State budget plan spreads wealth
Legislators offer an extra boost for school maintenance
Armed with new budget projections of a growing economy, Hawaii's lawmakers are closing the books on the 2006 session with gifts for all.
The final half of the state's two-year budget grew 4.9 percent to $4.7 billion, compared to the $4.5 billion spending plan sent down by Gov. Linda Lingle last December.
The big winner in the budget, House Bill 1900, according to the figures released yesterday by the House and Senate money committees, was education, especially repair and maintenance.
A total of $195 million in cash, rather than bonds, was appropriated for school repairs.
"The state is enjoying a cash surplus now. This one-time use of state funds to fix our schools will not saddle future generations with debt," the budget committee report noted.
The Democratic-controlled majority in the House and Senate also prepared an operating budget for the statewide school system that is $25 million higher than the $82 million suggested by the Lingle administration.
Included in the DOE budget was an extra $20 million to ease the financial pain of schools that are moving to the "student-weighted" formula which calls for giving money to schools on a per-pupil basis. The concept had been a key part of the Democrats' education reform package two years ago, but protests from schools that would lose money forced legislators to add money to the schools that would have lost funds.
While legislators were spreading around the wealth from the $600 million state surplus, they were also returning money in the form of tax reductions and also stashing money away in an undefined "innovation special fund."
According to Senate Bill 2546, one-half of one percent of the state's general fund balance for each fiscal year will be set aside in an innovation special fund for the next four years.
The state tax department said the money would be about $100 million after four years. Although no specific uses for the funds were given, supporters, including Rep. Jon Riki Karamatsu (D, Waipahu-Waikele) and Sen. Will Espero (D, Ewa-Kapolei-Ewa Beach) said the measure would support life sciences, advanced technology and renewable energy industries.
"This is specifically for items mentioned in the committee report," Espero said, adding that legislation would be needed next year to determine how the money would be spent.
In a written statement yesterday, Lingle said she was pleased that the Legislature worked with the administration to pass many of her initiatives.
She mentioned key areas such as reducing the state's reliance on oil, affordable housing, disaster relief and preparedness, anti-crime measures, stronger laws to protect pedestrians and deter underage drinking and drunk driving, and tax relief.
The tax bill agreed to Friday night, House Bill 957, will provide up to $50 million in tax cuts to state taxpayers, smaller than the $120 million Lingle pushed for.
The bill is designed to help the working poor, according to supporters. It includes an increase in the standard deduction to 40 percent of the federal standard deduction from 25 percent of and is expected to be worth about $11 million, according to state tax officials.
Also, the state income tax brackets that determine the percentage of taxes each tax filer must pay were expanded. According to figures provided by the House Finance Committee, the new tax proposal would save taxpayers between $10 and $311.
For instance, a single taxpayer making $5,000 a year would save $32 a year, a savings of 22 percent. A family filing a joint return with an income of $100,000 would save $311, which would be a savings of 4.4 percent.
Senate President Robert Bunda, an early advocate of changing the tax bracket structure, said the bill should help 80 percent of Hawaii's taxpayers.
"I feel that we accomplished a lot to help working families," Bunda said.
"The working middle class are already inundated with a lot of higher costs today. We need to reach out to them with this tax compromise," Bunda said.