StarBulletin.com

Finance committee tries to find alternatives


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POSTED: Wednesday, February 24, 2010

Lawmakers looking to close a $1.23 billion hole in the state budget decided to look at sources other than the four counties' share of the hotel room tax.

Working late last night, the House Finance Committee also decided against hiking the general excise tax.

Both measures were among a slew of tax proposals being considered as lawmakers work against a Friday deadline to complete work on bills before exchanging proposals for further vetting and crafting.

Among the most prominent measures being considered by the Finance Committee last night was House Bill 2598.

The bill originally proposed to scoop the Transient Accommodations Tax from the counties. Rather than take the full amount — estimated at $100 million for the upcoming fiscal year — the committee instead decided to temporarily cap the amount of TAT money going to the counties at the current level of $94.3 million a year.

The state would get any revenue above that amount and the cap would be in place for the next five fiscal years, starting July 1.

Mayors and other county executives had lobbied hard against the TAT scoop, saying the loss of those funds would lead to larger budget deficits on their ends and force them to consider increases in property taxes.

A similar measure advanced last year but ultimately stalled, leaving the TAT money in place. The TAT scoop is supported by Gov. Linda Lingle and legislative leaders including House Speaker Calvin Say.

“;Moving forward I think it's a good thing that we're keeping it alive,”; said Minority Leader Rep. Lynn Finnegan (R, Mapunapuna-Foster Village), a member of the Finance Committee.

The Senate may still decide to scoop the TAT money. Any changes in the bill would have to be worked out conference committee.

Meanwhile, the committee deferred HB2876, which would have temporarily increased the general excise tax and use tax rates by one percentage point to 5 percent.

The measure included built-in provisions to offset the tax hikes to help construction projects and aid low-income taxpayers. Those included a one percentage point increase in the tax credit for capital goods, such as equipment and machinery, to 5 percent, and an increase in the refundable food/excise tax credit by $10 per exemption.