$300 million in cuts would
eliminate the need to raise excise tax,
says Rep. Calvin Say

By Rob Perez
Star-Bulletin

The House Finance Committee expects to make major cuts to the state budget beyond what Gov. Ben Cayetano already has proposed, affecting even core services such as education and health, the panel's chairman says.

Rep. Calvin Say (D, Palolo) said the cuts would significantly add to the 163 positions Cayetano recently recommended eliminating as part of the administration's $111 million budget-cutting plan.

"It's a major increase from the governor's" proposal, Say said.

His comments came yesterday after his committee heard numerous speakers testify against a bill that would make all nonprofit organizations, including churches, subject to Hawaii's general excise tax. Much of their revenue currently is exempt from the tax.

The bill proposed taxing the organizations 1.5 percent, which would raise enough revenue to lower the current 4 percent excise tax to 2.5 percent, Say said.

Cayetano's Economic Revitalization Task Force has proposed raising the GET to 4.75 percent, while significantly cutting personal and corporate income tax rates.

Many of yesterday's speakers said taxing nonprofits such as hospitals and social service organizations would trigger widespread layoffs, hurt health care and curtail services to the needy.

They said the state should cut expenses rather than look for additional ways to raise revenue.

"Don't make the mistake of stealing from God," said Woodrow Yasuhara, superintendent of the Hawaii Assemblies of God. "To solve your problem you need to stay within your budget."

"If you tell us to cut, cut, cut, we can do it," Say later responded. "But services are not going to be provided to people who are part of your flock."

Say said his committee next week will consider a proposal to cut $300 million from the fiscal 1999 budget, which begins July 1.

That $300 million includes the $111 million recommended by the governor plus the $73 million that the task force's proposed tax overhaul would cost the state, Say said. He wouldn't say how many positions might be eliminated. But if $300 million is cut from the budget, that would eliminate the need to raise the excise tax as proposed by the task force, Say said.

Several speakers said the state should review existing exemptions to the excise tax to determine if they still are necessary.

Say said his committee likely will pass a bill next week that eliminates some exemptions.

He said the panel also will make decisions on the main tax bill proposed by the task force and the budget bill.

With the economy ailing, "we have to do something," Say said.