Tax rebate could drop to $1
A shortfall in state tax revenues could mean tax rebates of as little as $1 for Hawaii taxpayers, while government agencies could face operational budget cuts as steep as 6 percent, a key House lawmaker said yesterday.
The revenue shortfall, pegged at the start of the session to be around $290 million, also leaves little room for any state money to be put toward Gov. Linda Lingle's ambitious proposal to have the state buy Turtle Bay.
"To be absolutely honest with the people of the North Shore, given the projections, given the needs and given the shortfalls we're facing in current operations and budgets, I wouldn't hold my breath," said Rep. Marcus Oshiro, the House Finance Committee chairman.
Over the next two weeks, Oshiro's committee will begin crafting the supplemental budget for the current biennium.
Unlike in previous years, when budget surpluses allowed for major spending, the purse strings will be a bit tighter this year.
Lawmakers approved a $10.5 billion budget last year. That was before a slowing of the economy prompted the Council on Revenues to lower its economic forecast for the current fiscal year, leaving the state with the shortfall to make up.
"It's very, very difficult," Oshiro (D, Wahiawa-Poamoho) said of crafting the budget. "Expectations are so high, and people are slow to realize that the economy today is much, much different than the economy of two years ago and even last year."
Despite the shortfall, lawmakers remain obligated to provide some type of tax credit or rebate, which is mandated by the state Constitution because of budget surpluses in the previous two fiscal years.
Faced with the same mandate last year, lawmakers approved modest tax credits last year for the lowest wage earners in the state. This year's credit might be even lower.
The measure moving through the Legislature now would provide a tax credit of $1 that can be multiplied by the number of exemptions claimed by individual taxpayers.
That amount is simply a starting point and could change if the Council on Revenues comes back with a higher forecast when it meets later this month.
"Given what we know today and what they expect to come out with in mid-March when the Council on Revenues meets again, that might be a realistic rebate amount," Oshiro said.
All areas of government are likely to face some cuts, he added.
Last month he sent a memo to all state department heads asking for help in identifying areas of cost savings. It also asked for information on how their agencies would be affected if their general fund operating budgets were cut by 3 percent and 6 percent.
Linda Smith, Lingle's senior adviser on policy, said the administration responded saying it did not believe such cuts would be necessary under the governor's supplemental budget request sent to lawmakers in December.
"We specifically said that we cannot comply with this request because we had submitted a budget based on revenue projections -- that included the Council on Revenues estimate for January 2008 -- which we believe will meet our balanced budget requirement," Smith said.
Regarding Turtle Bay, Smith said the administration is studying means of financing, other than state funds, that could be used for the purchase. Officials also are working on getting an accurate appraisal of the property. Lingle has previously estimated the purchase price below $500 million.
"Once we have that appraisal in hand," Smith said, "we can talk to interested parties as well as, I think, do a major effort to identify what kind of federal, state, international resources and private foundation funds might be available.
"What we've said all along is that we really see that this acquisition can take place with very minimal state funding."