uses many pictures and provides a virtual tour! Choose an agent that has a toll free number for mainland prospects to call for more information. Consider this: 25 percent to 30 percent of Hawaii home buyers are from off-island.
Buying? Great news! In most cases you can think about it overnight. However, don’t wait too long to make your offer if the property suits your needs. Well priced, move-in properties are still attracting multiple offers.
What will happen in the future? Many home buyers are baby boomers and Hawaii is a desirable second home and vacation home destination. The second home and vacation home demand is strong! There are simply not enough new properties being built to satisfy the demand. Do the math.
Call Walt Harvey at (808) 375-8959 or email him at walt@coastalhawaii.com.
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