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$5B budget relies on tax hikes and federal funds


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POSTED: Friday, May 08, 2009

Hawaii lawmakers finished passing bills for this year's legislative session yesterday, including a $5 billion annual budget that relies on raising taxes, slashing government services and using an infusion of federal stimulus cash to fill the state's deficit.

Legislators also gave final approval to increasing taxes on oil, possibly opening a space port in the islands, making residents pay taxes for Internet purchases, tightening technology tax credits and giving taxpayers a meager $1 rebate.

“;What a roller-coaster ride it's been,”; said Sen. Donna Mercado Kim (D, Kalihi Valley-Halawa). “;And obviously, I don't care too much for roller coasters.”;

Among the 100 bills passed yesterday:

» An increase in the per-barrel tax on oil distributors from 5 cents to $1.05, expected to generate $31 million annually for alternative energy projects and food safety programs. It could cost consumers 2 to 3 cents more per gallon of gasoline.

» A $250,000 appropriation for Hawaii to apply for a spaceport license from the Federal Aviation Administration in hopes of establishing space tourism facilities in the islands.

» A bill that would ease the way for implementation of the 4 percent general excise tax on all Internet purchases made from Hawaii.

» Restrictions on tax credits that would allow investors in technology businesses to deduct 80 percent of their investment from state taxes over five years instead of the current 100 percent.

» Increases in the limit of campaign contributions that originate in the continental United States from 20 percent of a candidate's total donations to 30 percent.

“;No one will be completely happy with this budget,”; said House Finance Committee Chairman Marcus Oshiro (D, Wahiawa-Poamoho). “;We tried. We gave it our best.”;