Lingle readies veto pen on taxes as lawmakers get set to override


POSTED: Thursday, May 07, 2009

The state's $5-billion-a-year budget and an estimated $300 million in tax increases are to be decided in vetoes and possible overrides today and tomorrow.





        Here are the proposals the state Legislature is expected to override after Gov. Linda Lingle's vetoes today:

» A 28 percent increase in hotel room tax


» An increase in personal income taxes on individuals earning more than $150,000 and couples making more than $300,000


» Higher taxes for real estate sales over $2 million




Gov. Linda Lingle is poised to reject a series of tax increases passed by the state Legislature, and the Legislature is set to come back in special session tomorrow to override her.

“;The budget passed by the Legislature in conference committee late last Friday evening takes $566 million out of the pockets of our visitors and residents in an attempt to balance the budget,”; Lingle said in an Internet address to ramp up support for a rally today. “;... I will follow through on my promise to veto these tax measures because they would further erode our already weakened economy, cause greater loss of jobs, and discourage visitors from coming to Hawaii.”;

If Lingle's vetoes stand, the budget won't be in balance, Democrats say. Lingle insists that without the tax bills, public workers will have to accept smaller paychecks and benefits.

;[Preview]  Lingle Online To Address Tax Hikes

Governor Linda Lingle goes online and explains why proposed tax hikes will be bad for the economy.

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Lowell Kalapa, Hawaii Tax Foundation executive director, noted that Lingle's tactic is to draw “;a direct connection between the tax increases and the salaries of public employees.”;

Randy Perreira, executive director of the Hawaii Government Employees Association, the state's largest public worker union, discounted Lingle's effectiveness in trying to drum up support. “;I don't believe there is widespread opposition,”; he said.

Perreira, in testimony during the 60-day legislative session, argued that tax increases are better than budget cuts.

One tax measure that will take money immediately from thousands of Hawaii residents is House Bill 1747. It raises the state income tax from 8.25 percent for individuals making more than $150,000 a year.

The increased rates go up on a sliding scale, starting from 9 percent to a maximum of 11 percent, the rate for such taxpayers as joint filers making more than $300,000 and head of household filers with more than $225,000.

The tax rate was lowered to 8.25 percent by Gov. Ben Cayetano. When he left office, he said it was one of his most significant accomplishments.


Kalapa said the danger with the tax is that many small-business owners or sole proprietors count their business income as personal income and will see the tax hike.

An estimated 27,000 taxpayers will be affected.

The bill's supporters said it includes tax breaks for the very poor, but Kalapa said those do not take effect for two years while the increases begin right away.

To sustain a veto, Lingle needs at least 18 votes in the House or nine votes in the Senate. Both House and Senate have to override the veto with two-thirds' majorities.

The income tax increase had 12 “;no”; votes in the House and six in the Senate. If the numbers do not change, Lingle's veto will be overridden.

Also set for a veto is Senate Bill 1111, which raises the hotel room tax 2 percentage points in two years. Lingle yesterday estimated that the bill will cost 6,400 jobs as hotels suffer lower occupancy rates because of the increased fees. That bill had 14 “;no”; votes in the House; five in the Senate.

The final bill set for veto is House Bill 1741, which raises the conveyance tax on the sale of real estate. Lingle yesterday said it will drive real estate investment from Hawaii.