GOV. BEN CAYETANO huddled with state Democratic legislative leaders and top tourism and business officials yesterday, telling them he wants $76 million in tax breaks plus $1 billion in new construction spending to avert the economic crisis triggered by the Sept. 11 terrorism attacks.
» Seeks $76 million in tax breaks
» Wants $1 billion building blitz» Cayetano proposes 20 bills to be heard
by a special session of the state Legislature
» Lawmakers worry about the potential
debt caused by the construction packageBy Richard Borreca
rborreca@starbulletin.comCayetano gave the Democrats 20 proposed bills that he wants passed by a special session of the state Legislature later this month. The biggest tax change would be a $48 million tax break for people, estates or trusts paying state capital gains taxes for 2001 and thereafter.
After the 21/2-hour meeting, lawmakers declined to endorse the entire package, noting there were worries about the $1 billion construction package.
House Speaker Calvin Say (D, Palolo Valley-Kaimuki) said the interest or debt service on the $1 billion could amount to 5 percent or $50 million.
"A lot of our colleagues are very much concerned about the debt service," Say said. "It is a fixed cost and we know the general excise tax is going to be dropping, so we have to be careful."
To spur the economy Gov. Ben Cayetano, left, is proposing a series of tax breaks and deferrals worth $76.3 million. Here are the details. Governor's requests
>> Impose the general excise tax rather than public service tax on transportation services -- a $3 million one-time tax loss. TAX BREAKS
>> Increase tax filing thresholds for taxpayers filing withholding, GET, transient accommodations and car rents. Impact will be loss of $17.2 million in the current fiscal year.
>> Exempt unemployment compensation from Sept. 11 to June 30, 2002 from state income taxes. Estimated loss of $8 million.
>> Reduce the capital gains rate for individuals, estates and trusts for 2001 and thereafter. Estimated annual loss of $48.1 million.
The governor also calls for moving $213 million from the Hurricane Relief Fund and $53.5 million in tobacco settlement special funds to the emergency budget and reserve fund. EXTRA MONEY
Finally, Cayetano is asking that the state borrow an additional $1 billion in construction funds for new projects. The interest or debt service on the bonds was roughly estimated by House Speaker Calvin Say to be 5 percent or $50 million.
Senate President Robert Bunda agreed, saying there are "hurdles to overcome."
"We have people concerned about the debt, we have people concerned about the specific projects and we have people concerned if we can afford it," said Bunda (D, Wahiawa-Haleiwa-North Shore).
The special session is tentatively scheduled for the week of Oct. 22, Say and Bunda said, but Say added that if the public comes up with more ideas to include in legislation, the session could be delayed or extended for more than five days.
Before the meeting at the state Capitol, Cayetano told reporters he is also asking the Legislature to relax the rules on how the state contracts for services to make it easier to quickly approve contracts.
Many of the procurement rules were tightened eight years ago when there were questions of state contracts being awarded to politically influential businessmen.
Legislators, however, say that the state must be able to quickly spend money to help get construction projects approved.
Cayetano also wants to be given the power to defer all or a portion of rents, fees and charges imposed by the state Board of Land & Natural Resources on state leases and permits. He told reporters he had met with state vendors at the Honolulu Airport yesterday and was concerned about the dramatic drop in business at the airport.
"They are really hurting," Cayetano said.
The governor is also asking for an unspecified extra appropriation for "increased security measure for transportation ... and for the marketing and promoting of Hawaii airports."
Money for all that would come from state airport revenues, some for the construction budget and the rest from the state operating budget.
Cayetano's team of business leaders, including Walter Dods, BancWest Corp. and First Hawaiian Bank CEO and president; Peter Schall, Hilton Hawaiian Village vice president; and Tony Vericella, Hawaii Visitors and Convention Bureau CEO, also briefed the Democratic legislators about the new tourism marketing plan.
Cayetano, along with former governors George Ariyoshi and John Waihee, leave next week for a tourism promotion in Japan.
Cayetano said they hope to meet with Prime Minister Junichiro Koizumi and the major national tourism officials.
"There is an impression among Americans that all we have to do is convince the Japanese that it is safe to come and they will return," Cayetano said. "Well, it is not that simple."
Sen. Donna Mercado Kim (D, Ft. Shafter-Aiea), chairwoman of the Senate Tourism Committee, plans a committee meeting tomorrow to review the state's emergency tourist promotion efforts. After Cayetano's meeting yesterday, she said she heard "four different themes and I didn't see anybody jumping up for any of them."
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