Report Title:
Income Tax; Board of Education
Description:
Grants the Board of Education the authority to set individual income tax rates, establishes a special fund into which all individual income tax revenue is deposited, and authorizes the Board of Education to expend these funds on behalf of the Department of Education.
HOUSE OF REPRESENTATIVES |
H.B. NO. |
955 |
TWENTY-SECOND LEGISLATURE, 2003 |
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STATE OF HAWAII |
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A BILL FOR AN ACT
relating to education.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:
SECTION 1. The legislature finds that the future of this State is dependent on the provision of a quality education for our children. Under Article X, section 1, of the Hawaii State Constitution, the State is required to establish and support a statewide system of public schools, a state university, public libraries, and other educational institutions. Meeting this constitutional mandate requires a significant investment in both human and financial resources. Currently, the department of education receives its funding through the traditional budgetary process, involving input from the governor, department of budget and finance, and the legislature.
The legislature finds that this method of funding is outdated and insufficient in meeting the needs of Hawaii's public schools. The traditional budgetary process results in a situation where various state agencies must compete against each other for a limited amount of funds. In addition, this process sometimes results in politicization of agency budgets, including that of the department of education, as other entities such as legislators and lobbyists influence the decision-making process. This political infighting may result in a budget that does not necessarily reflect the best interests of the department and the children that the department must serve.
The legislature believes that another source of funding should exist to provide the children of Hawaii with the best possible education. By depositing all income tax collections into a special fund, where these moneys are to be expended by the board of education, and allowing the board of education the power to raise or lower income tax rates as it sees fit, the department of education will have the needed flexibility and autonomy to properly allocate funds to programs in a timely and efficient manner. The department of education will also be held more accountable for its actions since its funding will be much less affected by political factors outside of its control. Finally, by tying revenue streams for the department of education with income tax revenue, an important philosophical point is made – theoretically, a stronger educational system facilitates a smarter more dedicated workforce which can improve corporate productivity leading to a growing, vibrant economy. This generally results in higher income levels and higher income tax collections that will in turn benefit the department of education even further. A virtuous cycle is created.
The purpose of this Act is to provide an alternate source of funding for the department of education by depositing all income tax collections in the department of education special fund and authorizing the board of education the power to expend funds from this special fund and to raise or lower income tax rates and brackets as it sees fit. The legislature intends to meet these objectives through this Act and the constitutional amendments proposed in H.B. No. ____.
SECTION 2. Chapter 36, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:
"§36- Department of education special fund. (a) There is created in the treasury of the State the department of education special fund into which shall be deposited all income tax revenues collected by the department of taxation in accordance with chapter 235. Expenditures from the special fund shall be subject to the provisions of section 37-31, and sections 37-33 through 37-40. Appropriations or authorizations from the special fund shall be expended by the board of education as provided by law.
(b) The special fund shall be used to provide necessary funding for education programs and related costs, including without limitation, educational and classroom instruction, library services, personnel and personnel costs, administration, facilities, facilities repair, renovation and maintenance, carrying charges, school health services, risk management, and other programs and related costs, provided to or on behalf of the department of education."
SECTION 3. Chapter 235, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:
"§235- Tax imposed; rates; board of education resolution. Upon adoption of a resolution by the board of education as provided in section 302A- and notification to the director, there shall be imposed, in lieu of the tax rates imposed under any other section of chapter 235, a tax on taxable income at the rates set forth in the resolution. The tax shall be imposed starting January 1 of the calendar year following the adoption of the resolution by the board of education, and shall apply to all taxable years thereafter until another resolution in accordance with section 302A- is adopted."
SECTION 4. Chapter 302A, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:
"§302A- Establishment of income tax rates by board of education. (a) The board of education may increase or decrease the income tax imposed under chapter 235 by amending the income tax rates and brackets to determine the tax; provided that the income tax imposed by the board shall:
(1) Be imposed in a manner similar to that now imposed under chapter 235;
(2) Maintain the principle of progressivity; and
(3) Be subject to section 235-52 and those provisions under chapter 235 which conform to the federal Internal Revenue Code.
(b) The resolution increasing or decreasing the income tax rates as specified in this section shall be adopted by the majority vote of all members to which the board is entitled. Any resolution pursuant to this section shall be adopted by the board no later than June 20 of the preceding calendar year for which the increase or decrease is effective. Voting on any resolution pursuant to this section shall take place in a public hearing. The date, time, place, and subject matter of a public hearing pursuant to this section shall be advertised in a newspaper of general circulation in the State and the public hearing shall take place no less than twenty days after such advertisement is first published.
(c) If the income tax for the ensuing calendar year is increased or decreased, the board shall notify the director of taxation before July 1 of the increased or decreased income tax, income tax rates, and brackets. The director of taxation shall employ such rates and brackets in the administration of chapter
235 for the ensuing calendar year as provided by law."
SECTION 5. Section 235-119, Hawaii Revised Statutes, is amended to read as follows:
"§235-119 Taxes, state realizations. All income taxes shall be for the use of the [State] department of education and shall be paid into the [state treasury at such times as the director of finance shall direct.] department of education special fund established under section 36- ."
SECTION 6. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.
SECTION 7. This Act, upon its approval, shall take effect with the ratification of the constitutional amendments proposed in H.B. No. .
INTRODUCED BY: |
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