Cayetano: Senate’s
‘attitude’ hanging up
tax, budget deals

He says the Senate is making no
effort to offer a compromise

By Mike Yuen
Star-Bulletin

Tax-relief and budget negotiations remained stalled today as the Senate has spurned a tax compromise and refused to respond to a House "ultimatum" to justify its budget cuts.

Lawmakers have a deadline of midnight tomorrow to have fiscal-related bills in their final form if they are to adjourn as scheduled on Tuesday.

Yesterday, as Gov. Ben Cayetano's frustration with the Senate seemingly grew, the Senate:

Rejected an administration-House offer to exempt all store-bought food from the excise tax if the Senate agreed to raise the general excise tax from 4.0 percent to 4.5 percent on all other transactions, said House Speaker Joe Souki (D, Wailuku), who participated in the close-door negotiations in Cayetano's office.

Sidestepped what House Finance Chairman Calvin Say (D, Palolo) said was his "ultimatum" that the Senate come up with hard numbers justifying five cuts totaling $52 million. Those cuts include reductions to the QUEST health insurance program for low-income residents and funds the House wants earmarked for state compliance with a federal decree to provide health and educational services for special-needs students in public schools.

"I'm still waiting," Say said.

Say also wants the Senate to justify its proposal to abolish 416 positions at the University of Hawaii.

According to university officials, they are obligated to fill at least 192 of the positions -- 82 are already under active recruitment, 81 are identified as "critical positions," 15 already have been filled, and 14 have staffers with "return rights."

Cayetano, after huddling late last night with House leaders and Senate Co-Majority Leader Mike McCartney (D, Kaneohe) in Souki's office, said the problem for the logjam stems from the Senate's "overall attitude."

The Senate, Cayetano insisted, is making no effort to offer a compromise plan for stimulating Hawaii's anemic economy. Moreover, Senate leaders "do not know how to logically explain their budget. They made drastic cuts, and they don't have a balanced budget. That's their problem," Cayetano asserted.

Senate President Norman Mizuguchi (D, Aiea) said his chamber is opposed to any economic revitalization plan that includes an excise tax increase.

It was estimated that the rejected food-exemption proposal would save isle taxpayers $100 million annually. "The public for years has been asking that food not be taxed," Souki said.

Mizuguchi said two key budget hang-ups involve the Senate's desire to slash $23 million from QUEST and $20 million from the Health and Education departments which would be used to comply with the Felix consent decree. Senate money committee Co-Chairwoman Rosalyn Baker (D, Lahaina) and Carol Fukunaga (D, Makiki) contend that funds in those two areas have not been wisely budgeted in the past.

Yesterday there were no public negotiations on the budget and tax-relief initiatives. But late in the afternoon Souki and Mizuguchi had their money committee chairs join them for private talks in Souki's office.

But the discussions ended when the Senate left without satisfactorily explaining the cuts that the House believes must be restored, Say said.