State of Hawaii

House, Senate
clash on resort
tax credits

Lack of a campaign reform bill
accord has also created ill feelings

The Legislature is to end this evening with the House and Senate engaged in brinkmanship over two separate resort tax credits.

And the legislators have also stirred up some closing-day furor, with the Senate charging that the House is "dictating" which senators can sit on conference committees.

The tax credits, which are valued in the millions of dollars for Outrigger Hotels and Ko Olina Resorts, have been linked in an "all or nothing" package by the House Democratic leadership, although Democrats in the Senate insist the bills can be reviewed and passed separately.

The confusion was caused when the Senate voted to withdraw the bill to give tax credits for hotel renovation and construction and commercial construction in tourist areas, after the state Tax Department said the bill would cost between $17 million and $26 million.

"If given the information in this memo, it seems the budget won't balance, and I want to recommend a balanced budget," Sen. Brian Taniguchi (D, Manoa), Ways and Means chairman, said.

House Speaker Calvin Say (D, St. Louis Heights-Wilhelmina Rise) said if the hotel tax credits fail, so does the Ko Olina tax credit, which had been supported by the Senate.

"Ko Olina is part of an overall package. If one goes, the other goes," Say said.

"I don't really care about Ko Olina; the Senate wants it," Say said, adding that he was concerned about the hotel credits, which were already on the books.

The new bill extends the credits, which had been set to expire this year, until 2006.

Say told senators the credits would help pay for themselves by adding in the "dynamic effect or multiplier effect" because they prompted construction jobs and new business.

Outrigger Hotels plans to knock down five small hotels along Lewers Street in Waikiki and put in a commercial arcade and then construct new hotels. The total development package is expected to cost $300 million, according to Max Sword, Outrigger Enterprises director of industry affairs.

Sword declined to say if Outrigger would continue the projects if the tax credits failed.

The $75 million Ko Olina tax credits have been shepherded through the Legislature by Sen. Colleen Hanabusa (D, Nanakuli-Makua), who said the issue could wait if the credit created an unbalanced budget.

"As the person who drafted the Ko Olina credit for two years, I still feel we have to support the Ways and Means chair, and if in the end he does not feel comfortable with the budget, then the bill goes," Hanabusa said.

"It would be unfortunate, but if the bills are linked, that's it," Hanabusa said.

The Legislature is also ending with some bad feelings over the failure to reach agreement on a campaign spending reform bill.

The House pulled back a campaign spending bill Tuesday which critics said was actually worse than the existing law. Say complained that Sen. Cal Kawamoto (D, Waipahu), Transportation and Government Affairs Committee chairman, was the stumbling block, and Say said the House did not want Kawamoto to bargain for the Senate because he has tried to water down the campaign bill.

Senators have been privately complaining for two days that the House was refusing to discuss the campaign spending bill until Kawamoto was removed from the conference committee.

Asked about that yesterday, Say acknowledged that he did ask.

"Yes, I did, and they said no," Say said.

"All I asked -- we said to the caucus ... that next year we would like Kawamoto off the measure," Say said.

Kawamoto was not available for comment yesterday, but other Senate leaders rushed to his defense and said Say had no business telling whom to pick to negotiate a bill.

"I don't think this is right for the House to make this kind of a request. Our caucus was offended. He is a sitting senator and he has been duly elected," said Senate President Robert Bunda (D, Wahiawa).

Hanabusa called it "an issue of internal affairs for one house."

"How would the House like it if we told them we wouldn't talk to them unless (Rep.) Joe Souki (the influential former speaker) was off a committee?" Hanabusa asked.

State of Hawaii

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