Bigger room-tax
hike floated

By Rob Perez
Star-Bulletin

Gov. Ben Cayetano has suggested that lawmakers consider raising the hotel-room tax even higher than he has proposed as one possibility for reducing the financial hit to Hawaii's counties.

Cayetano mentioned the tax-hike idea yesterday in response to a question at a House Finance Committee hearing about his economic task force's proposal to overhaul Hawaii taxes.

One element of the Economic Revitalization Task Force package is to increase the hotel room tax from 6 percent to 7 percent and dedicate 3 percentage points -- about $60 million -- to tourism promotion.

The industry, which has long sought a guaranteed source of state funding for promotion, is reluctantly supporting the 16.6 percent tax increase to get the dedicated fund.

But the counties, which now get the bulk of the roughly $100 million generated annually by the room-tax, oppose the plan because they would lose $40 million of that money.

Cayetano said legislators could consider raising the tax to 8 percent and giving the counties the $20 million from the extra 1 percentage point.

He also offered another possibility: keep the rate at 7 percent as proposed but dedicate only 2 points -- roughly $40 million -- to tourism promotion, giving the counties the other $20 million.

Under either option, the counties' hit would be halved to about $20 million.

Industry officials immediately rejected the proposals.

"They're not two ideas we would support," said Murray Towill, president of the Hawaii Hotel Association. "It's a tough time to be raising any tax."

The industry only agreed to support the original hike to get the 3 percentage points dedicated for promotion, Towill said.

"The idea of increasing that (room tax) even more is really counterproductive," he said.

The Finance Committee heard about five hours of testimony on the main tax proposal of the task force plan. That calls for big cuts in personal and corporate income tax rates while raising the general excise tax nearly 19 percent.

Most speakers opposed raising the excise tax.

Cayetano told the committee he would support keeping the excise tax at 4 percent if legislators could come up with a way to accomplish the task force's objectives without crippling the state's ability to deliver services.

The committee said it will make a decision on the bill tomorrow.

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Bills at odds on
workers comp standard

By Craig Gima
Star-Bulletin

Two words could make a big difference in an effort to eliminate stress-related workers compensation claims resulting from the suspension or firing of employees.

The House Labor and Public Employment Committee yesterday passed a bill that would deny claims based on "good faith" disciplinary actions by employers. The Senate Human Resources and Ways and Means Committees passed a similar measure with a higher "just cause" standard to deny a claim.

House Labor Chairman Rep. Noboru Yonamine (D, Pearl City) said the "good faith" standard is consistent with a Hawaii Supreme Court recommendation.

The legislation stems from a state Supreme Court decision in a case in which a Big Island teacher received stress-related workers compensation after she learned she was to be suspended for allegedly striking a student.

Unions testified in favor of "just cause," which is a standard used in labor arbitration proceedings.

Gary Rodrigues, state director of the United Public Workers union, testified that "just cause" has been clearly defined in arbitration and in court, and using other definitions could lead to further court proceedings.

But Perry Confalone of the Chamber of Commerce of Hawaii said using the "just cause" language would apply a collective bargaining standard to all businesses, and add another level of complexity to workers compensation claims. "Once the 'just cause' principal is applied in workers compensation, I think the only winners are going to be attorneys," Confalone said.

The "just cause" bill goes to a vote in the full Senate, while the "good faith" measure goes to the House Finance Committee for consideration.

Differences in the language of the House and Senate versions would need to be worked out in conference committee.

The Labor Committee yesterday also passed a measure to form a task force to study changes in the state's collective bargaining and civil service laws.

Government labor unions testified the measure was flawed and not necessary.

The state's chief negotiator, Manabu Kimura, said the administration would prefer a comprehensive review of collective bargaining. "I believe the governor feels there is definitely a need for some changes, but it's a matter of priority," Kimura said.