Senate panel OKs
liquor tax hike

The increase would add 13 cents
to a six-pack of beer

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By Bruce Dunford
Associated Press

The Senate Ways and Means Committee yesterday approved a 25 percent hike in the state's liquor tax, despite concerns by some members it could hurt businesses and force layoffs at restaurants and bars.

The increase would add about 30 cents to a fifth of whiskey, nine cents to a quart of wine and a little more than two cents on a bottle of beer, or 13 cents on a six-pack.

Gov. Ben Cayetano requested that the liquor tax be doubled to generate $40 million to help balance the state's budget. The Senate earlier approved a 50 percent increase, but committee Chairman Brian Taniguchi said Monday he's concerned that would have too much impact on businesses.

The latest proposal would raise about $10 million in state revenues and Taniguchi, D-Manoa, said the Senate will also look at the House proposal to raise the tobacco tax to further offset a predicted $330 million revenue shortfall.

Sen. Cal Kawamoto, D-Pearl City, said he didn't like the idea of selecting a single area for a tax increase instead of spreading out the burden of balancing the budget.

Sen. Sam Slom, R-Hawaii Kai, said the problem is that while everyone else in the state is being asked to do with less because of the state's financial crisis, the state government isn't doing its part.

"When we talk about everybody sharing the pain equally, we're not," Slom said. "We're protecting the state government. Everybody else in this state has had to prioritize, reprioritize and do without. And what we're trying to do is to keep this state going and keep this state growing.

"When is it that you are going to realize that we are destroying what little business fabric we have left in this state?" he asked.

Joining Slom on voting against the measure was Sen. Lorraine Inouye, D-N. Hilo, who said she is concerned it could cost some Big Island college students the jobs they depend upon to get an education.

"It's not going to do much for businesses to survive after 9/11," she said. "I have great concern about the economic well-being for our businesses."

Sen. Jonathan Chun, D-South Kauai, defended the proposal against Republican criticism about the Democratic-controlled Legislature raising taxes.

"How quickly we forget that the Legislature just as recently as last year has followed through on its commitment to lower taxes by lowering the income taxes," he said. "The minority party keeps on saying we have raised taxes, raised taxes and ignoring when we have lowered taxes.

"I think it's a case of selective memory," Chun said.

Also yesterday, Taniguchi outlined another key piece in the plan to address the revenue shortfall -- borrowing less than $100 million from the $213 million Hawaii Hurricane Relief Fund with a promise in law that it would be returned in a few years.

The money taken from the fund would be earmarked for education programs, including some of the $55 million in the Department of Education's budget not funded by the governor, such as multitrack schools at Kapolei and Mililani Mauka, Taniguchi said.

"We haven't come up with a bottom line yet," he said. "It'll be a lot less than $100 million," he said. "It's going to be about $50 million, maybe a little more."

Cayetano said yesterday he proposed legislative leaders look at the idea of borrowing from the hurricane fund after it was suggested by Democratic gubernatorial candidate D.G. Andy Anderson.

"We never proposed borrowing because in our view the Hurricane Relief Fund was there for us to use because it doesn't belong to anyone else but the people of Hawaii," he said. "But the issue has become so politicized that this may be a middle ground so that people who are concerned about the existence of the fund may feel comfortable."

The Senate committee, meanwhile, followed the House's lead and yesterday approved a $123 million raid on a variety of state special and revolving funds.

The House has already approved a similar raid, netting $103 million.

The differences between the House and Senate on addressing the state's revenue shortfall will go before the joint conference committee late this month.

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