Lawmakers:
Special session costly,
unnecessary
Gov. Cayetano says a session may be needed
By Mike Yuen
to meet a feared $90 million shortfall
Star-BulletinSenate and House leaders say it is premature to talk about a special legislative session, although Gov. Ben Cayetano believes it may be needed to deal with declining state tax revenues. But, said Senate Co-Majority Leader Mike McCartney (D, Kaneohe): "It is positive that he wants to work with us instead of imposing unilateral restrictions.
"For us in the Senate, working on the economic well-being of the state is bigger than the budget. Whether it should be done in a special session or next year's regular session needs to be discussed.
"Simply looking for additional tax revenue is not the answer."
McCartney and fellow Senate Co-Majority Leader Les Ihara Jr. (D, Kaimuki) met with Cayetano's chief of staff, Charles Toguchi, for about an hour yesterday to assess the state's latest fiscal woes and to discuss economic development.
Cayetano fears the state could end the current fiscal year with a revenue shortfall of roughly $90 million as tax collections for March, April and May ran significantly below what was collected in those months last year. After 11 months, tax revenues this year are 2.1 percent below what was collected in the same period last year.
The Council on Revenues has projected that the fiscal year would end with tax revenues 1.2 percent higher than the previous year.
Earlier this week, Cayetano said if tax revenues don't pick up this month he may ask for a special session to pass two revenue-generating bills that were rejected by lawmakers during this year's regular session. The measures would:
Repeal the tax break for local insurance companies that out-of-state competitors have gone to court to fight.
House Speaker Joe Souki (D, Wailuku) said it would be a waste of taxpayers' money to call a special session if there was no pre-agreement between the House, Senate and administration on the issues.
The House, he noted, backed the unsuccessful administration bills that Cayetano wants resurrected. The Senate didn't.
The measures also won't completely solve the budget woes, Souki said. The two bills, if passed, would provide only about $50 million, Souki said.
He said Cayetano can restrict funding, which he has vowed to do, and also tap the state's general fund cash carryover -- the equivalent of a taxpayer's checkbook balance at the end of each month.
The cash carryover is projected to be $104.4 million, based on the 1.2 percent growth projection by the Council on Revenues.
But if the carryover is drastically reduced to cover a shortfall, it could jeopardize the state's bond rating.
The administration won't know until mid-July what the state's year-ending revenues are and how much the departments return to the general fund, which could be used to cover the shortfall. Those key factors are hard to predict, said state Budget Direct Earl Anzai.
Senate and House Republicans said they support Cayetano's call for a special session -- as long as the issue of privatizing government services, a way to save taxpayers' money, is also addressed.
Changing the state's tax structure to put more money in circulation is another solution, said Senate Minority Leader Whitney Anderson (R, Kailua).
Senate and House leaders said the privatization issue can be addressed next year.
