Souki: ‘No hope’
of ending on time

Significant differences on
money issues keeping House
and Senate apart

By Mike Yuen
Star-Bulletin

With the House and Senate far from resolving significant differences in crafting the state budget and tax-reform initiatives, it appears inevitable the legislative session will be extended.

"There is no hope that we will adjourn the session on time," House Speaker Joe Souki (D, Wailuku) said early this morning.

His assessment came after no public negotiations yesterday on the budget and tax relief, the key tasks confronting this year's Legislature. Nor was there any evidence yesterday of face-to-face talks behind closed doors.

Souki said it is unclear whether conferees will meet today, even as tonight's midnight deadline looms to have all fiscal-related bills in their final form.

The Legislature is scheduled to adjourn Tuesday following final action on bills.

"As far as I know, they're not going back," Souki added. "However, all (what Senate conferees) have to do is pick up the phone and call me."

Senate President Norman Mizuguchi (D, Aiea) painted a less gloomy picture.

He said he has instructed Senate Ways and Means Co-Chairwomen Rosalyn Baker (D, Lahaina) and Carol Fukunaga (D, Makiki) "to make progress."

If he must, Mizuguchi said, "The extension is something I will discuss with the speaker (tonight) about this time (10 p.m.)."

Senate Co-Majority Leader Mike McCartney (D, Kaneohe) said it makes no sense to to extend the legislative session if there are no agreements beforehand; otherwise, it would be a waste of taxpayers' money.

Other options include a recess and then an extension, a special session, or adjournment without a budget and tax reform, McCartney added.

If lawmakers fail to pass a supplemental budget, Gov. Ben Cayetano would have to live by the biennium budget passed last year and make budget-restriction decisions on his own.

Mizuguchi said: "Things are going slower than normal, but we are in communication (with the House). We have developed some financial parameters." That means, he said, that both sides will discuss tax-reform initiatives and the supplemental budget as one package.

House Finance Chairman Calvin Say (D, Palolo) insisted that raising the general excise tax from 4.0 percent to 4.5 percent remains an essential element of the House's plan to provide tax relief and revitalize the state's flat economy.

The tax hike offsets a portion of the $560 million that the House intends to return to taxpayers by lowering income tax rates over the next three years.

"If we don't go for the 0.5 percent increase, there is no 35 percent reduction in personal income taxes," Say said.

The Senate, however, is adamantly opposed to any excise tax increase. It makes deeper cuts to government services and personnel than the House to avoid a tax hike.

"We need to get the general excise tax off the bargaining table," Mizuguchi insisted.

The budget is stalled because the House believes the Senate has so far provided inadequate explanations to justify five major cuts totaling $52 million. Of particular concern to the House:

The Senate's slashing $23 million from the QUEST health insurance program, which could leave 29,000 low-income residents without coverage.

The Senate's eliminating $20 million from the Education and Health departments that were earmarked for state compliance with a federal decree to provide services to special-needs students in public schools.

Last night, lack of progress on the fiscal proposals created an eerie scene, said longtime Capitol observers.

"It is highly unusual that it is so slow," said George Yamamoto, executive director of the Hawaii State Teachers Association. The union supports raising the excise tax as high as 5.35 percent, as proposed by Cayetano's economic revitalization task force.

Public Safety Director Keith Kaneshiro, concerned about how Senate budget cuts would affect his department, waited for House-Senate conference negotiations that never occurred.

Kaneshiro fears a Senate recommendation to eliminate $2.2 million for the planning and design of a prison on the Big Island. If that proposal passes, it would mean a year's delay for a prison, said Kaneshiro.

"It is irresponsible for them to put this in," said Kaneshiro of the prison item, and called the absence of Senate conferees yesterday "just a stall tactic."

The overcrowded prison system needs more beds, he stressed. "What do they want instead? Early release of inmates into their communities?"