Over the past few months, Hawaii has joined the ranks of the states that have been most heavily impacted by the coronavirus pandemic.
The most significant impact of the coronavirus on the state has been the drastic dip and at times, complete standstill of the tourism industry in the island-state.
Much of Hawaii's tax revenue comes from commerce that is generated from tourism. Without that windfall, Gov. David Ige has been talking about a nearly $1.4 billion shortfall that he expected the state to experience in the next year as a result.
However, there's just one problem. This catastrophic estimate has yet to pass. While this is good for the state, it also has taxpayers left scratching their heads, wondering why the state lawmakers are still pushing for drastic tax increases to make up for a shortfall that no longer seems so catastrophic.
In an interview earlier this month, Ige did not repeat the $1.4 billion figure that he had so often cited last year during conversations about the pandemic and its consequences. It appears that the situation has changed, and that the financial situation of the state is improving by the day.
Previously planned layoffs and furloughs by the government have now been delayed at the very least, and possibly cancelled altogether. These measures were initially proposed due to the vast amounts of revenue that the government expected to miss out on. In addition, proposed cuts to public education have been delayed. Gov. Ige has publicly called for the government to save on costs wherever possible, but is now also saying that tax increases won't be necessary.
It appears that state lawmakers have a different plan in mind, however. They have largely rewritten Ige's proposed budget and have indeed proposed tax hikes. House Finance Committee Chairwoman Sylvia Luke said earlier this week that this is a result of the government's goal to restore funding to a number of programs that the administration had earlier tabbed for cuts.
Luke has expressed a willingness to raise state capital gains taxes and raise taxes on higher-income individuals in order to pay for the initiatives that she has in mind. The raised taxes would also help to pay back the $700 million that the state was forced to borrow from the federal government to cover unemployment checks.
The upcoming budget should continue to be a source of debate and contention as the state continues to navigate the challenges that have been posed as a result of the pandemic.