Lingle again seeks tax cuts

The governor cites the state's
financial health in reintroducing
plans defeated in the past

Gov. Linda Lingle is again asking lawmakers to consider "significant" tax cuts and even refunds to taxpayers based on the state's improved financial condition.

Lingle predicts improved conditions will continue at least through the end of the next fiscal year.

"Every taxpayer in the state should enjoy relief, and we'll be pressing for that at the Legislature in the upcoming session," Lingle said yesterday.

Lingle said she again plans to introduce proposals seeking to raise the standard deduction for income tax filing; provide tax credits to offset taxes on food, medical services and nonprescription drugs; provide tax credits for people who purchase long-term care insurance policies; and lower the unemployment insurance tax paid by businesses.

All of these proposals have been introduced in the past and defeated by majority Democrats in the Legislature.

House Speaker Calvin Say said lawmakers have always tried to remain open to the governor's proposals while considering the other financial needs of the state, such as funding for a new prison, money to address reforms at the Hawaii Youth Correctional Facility and funds for public education, among others.

"When your household budget is doing well after a long period of struggle, would you automatically go out and spend all your surplus money?" said Say (D, St. Louis Heights-Wilhelmina Rise) in a statement. "In our family we save for the future, we invest in areas that we weren't able to take care of when times were bad, and we anticipate what costs might be coming up."

The Legislature approved an $8.9 billion two-year general fund budget this year that included money for government employee pay raises, education initiatives and anti-drug programs.

Lingle is expected to deliver her proposed supplemental budget to lawmakers for consideration in December. She says her office has not yet determined the amount of any tax reductions or refunds she might seek.

She noted that the state Constitution includes a provision stating that if the surplus in the general fund is greater than 5 percent of general fund revenues for two consecutive fiscal years, the Legislature is required to provide tax refunds or tax credits.

The state ended the 2005 fiscal year with a surplus of $486 million, according to the state Department of Budget and Finance, which also predicts a surplus of about $473 million at the end of the 2006 fiscal year on June 30.

"What we're saying is, let's not wait," Lingle said. "Let's do it now, in '06, when people really need the tax relief."