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The Honolulu Advertiser
Posted on: Wednesday, April 19, 2006

State surplus should focus on the long term

With the Legislature moving into its final days, one of the major unanswered questions revolves around the state's $600 million-plus surplus.

In an election year, that pot of money will surely not be left alone. The issue is, will it be spent wisely?

Clearly taxpayers do not want to see this money frittered away on a variety of feel-good ideas and projects that will make little difference long term for the state.

And as lawmakers head for the homestretch, some fundamental principles must apply:

The surplus should be looked at as an "investment" in our future. In this category, the No. 1 focus should be on our public schools. The money should not be spent to launch expensive new programs but rather to upgrade long-overdue physical needs for our schools.

Using the surplus for repairs, air-conditioning, upgraded classrooms and other physical improvements sends students a strong message that we, as a society, value education. It's an investment that will have lasting impact.

A secondary and concrete use for the surplus, which would also benefit the schools, is to upgrade our emergency shelter infrastructure in advance of a disaster.

Civil Defense officials have repeatedly warned that we do not have the facilities to handle masses of citizens in the event of a natural or man-made disaster. Primarily, this means upgrading the designated public shelters, many of which are on public school grounds.

The surplus has created considerable pressure to dole out tax relief, and that's understandable. But the best way to do that is through sensible policies, rather than using the surplus to fuel a direct rebate.

Three ideas on the table deserve careful consideration:

  • Increasing the standard deduction (long overdue);

  • Adjusting the brackets so those at the lower end of the income ladder are not unduly taxed;

  • Some form of the earned income tax credit, which allows the working poor to keep more of their income.

    The earned income credit has the additional social advantage of encouraging people to work and leave welfare behind.

    Any change to tax policy should be approached carefully. The days of surpluses and a driving economy will end. We must be left with a tax system that is stable enough to survive an economic slowdown as well.

    Lawmakers should resist the impulse to throw the money away on myriad temporary feel-good projects. The surplus should become an investment in our future. Investing in our schools is precisely the way to accomplish that.