Closed-door talks on
budget productive

As tomorrow's deadline looms,
Sen. Baker says a public session probably
will be held tonight

By Mike Yuen
Star-Bulletin

House and Senate budget negotiators made some progress during lengthy talks over the weekend, Senate Ways and Means Co-Chairwoman Rosalyn Baker said last night.

Baker (D, Lahaina) provided no details, however.

The closed-door meetings involved just Baker and fellow Senate money committee co-chairwoman, Sen. Carol Fukunaga (D, Makiki), and House Finance Chairman Calvin Say (D, Palolo) and Vice Chairwoman Bertha Kawakami (D, Hanapepe).

A public negotiating session involving all House and Senate conferees probably will be held tonight, Baker said.

If work on the budget can be completed by tomorrow, the day the Legislature is scheduled to adjourn, House Speaker Joe Souki (D, Wailuku) and Senate President Norman Mizuguchi (D, Aiea) intend to officially extend the legislative session to Thursday.

ip,,,.8 The Hawaii Constitution requires that all bills be in their final form for 48 hours before final action is taken.

A partial closure to this year's session will occur tomorrow.

The House and Senate will vote tomorrow on 131 bills that made it through House-Senate negotiations late last week.

However, 62 other measures -- many encompassing key issues confronting the Legislature -- were put back on the table.

Souki and Mizuguchi yesterday approved the bills for further conference negotiations, even though the measures failed to meet last week's deadlines for agreement.

Some involve major disputes, such as how deep cuts should be to the state budget, whether tax relief should be tied to raising the general excise tax, and the cost of tax breaks aimed at enticing businesses to the isles.

Others involve technical hang-ups, such as getting a few conferees to sign the conference reports that accompany bills, said Robin Matsunaga, Souki's chief of staff.

And there are still other measures in which agreements in principle have been reached.

ipThey have fiscal implications that put them in limbo until the supplemental budget for the current fiscal biennium is wrapped up, Matsunaga added.

Souki, meanwhile, disputed speculation that the House has abandoned its controversial proposal to increase the general excise tax from 4.0 percent to 4.5 percent to offset a portion of revenue lost by cutting personal income tax rates as much as 35 percent.

Proponents of the House plan, who include Gov. Ben Cayetano, contend that it means a net decrease to the tax burden of isle residents.

The Senate has been unwavering in its opposition to an excise tax increase and instead wants deeper cuts in government spending than what the House or Cayetano have sought.

Conferees are set to tackle the tax question after they complete their work on the budget.

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LEGISLATURE UPDATE

Back on the table

Some key bills that House Speaker Joe Souki and Senate President Norman Mizuguchi have approved for further negotiations:

State Budget: House and Senate differences center on how deep to cut, and how many positions to eliminate.

Tax reform: The House reduces personal income tax rates 20 percent to 35 percent but raises the general excise tax from 4.0 percent to 4.5 percent. The Senate cuts personal income tax rates 10 percent to 33 percent and doesn't raise the excise tax.

Downsizing and reorganization: The House wants the aquaculture program transferred from the Department of Land and Natural Resources to the Agriculture Department. The Senate wants to do more: eliminate two positions in the attorney general's office, school health aide floater positions, and the Health Department's interdepartmental cluster for services to children program.

Assistance for laid-off state workers: The Senate wants to offer relatively generous severance pay and early retirement benefits for terminated state workers. The House has cost concerns.

Fund transfers: The House and Senate need to formalize their agreement in principle to transfer about $60 million from special funds to the needy general fund.

Fee increases: The Senate is proposing to raise fees in nearly two dozen ways, including charging for parking and camping at state parks and for school bus transportation.

Tax incentives: The House wants to cut the excise tax on airline ticket commissions from 4.0 percent to 0.5 percent. The Senate seeks tax credits for technology training, job creation and lifetime learning.

Privatization and stress-related workers' compensation: The Senate rejected a House offer of nearly $24 million in pay raises for blue-collar state workers, including prison guards, if the Senate would agree to "reasonable basis" privatization of government services and to prohibiting stress-related workers' comp claims stemming from disciplinary actions.

Hotel room tax: The House raises the hotel room tax from 6 percent to 11 percent and exempts room revenue from the excise tax. The Senate raises the room tax to 11.5 percent; grants exemption from excise tax; extends the proposed 11.5 percent hotel room tax to resort time-share vacation units.

Education accountability: The House wants the Department of Education to require students to be competent in computer literacy and a foreign language, as recommended by the governor's economic revitalization task force. The Senate countered by proposing a temporary commission on educational accountability; authorizing the Department of Education to hire retired teachers an a part-time basis for one school year; authorizing the Board of Education to charge a deposit fee on all school books.

University autonomy: The aim is to grant the University of Hawaii more flexibility in running the UH system.

Waiahole water system: The House and Senate were in general agreement in authorizing special purpose revenue bonds of $10.2 million to purchase, improve and operate the Waiahole water system to assure adequate water to Leeward Oahu farmers.