Lawmakers backing off from tax raid of county funds


POSTED: Thursday, April 30, 2009

Legislative leaders are saying a plan to take the hotel room tax money from the counties might not be needed and that lawmakers might not be able to override a veto anyway.

According to Senate President Colleen Hanabusa and Speaker of the House Calvin Say, the tax raid, which would have cost Honolulu $43 million a year in lost revenues, would have offset state budget losses. But it might not be needed.

Say said the majority Democrats will wait until tomorrow to see if they need to take the hotel room tax money to balance the budget, but Say cautioned that he is not sure the tax grab could survive a Gov. Linda Lingle veto of the tax bill.

“;We will see if it is needed or not. If we don't need it, it may not be considered,”; said Say (D, St. Louis Heights-Wilhelmina Rise-Palolo Valley).

The counties have protested the threatened tax grab because if the state takes the money, the counties will either raise residents' taxes or reduce services to balance their budgets.

That final added cost to residents makes Say think the bill might not survive if Lingle vetoes the bill as threatened.

“;I recognize I may not have the needed two-thirds vote to override,”; Say said.

But Say and Hanabusa (D, Nanakuli-Makua) predicted in separate interviews yesterday that the other tax increases will survive vetoes.

The Legislature has already approved tax bills to raise the state income tax on wealthy residents, and the hotel room tax plus tax increases to the purchase of cigarettes and homes selling for $3 million or more.

Republican critics of the tax bills say they amount to more than $300 million in new taxes.

Say said Lingle stopped by his office Tuesday morning to discuss the state budget and let him know she might veto the budget because of her concern with provisions in the bill that would limit her ability to transfer funds between programs.

“;She caught me by surprise; she came unannounced,”; Say said.

Hanabusa noted that the Legislature's plans to raise taxes are not dependent on Lingle's ongoing negotiations with the state's public workers.

Lingle wants to save $278 million in state money to balance the upcoming two-year budget by furloughing state workers for up to 37.5 days over the next two fiscal years.

Hanabusa and Say said the tax increases are needed to keep the state budget afloat, even with the possible $278 million in labor savings.