Senate approves bill to raise general excise tax for Hawaii's public schools

Senate Bill 1474 aims to provide hundreds of millions of dollars in additional funding for our keiki

A school funding proposal, Senate Bill 1474, was approved overwhelmingly by the full Senate on Tuesday, March 5, and now crosses over into the House for review.

The bill aims to increase the state's general excise tax by a half-percent to provide hundreds of millions of dollars a year in additional funding to public schools.

"We know that we have needs in our schools. We have classrooms without proper supplies, equipment or even highly qualified teachers. We cannot continue to wait and see if more money will magically appear, or rely on a growing economy to put more resources into our classrooms," said Sen. Michelle Kidani (D, Mililani Town, portion of Waipio Gentry, Waikele, Village Park, Royal Kunia), who chairs the Senate Education Committee.

Sen. Russell Ruderman (D, Puna, Kau) said, “No one likes added taxes, and this is certainly not perfect, but every other effort to try to get significant more funding to teachers in schools so far has failed. We all know about the teacher crisis that we have, and that affects our next generation, so I will support any and all efforts that the teachers themselves support to try to get more money to our teachers.”

"It's basically half a penny per dollar. A little bit here and there actually makes a big difference, so we think this bill will probably bring in over $300 million for education," said HSTA President Corey Rosenlee. "At the end of the day, our schools need funding and the funding's got to come from taxes. In Hawaii, our schools are in crisis. They're totally underfunded. We estimate that we spend about $6,000 less per pupil than comparative districts. Now $6,000, when you multiply that by how many students are in the Department of Education, it's close to a billion dollars. This doesn't get us to a billion dollars, but we've got to take this first step."

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General excise tax history

Kidani told her fellow lawmakers, "I know there are those who speak out against any raises in the GET due to its regressive nature, but I want to remind my colleagues today. With the exception of the half-percent surcharge for rail, the tax rate or GET has remained at four percent since 1965.

"Ironically, I will note, that the session act of 1965 that raised it to 4 percent was Act 155, and five years ago, we passed Act 155 which was to build 21st-century schools which still has not happened," Kidani continued. "Since then, our population has doubled. Government services expanded. We have had federal mandates. But our largest general revenue tax stream, our GET, has remained at four percent for the state. I hope that this body will continue to support ways to fund our public education system by voting in the affirmative on this measure."

The bill passed with 21 votes. Sens. Jarrett Keohokalole and Glenn Wakai voted yes with reservations. Sens. Inouye, Gil Riviere and Laura Thielen voted against the measure.

Work continues in the House

Rosenlee thanked the 21 senators who supported the proposal Tuesday, along with members of the three Senate committees–Ways and Means, Education and Higher Education–that approved the proposal, positioning it for a full Senate floor vote.

The work isn't over yet. The bill now goes to the House.

"It's going to take the effort of everyone to make sure the House votes on the bill, and votes yes. It's too important. At the end of the day, it's about funding our schools and funding our keiki, to make sure we give our keiki the schools they deserve," Rosenlee said. "Try to imagine if a child goes to school, and often times our poorest members of our community are the ones that have the schools with the least qualified teachers, and year after year of this child not having a qualified teacher, that has a long-term impact. Are you saying that these parents would not be willing to pay $5 more a month to make sure that their children could have a good education and a better future? The answer, of course, is yes, they would."

HAWAII PUBLIC RADIO: Rosenlee spoke on Hawaii Public Radio in favor of the proposed GET increase and how it could benefit Hawaii's public schools and our keiki. Listen to the broadcast here.

Here's background on the proposal

"RELATING TO TAXATION. Increases the general excise tax and use tax by 0.5% to provide a dedicated funding source for the Department of Education and the University of Hawaii. Takes effect on 7/1/2050."

*Editor's Note: Draft legislation typically includes effective dates that are decades away as a placeholder. The dates are adjusted as these bills progress.

Version SD1 would provide additional funding, 80 percent to public schools and 20 percent to the University of Hawaii, through a half-percent increase in the general excise tax (GET).

Version SD2 removes the percentages that break down how the money will be distributed to allow for further discussion in the House.

View the full measure and track its progress here.