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Home My WebLink AboutCOM 0722.075 2016-2018From: Bill Walter To: Council Testimony Subject: TESTIMONY ON THE PROPOSED GENERAL EXCISE TAX (GET) AND THE COMING BUDGET FROM HAWAII ISLAND CHAMBER OF COMMERCE Date: Wednesday, February 14, 2018 2:34:04 PM CIDI Concerning Budgets and Taxes -- `* No one either likes to pay higher taxes or raise taxes. Neither the "giver" nor the "receive1S happy when -taxes go up. Concerned that for the second year in a row — in the midst of economic good times — the County would consider raising taxes to meet a growing budget, several business leaders met with our Mayor and the Managing Director. The meeting was cordial and covered many issues. Our budget point was that when it comes to taxes, this is a "zero sum game" - when what is gained by one side is lost by the other. There is only so much money in the economy and what the County takes from its residents is no longer available to those residents to meet their financial needs or improve their financial situation. In an economy made up of small businesses competing against major mainland retailers and a resident base that is the most economically challenged in the State — such extractions are serious. As Harry Kim is quoted in the Hawaii Tribune Herald, speaking of a possible GET increase: "We're taxing the people who can least afford to pay taxes." Context here is important. The County's budget has grow_ n from $175,000,000 in fiscal year 2000 to what may well be $500,000,000 in 2018 — a near tripling in less than twenty years. During the same period, the consumer price index has risen 46% for urban areas. We have not had an explosion in population nor high inflation to explain the growthin our county's budget. Nor can we point to new services although we do understand that some Federal and State mandates have added to the growth in budget. i Growth in County employment has been a significant contributor to budget increases. Government growth through employment growth is a long term and expensive proposition. Nancy Cook -Lauer points out in her Tribune Herald article that: • l2% of the budget is a payment towards pensions and that will grow to more than 15% in 2018. • Another 12+% of the budget is consumed by employee and retiree medical insurance. -rm, Na: 11-1.1s Ref. T®0• _ to _ Q,4. rw FEaUmo.._ This works out to more than 25% of the budget for employee fringe benefits. The point here is not whether employees are deserving of these benefits; the point is that they illustrate the long term cost of employees. We have no intent to micromanage the County and we know that many intelligent, hard- working people are employed by our County. However that may be, we believe that the County must now look at how it can reduce expenses rather than increase revenue. The business community is ready to help if called to. We are already circulating to our Chamber membership commissions that have available slots and are charged with reviewing government operations. We stand ready to do more if asked. We see this as a serious problem that needs addressing, and that if not addressed, will increasingly sap the power of our businesses and community members to grow and survive in one of the most beautiful places in the world to live. 3aVWaWer President Hawaii Island Chamber of Commerce