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Straight Talk From the Capitol

By Staff | Apr 28, 2011

As the 2011 Legislature reaches its final weeks, Senate and House managers have begun conference committee meetings to resolve differences between their respective bill versions.

Balancing the state budget

The executive budget bill, House Bill 200, is currently in the spotlight, since it outlines a balanced spending plan for the next two years. Due to legislative deadlines, prior House and Senate drafts did not reflect the latest Council on Revenues forecast after the devastating tsunami hit. The negative financial impact has increased the state deficit from $790 million to $1.3 billion and requires cuts to be made in the current fiscal year ending June 30. (Note: The Hawaii state government cannot run a deficit, so the legislature must enact a balanced budget. It is then up to the governor to adjust spending if revenues fall short of projections.)

With many departments and programs already running on empty because of previous personnel cuts, retirement vacancies and increased demand for services, many question the wisdom of even larger cuts to balance the budget. Of course, no one wants to pay additional taxes either.

It is clear to me that there needs to be some revenue enhancements and cuts to bridge the gap. The question is how much and where? With only a few months remaining in the current fiscal year, it is likely that funds will be borrowed from the Hurricane Relief Fund — but set on a plan to pay back — as well as from the so-called “rainy day fund” created for such a fiscal shortfall. Also, Gov. Neil Abercrombie has imposed a 10 percent spending reduction for all departments for the remainder of the year.

The Legislature, like the Executive and Judicial branches, continues to tighten its belt. Moving to conference, HB 575 will also continue pay cuts for legislators, judges and members of the executive branch not covered by collective bargaining. Budget conferees have limited and difficult choices. Sen. J. Kalani English and Rep. Kyle Yamashita are the Maui members of the budget conference committee.

Bright spots in Senate version of HB 200

On a positive note, the Senate’s budget bill includes funding for several projects from my district capital improvement program request, as well as others important to West Maui: two portable classrooms for Princess Nahienaena School; renovation of student restrooms at Lahaina Intermediate School; solar-powered emergency landing lights for Kapalua Airport; Mala Wharf improvements; exterior painting and repairs at David Malo Circle housing; $32 million to continue construction of Lahaina Bypass; improvements for Kahului Airport, such as modernizing the loading bridges, improving passenger information system, terminal re-roofing and the access road; and implementation of an electronic health record system for the Hawaii Health Systems Corporation hospitals, including Maui Memorial Medical Center.

Additionally, the governor has announced the release of funds for a number of hurricane retrofits for Maui schools, including Band Room screens for Lahaina Intermediate.

Senate says no to taxing pensions

The Senate amended HB 1092, deleting the proposed new tax on pensions before sending it back to the House. My colleagues and I felt that imposing this tax on public and private sector retirees after their retirement budgets and plans had been set would pose an undue hardship. Hopefully the House’s pension proposal will not find its way back into conference deliberations.

What about economic development?

It is critical to move our economy forward and create jobs. One such measure in conference is SB 318, which proposes incentives for film and digital media companies to build infrastructure, create new businesses, train and employ a Hawaii workforce and grow this industry here in the islands.

Because of the importance of creating and retaining good-paying private sector jobs, we should not let any tax measure harm our fragile recovery. That is why I oppose HB 793, which would re-impose the 4 percent general excise tax (GET) on a variety of businesses such as subcontractors, aircraft maintenance and leasing and the transportation of goods between the islands, among others. HB 793 re-imposes a tax on a tax, causing the end product to cost more.

Since most of the GET gets passed on to consumers, it will mean construction of housing, roadways, schools and remodeling will cost us more. It will hurt our attempts to get workers back to work, as well as risk the high paying jobs in Hawaii that originated as a result of de-pyramiding the GET. It’s not about fairness as some claim. It is about PREVENTING THE INCREASE IN OUR COST OF LIVING AND PROTECTING JOB CREATION/RETENTION IN THE PRIVATE SECTOR.

There are many, many important decisions your legislators will make in the days ahead. Please go to www.capitol.hawaii.gov for information on the bills going to conference. I welcome your comments and look forward to providing a final wrap up of the 2011 session in early May. A hui hou.