Rooted in Reason: Nurturing the Seeds of Liberty

Cutting Taxes is Not Enough by grassroothawaii
January 11, 2011, 2:44 pm
Filed under: Economy, Limited Government | Tags: , , , , ,

by Frances Nuar

The Mercatus Center of George Mason University hosted a very interesting panel today about “Broke States and Bailouts”. Hawaii is one of 46 states facing a budget deficit, which Governor Abercrombie said would be $71.6 million for the fiscal year ending in June and a whopping $771.9 million deficit for 2012-2013. Hawaii, as do many other states, depends on federal funding to help balance its budget.

But why should Hawaii, or any other state for that matter, depend so much on federal dollars? The federal government is already broke, and can’t be expected to bail out broke states. Last year the federal government borrowed $0.37 for every dollar spent,  a very unsustainable trend. State and local governments are already overly dependent on federal money, and bailing out states doesn’t translate into necessary fiscal responsibility changes at the state level.

Balancing the budget is mandatory by law in Hawaii. But merely cutting spending or raising taxes isn’t enough–structural and procedural changes must be made to allow efficiency and responsibility to dictate government spending.

Some ideas to put the procedural power to make efficient changes into the hands of public officials:

  • Eliminate binding arbitration in public sector unions. Granting public unions bargaining power only serves to artificially drive up wages and eliminate competition.
  • Change employee pension plans from defined benefit to defined contribution plans. As it stands now, powerful public sector unions lobby to protect employee pension plans, which are completely unsustainable given state budgets. Taxpayers should not be expected to fund lavish retirement plans, rather government employees should contribute to their own retirements.

There’s much to be done here in Hawaii to restore fiscal responsibility to the budget. Grassroot Institute is here to help identify and implement those changes.


Leave a Comment so far
Leave a comment

Leave a Reply (Comments are approved by a moderator before they are posted.)

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: