StarBulletin.com

Kim will unveil budget plan


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POSTED: Tuesday, March 23, 2010

State Sen. Donna Mercado Kim says her financial plans call for balancing the state budget without raising the general excise tax.

Kim, chairwoman of the Senate Ways and Means Committee, will be unveiling her own version of the state's $4.8 billion general fund budget, adding that preliminary plans call for about $14 million in cuts, compared with the more than $40 million cut in the House version.

Last week, two Senate committees approved raising the excise tax to 5.5 percent on Oahu and 5 percent on the neighbor islands. The supporters said the excise tax increase would be for two years and would prevent more budget cuts.

A coalition of labor unions and social service agencies plans a rally and lobbying campaign today to ask for the GET increase to restore budget cuts.

While Kim opposes the GET increase, she does foresee increases in local taxes on oil and possibly increases to liquor and cigarette taxes.

In an interview yesterday, Kim said she is trying to steer away from broad tax increases.

“;This is not a good time to raise taxes on business,”; said Kim (D, Kalihi Valley-Halawa). “;I am told businesses are teetering, and they will either fail or be forced to lay off workers.”;

               

     

 

 

TAXING MEASURES

        Here are some of the tax bills under discussion by the Senate Ways and Means Committee:

       

House Bill 1985: This drops the tax deduction for political contributions, raises the tax on cigarettes and doubles fees for insurance fees and licenses.
        HB 2542: Transfers excess balances from special funds into the general fund.
        HB 2850: Raises the state liquor tax.

       

Although she did not yet have specific figures, Kim said she is also looking at taking a portion of the $100 million-a-year hotel room tax now going the counties.

The House version of the hotel room tax bill capped the counties' annual portion at $94 million, but Kim says that could change.

“;We are looking at dropping that cap. The House capped it. We are looking at lowering the cap—a little bit more than a little bit,”; Kim said.

Kim also hopes to balance part of the budget with an accounting change by taking $57 million now tucked in special funds and moving it to the general fund, where it can be spent on anything.

“;There is not one magic bullet. We are looking at more budget cuts, revenue enhancements, transfers and some tax increases,”; Kim said.

The state's Act 221, which has created a set of tax incentives for high-tech investments, would be deferred, according to the Kim plan. That would save the state $93 million and is expected to face strong opposition from the high-tech community.

Kim argues that all the minor changes are better than raising the GET because it would not be as broad.

Besides, Kim says, there is not enough support for the GET increase, proposed last week.

“;I refuse to have a big hole in the budget and us being in a situation like last May where the governor restricts money across the board and it hurts everybody,”; Kim said.

Hearings on Kim's budget proposals are set to start today.