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The Honolulu Advertiser
Posted on: Wednesday, February 10, 2010

Let us choose our tax options

By Jerry Burris

Unlike the federal government, states must balance their budgets. That is, there is no room to print money when the cash drawer is empty.

So no wonder legislators and the administration of Gov. Linda Lingle are scrambling to find ways to make the budget balance this year. The latest proposal is to hold back on the return of tax refunds, keeping the money in the state treasury until a new budget year begins.

Makes sense, from the bookkeeping standpoint of trying to balance a budget. Who among us has not put off one bill to pay another, perhaps more important demand?

The problem here is that this idea does not postpone the inevitable. The tax refunds will have to be paid, one way or another and at one time or another. And if the money has to be paid some day, why not now? After all, the basic Republican philosophy is that money put into the economy will redouble and redouble again as people spend it and pass it on to their neighbors.

Thus, keeping the money in the treasury will help the bottom line of the state budget but will do little to kick-start the local economy.

Now, it is hard to fault those who have floated this idea. Some $271 million would be "saved" if the refunds were pushed into the next fiscal year.

But that's paperwork. The money will still have to be paid and at some time the cash will still flow out of the state treasury.

Is next year's budget picture going to be any prettier than today's?

What it comes down to is whether the money is better held in the hands of individual taxpayers or in the hands of the state. That's a tough call, since the state has twin obligations involving balancing the budget and meeting the demands of constituents. For all their complaining, people want to see state services continued as usual.

In effect, if a decision is made to delay refunds, this amounts to a short-term tax hike or "loan" from individuals and businesses to their government. Maybe that's what people want. But should they not be given a choice?

Some people may prefer to see a real tax hike in order to preserve essential state services in areas ranging from education to social welfare.

Should they at not least be given the option of a choice?