Senate budget proposal raids hotel tax, foresees counties imposing sales levy


POSTED: Wednesday, April 08, 2009

A new county sales tax is under consideration as one way to help balance the state budget.

;[Preview]    Senate Releases State Budget

The senate has released its version of the state budget and it avoids hiking the general excise tax as some feared, but it does include layoffs.



The Senate Ways and Means Committee yesterday approved its version of the state budget, which cuts the original Lingle administration budget by $1.9 billion.

The budget is partially balanced by taking the hotel room tax that usually goes to the counties.

To replace that, Senate leaders are proposing, in House Bill 1605, to permit the counties to raise their own money with a new tax.

The state Tax Department estimates the yearly take by county — with a 1 percent sales tax — to be: Honolulu, $144 million; Maui, $39 million; Hawaii, $29 million; and Kauai, $16 million.

The hotel room tax raises about $200 million a year, with varying percentages going to the counties.

The four county mayors opposed the hotel tax raid, saying their budgets were already prepared and included the hotel tax money. To replace it with a tax that had to be approved by the counties, they said, was risky.

“;We are very reluctant to accept any proposal or package of proposals that would, in effect, force us to overhaul the budgets we have already submitted,”; the four mayors said in a joint statement.

“;If the Legislature approves this new taxing authority for the counties and concomitantly diverts our share of the hotel room tax to the state, the Legislature will have effectively forced the counties to raise taxes,”; the four mayors said.

The state budget, which was cut by Gov. Linda Lingle and the state House, was further chopped yesterday as senators approved their version of the budget, House Bill 200.

Budget scenarios from both the House and Senate envision layoffs of more than 300 state workers. The House version would eliminate 375, and the Senate 315.

Yesterday, Sen. Donna Kim, Ways and Means Committee chairwoman, said in the committee hearing that the effort was to preserve jobs for those who provide direct services to the public.

Kim said those losing jobs would be “;exempt, special assistants and PR types.”;

The House version of the budget also included layoffs of exempt or non-civil-service workers.

The two versions, however, have some discrepancies. For instance, the House said it was restoring the adult dental services program for the poor at an additional cost of $3.1 million. The Senate also said it would restore dental care, but at a cost of $2.6 million.

Kim was not available for comment regarding the budget changes. In a written statement, she said her committee did not touch the general excise tax.

Kim said in her statement: “;This budget is balanced with enough options still on the table in conference. It balances without increasing the regressive, pyramiding of the general excise tax ... and without resorting to (temporary) furloughs.”;