State leaders no closer to reducing budget shortfall


POSTED: Tuesday, April 28, 2009

State legislative leaders are moving into the last five days of the 2009 Legislature with no clear plans on how they will resolve the state budget shortfall and what funds they will use to fill the budget holes.

While Gov. Linda Lingle insists that the budget gap can be closed with $278 million in state worker takeaways, either in furloughs or benefit cuts, the Legislature is looking instead at a series of budget cuts and tax increases.

The two most drastic budget changes—either raising the general excise tax or taking the hotel room tax money away from the counties—are still being discussed, although legislative leaders are not predicting passage of either proposal.

Lawmakers said they were flooded with calls over the weekend from state workers represented by the Hawaii Government Employees Association who want the GET increased instead of pay cuts.

Randy Perreira, HGEA executive director, confirmed yesterday that the union is still lobbying for a GET tax increase, but he says the fate of any major tax increase is murky.

Still, lawmakers said even businesses were advocating a raise in the GET, not the hotel room tax.

Herb Schreiner, assistant to the president of Stars of Paradise Tours, sent a letter to legislators saying increasing the hotel room tax “;takes money away from our visitors immediately .”;

“;Put the increase in the GET, let them spend the money first, then tax it,”; Schreiner said.

But even supporters of the GET increase, like Rep. Joe Souki (D, Waihee-Wailuku), say there is little chance of moving the increase this year.

The other big change would be to take the hotel tax money away from the counties and give it back to the state. The Legislature has already voted to increase the hotel tax to 9.25 percent from 7.25 percent by 2011.

Lingle, however, has promised to veto the hotel room tax increase.

Legislative sources, however, are saying that the state tax could be returned to state coffers in return for the counties being given the ability to raise needed funds with a sales tax.

Legislative leaders first floated the plan at the middle of the session, but it was killed after the four county mayors opposed it. Now, according to sources, legislative leaders may discuss the plan with the county council leaders today.