Governor Green Proposes Tax Relief to Lower Cost of Living

(AP) — Hawaii Gov. Josh Green on Monday proposed investing $1 billion in affordable housing and giving tax breaks to people of all income levels to lower the cost of living in the islands.

Green told lawmakers during his first State of the State address at a joint session of the state Legislature that tax breaks would get money into the pockets of working families so they can pay for food, medicine and housing. He said the tax breaks would also stimulate the economy because “every dollar” that goes to working families with limited assets and income would be spent immediately.

Green said every family of four could expect to get $2,000 in tax relief under his plan, while lower-income residents would get more.

“This plan makes sure every income bracket does a little better and directly lowers the cost of living for every single resident by keeping more money in our pockets for each taxpayer, especially those who are wrestling with survival,” Green said.

The proposal includes doubling the standard tax deduction and providing tax credits to families paying for childcare, babysitters, after-school care and adult day care.

Green estimates the plan will lower state revenue by $312.7 million a year.

The Democratic governor told reporters after his speech that the issue he heard about most during his campaign for the state’s highest office was how unaffordable Hawaii is. He said his plan would help stem the exodus of people leaving the islands for less expensive places to live.

“If we cut some of the costs on early education or adult daycare and we put some tax dollars back into people’s pockets, then they can stay in Hawaii,” Green told reporters.

The $1 billion for housing would include funds to boost financing for more affordable housing units through the Housing Finance and Development Corporation and provide state rental subsidies to low-income families. Some money would to go to renovate and upgrade public housing.

The governor paused in the middle of his speech to sign an emergency proclamation to make it easier for the state to build 12 small villages for homeless individuals — what he calls Kauhale Homes. Each village is expected to house between 100 and 150 people. One of the first will be in Kailua-Kona, at the Kukuiola Emergency Shelter and Assessment Center.

Green said he would likely need to take emergency action to streamline the development of more traditional housing as well. His administration is still finalizing an emergency order for this purpose.

“You’ll see us cutting red tape so we can provide housing as soon as possible,” Green said.

Senate President Ron Kouchi, a Democrat, said after the speech that Green’s housing proposals were doable. He said spending more this year will ensure that the state has more affordable housing in the pipeline.

As for tax breaks, he said something on the scale of what Green proposed would be necessary “to have an impact” given how inflation has affected residents. But ultimately he said what lawmakers do will depend on state tax revenue predictions submitted by the state Council on Revenues.

State law requires the governor and lawmakers to draft their budgets based on the council’s revenue forecasts. The panel is expected to update its predictions in March.

The state started off the year with a $1.9 billion surplus thanks to the tourism industry bouncing back strongly from the coronavirus pandemic.

Rep. Kyle Yamashita, the chairperson of the House Finance Committee, said lawmakers will have to look at the details of Green’s proposals to determine what the state can afford.

“I think it’s a good idea to be bold, as the governor said. But I think the devil’s always in the details. So we’ll take a look at it,” he said. “Because the House has priorities. I’m sure the Senate has. And we’ll see how that all pencils out.”

Both Kouchi and House Speaker Scott Saiki, a Democrat, said they preferred to have tax credits targeted for those who need it, rather than people in all income brackets.

Saiki said he agreed it would be important to streamline regulations governing affordable housing construction. He said this could be done while also allowing for public participation in the process.

House Majority Leader Rep. Nadine Nakamura said Green’s proposals on housing and Kauhale Homes were consistent with the House’s position.

 

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