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Lingle warns of job losses


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POSTED: Saturday, May 09, 2009

Furloughs of state workers are now a certainty, Gov. Linda Lingle said, and more job losses in the private sector are likely because of moves made yesterday by Democrats in the Legislature.

; Lawmakers closed out the 2009 legislative session with overrides of her vetoes on four tax bills.

Democrats said tax hikes are needed to maintain core services and programs in the $10 billion, 2-year budget.

House Majority Leader Blake Oshiro (D, Aiea-Halawa) defended the taxes as targeted, modest and “;a reasonable approach.”;

“;What we need to do is be responsible and look at our budget and make sure we provide the services that are necessary for the state,”; he said.

Bills that were overridden increase the hotel room tax by 28 percent (Senate Bill 1111); raise personal income taxes on individuals earning more than $150,000 and couples making more than $300,000 (House Bill 1747); increase taxes on real estate sales over $2 million (HB 1741); and increase taxes on tobacco products other than cigarettes (HB 895).

Lingle urged lawmakers to shun the tax hikes and allow her to balance the budget through cuts to public workers' hours and benefits that she feels her administration can achieve through collective bargaining.

How furloughs would be implemented would be determined as union contracts are negotiated, Lingle said.

“;These tax increases they passed don't remove the need for labor savings. They just make our negotiations on how to bring that about more difficult,”; she said.

Some in the private sector echoed Lingle's concerns.

News of the hotel room tax increase was devastating to Hawaii's visitor industry, which suffered one of its worst first quarters ever, said David Carey, president and chief executive of Outrigger Enterprises Group.

“;It's sort of hard to fathom when we have gone through a period where we have cut expenses, reduced work forces and tightened our belts,”; Carey said.

;[Preview]  Hawai'i Tax Hikes Approved
 

State lawmakers enacted four tax hikes today, which overrides the governor's vetoes.

Watch  ]

 

The hotel room tax, known as the transient accommodations tax, will increase by 1 percentage point July 1 to 8.25 percent, and another percentage point on July 1, 2010. Jerry Gibson, Hilton Hawaii's area vice president, said the increase would add $5 to the cost of a $220 room.

“;If you pick a group with 5,000 room nights, they are looking at paying an extra $25,000,”; Gibson said.

Said Carey, “;We'll have to eat the rates, and that will mean more layoffs and shutdowns.”;

During legislative debate, Sen. Donna Mercado Kim (D, Kalihi Valley-Halawa), one of the architects of the state budget, said the increase had to be passed. The bill is estimated to raise $88 million over the next two years. Besides, Kim argued, “;is an additional 1 percent on a $200-a-night room going to deter visitors? If so, then cut the hotel room rates by $10 — the hotels have no trouble in raising rates when the demand is high.”;

Republican Sen. Sam Slom (R, Hawaii Kai-Diamond Head) said, “;Legislators who think it is OK because we are only taxing tourists — if this industry continues to sink, there will be further layoffs.”;

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Star-Bulletin reporters Richard Borreca and Allison Schaefers contributed to this report.