'I don't think the session will end
on time,' Cayetano predicts

By Mike Yuen
Star-Bulletin

Gov. Ben Cayetano believes there will be an extension of the legislative session -- scheduled to end in just six days -- as lawmakers appear deadlocked on key fiscal issues, including whether to raise the general excise tax.

While insisting that talk of an extension was premature, House and Senate leaders held a late-night secret meeting that stretched into early this morning, trying to achieve significant progress.

They didn't.

"It's slow," House Finance Chairman Calvin Say (D, Palolo) conceded after the meeting.

Cayetano said the House and Senate are still far from resolving differences on how to shape the state budget and tax-relief initiatives that are aimed at revitalizing Hawaii's stagnant economy.

"Given where they (are), there's a lot more work to be done," Cayetano said.

House Speaker Joe Souki (D, Wailuku) and Senate President Norman Mizuguchi (D, Aiea) did not dispute that. But they said they remain hopeful that agreements will be reached without the need for overtime.

Lawmakers have until midnight Friday to have fiscal-related bills in their final form in preparation for floor votes on Tuesday, what's supposed to be the session's final day.

Last night, House and Senate conferees reached agreement during public negotiations on some less contentious aspects of the supplemental budget for the current fiscal biennium.

But key sticking points still need to be resolved.

They center on five major cuts totaling $52 million that the Senate made, but which Say believes are unrealistic. Say wants the cuts restored or the Senate to come up with hard numbers justifying its position. The cuts include $23 million in the QUEST health insurance program, which could cause 29,000 low-income people to be without coverage. Also at issue is the Senate's elimination of $20 million from the Education and Health departments; the House had earmarked the funds for the state's compliance with a federal court order to provide educational and health services to special-needs students in the statewide public school system.

House conferees last night also offered to support a Senate bill raising court-related fees -- it's estimated to raise $2.9 million annually -- if the Senate would agree to back away from cuts that Judiciary officials contend will drastically hinder its services. The House also realized that its reductions were too great.

Following the public deliberations, Souki and Mizuguchi joined the money committee chairs -- the House's Say and the Senate's Rosalyn Baker (D, Lahaina) and Carol Fukunaga (D, Makiki) -- behind closed doors in Souki's office to continue negotiations.

Cayetano said House and Senate leaders are "developing alternatives and different kinds of approaches." But he declined to reveal what they are.

Cayetano said he has talked with some senators and met with Souki and Say. The House's budget and tax-reform proposals are more in line with what Cayetano wants. The excise tax increase, Cayetano insisted, is still alive.

Earlier yesterday, House and Senate conferees held their first public face-to-face discussions on their different tax-relief proposals after deferring talks that were supposed to begin last week.

Say stressed that while the House plan raises the 4.0 percent general excise tax to 4.5 percent, the proposal is able to offer bigger cuts in income tax rates because about 30 percent of the tax increase is exported to tourists and nonresidents.

The bottom line, Say said, is that isle taxpayers get a net decrease in their tax burden. Over three years, the result will be $500 million more in taxpayers' pockets, Say added, noting that the plan also helps low-income people with tax credits.

The Senate's plan doesn't include an excise tax increase.

Fukunaga countered that the Senate's more modest income tax cuts that focus on lower-and middle-income families will be a quicker boost to the economy.

"If we can get money back to the people faster, it will get money into the economy faster," Fukunaga asserted.

At the same time the House and Senate were trying to put their tax-relief initiatives in the best light, Cayetano was saying: "I don't think the session will end on time, quite frankly. I think everyone recognizes that there's a great deal work to be done. The issues are difficult and complex."

Cayetano declined to predict how long an extension might be.

Told of Cayetano's remarks, the Senate's Baker said: "The issue should be what kind of budget do we put together. Does it address concerns? Is it balanced? Is it fair? Does it try to take care of the needs of the state as best we can with the finances we have? Thats the issue -- not the timing."

Fukunaga said the Senate has not seen anything that would cause it to end its opposition to an excise tax increase. "But certainly we want to remain open. However, (an excise tax increase) is not a part of the Senate's financial plan," she said.

When Souki was asked why there has been no movement on the excise tax issue, he said the question should be directed to the Senate.

Mizuguchi said: "The Senate is really holding to that position of no (excise tax) increase, so I know there will be long and arduous discussions with House leadership and the House Finance Committee to meet the Senate as far as a no (excise tax) increase is concerned this session."

If there is an extension, it would be the first since the 1992 legislative session went into overtime for three days. Lawmakers' inability to agree on a supplemental budget led to that extension.

In 1993 and 1995, the Legislature needed special sessions to complete its work.

There were two overtime sessions in 1995. One was to reapprove 34 money-related bills -- including the Judiciary and Office of Hawaiian Affairs budgets -- invalidated by a procedural error, and to restore the nursing facility expenses tax credit that was inadvertently repealed.

During the 1993 special session, the site for the state convention center was chosen -- a former car lot on the edge of Waikiki.