Wednesday, December 29, 1999

Hawaii State Seal

Cayetano budget restores
spending for health/UH,
drops planned tax hikes

By Lori Tighe


A positive tax-revenue forecast has prompted Gov. Ben Cayetano to boost the $47.1 million supplemental budget submitted last week to the state Legislature.

Cayetano yesterday announced he will restore $3 million to the state Health Department and $1.6 million to the University of Hawaii, while dropping efforts to raise $29 million through several tax-hike proposals.

The announcement came after the Council on Revenues last week increased its tax-revenue projections by almost 1 percent a year for the next five fiscal years.

The panel of economists credited the overall economy, visitor spending, construction activity and personal income for the positive forecast.

"This shows that much of what we've done to improve the economy is beginning to bear fruit," Cayetano said.

After reviewing the Council's projections, the state doesn't intend to propose a tax on used car sales, add $1 to the surcharge on rental cars, and eliminate the current 1 percent tax credit for Hawaii-based insurance companies, the governor said.

The additional money slated for the Health Department would be used to promote better nutrition and physical activity in public schools and communities.

"But more work needs to be done," he said.

Cayetano said emergency appropriations have been averaging $44 million a year over the past five years to continue essential government services, including special education programs, human services and the state's rural hospitals.

"These are the kinds of emergency costs typically not included in our budget plan," he said. "But we fully expect these costs to recur in the years ahead. That's why sound fiscal planning mandates that we maintain a sufficient surplus to cover these costs."

The governor leaned away from a proposal to use the extra tax revenue for a 2 percent annual raise for state employees.

He said it would cost the state $286 million over the the next four years, depleting the projected surplus and resulting in a shortfall of $198 million in fiscal year 2003.

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