The governor put his name on his proposal for easing the state’s cost of living, the Green Affordability Plan, so plainly the enabling legislation, including House Bill 1049, has his stamp of approval. And this indeed is the year to direct income tax relief, as the measure proposes, toward Hawaii residents — especially toward those most in need.

The plan was a centerpiece in Gov. Josh Green’s inaugural State of the State address, including expansions for a range of tax credits largely targeted to low- and middle-income people. He headlined in particular a $500 Educator Tax Credit for teachers, who often pay for classroom needs themselves.

But importantly, it also reforms income tax brackets so that Hawaii residents at every income level would benefit from a lessened burden. At a time when most people are struggling with inflation and, in some cases, the after-effects of the pandemic, a broadened approach to tax reform is welcome — even overdue.

However, this is where lawmakers will have to pare down taxation with great care. The aspirations of the governor and legislators alike include a lot of costly programs that also are designed to help the workforce and the poor.

The universal preschool initiative, for example, needs a healthy infusion to get off the ground, and the budget surplus could provide that now.

Nonetheless, fiscal prudence and a stable revenue stream are crucial to maintaining the state’s budgetary health and credit worthiness.

The state’s largest source of tax revenue is the state general excise tax, but the individual income tax remains important. The Hawai‘i Budget & Policy Center, part of the nonprofit Hawai‘i Appleseed, illustrated how the relative amounts can fluctuate. Income taxes actually edged out the GET in fiscal 2021, during the pandemic’s economic disruption.

But in fiscal 2022, the GET rebounded, and income tax came in at roughly a quarter below what the GET brought in. Collectively, the two taxes bring in about 80% of the state’s revenue, with the balance derived from the transient accommodations tax, corporate income tax and other sources.

HB 1049 appears to be moving along, passing both the House education and economic development committees last week, and is now awaiting a hearing in House Finance. The committees jointly found that the bill, which creates the new income tax credit for teacher expenses and increases the reach of some existing credits, “seeks to improve the lives of people throughout the state.”

But they also rightly asked House Finance “to consider the fiscal impacts this measure may have on the state as a whole and on individual taxpayers.”

Committee members clearly heard the cautionary notes in the testimony, even from those in support.

Luis Salaveria, Green’s nominee to direct the state Department of Budget and Finance, outlined some of the proposed changes:

>> Individual income tax brackets, the personal exemption amount and standard deductions would be increased and indexed to inflation, a broad taxpayer benefit.

>> The upper limits for the income tax brackets would be increased, resulting in less tax paid at each income level.

>> Credits proposed for enhancement include those for child- and dependent-care expenses, low-income household renters and the refundable earned income tax credit.

Among the backers for this relief is Hawai‘i Appleseed. The organization underscored, though, that “both cuts and revenue are needed to promote affordability,” adding that credits must be accompanied by public investments, such as child care.

That is a reality check for legislators. They ultimately must ensure that the complete package makes the most of state resources, finding the right balance of lower taxes and the services that Hawaii’s people need most.