Hotel tax credit bill
faces probable vetoA construction credit that Lingle
opposes is added to the bill
Gov. Linda Lingle likely will veto a bill allowing state tax credits to encourage hotel and commercial development.
The credits, heavily supported by Outrigger Enterprises, which is planning a $300 million hotel and shopping arcade complex along Lewers Street in Waikiki, were passed by the 2003 Legislature.
Yesterday, however, Lingle criticized credits that would give hotel and commercial developers an 8 percent tax credit through 2010, saying they would cost the state too much money.
While Lingle said she would have considered a tax credit for hotel construction or renovation, the additional credit for commercial construction in tourist areas was the decisive point.
"I was clear with the legislators and one major developer that I did not support adding in the commercial reconstruction and renovation credit along with the hotel credit," Lingle said.
"They knew what my feeling was, and everyone was aware of it and they shouldn't be surprised if it gets vetoed," Lingle said.
The hotel tax credit bill had been passed in 2001 as part of a legislative effort to help the local economy after the Sept. 11 terrorist attacks and was due to expire on June 30. But the bill was changed to include commercial buildings and facilities located within a qualified resort area.
Legislators yesterday defended the tax credits, but said a veto would be understandable.
"I knew from the beginning that she had only factored in one or two tax credits into her financial plan, so I didn't think it had a chance," said Sen. Donna Mercado Kim (D, Kalihi Valley-Halawa), Tourism Committee chairwoman.
Kim complained that during negotiations between the House and Senate, the conference committee on the tax credits had agreed to give a credit only for hotel renovation.
Kim and Lingle said that despite the agreement, the construction credit was put in the final version of the bill and after the House threatened to reject a tax credit for the Ko Olina Leeward coast development, the Senate agreed to the hotel and commercial tax credit.
Senate President Robert Bunda said, "We thought it (the commercial tax credit) had been taken out, but in the last minutes, it got added back and we in the Senate had no choice but to go along with it."
Lingle added the commercial credit "was something just slipped in at the end."
"It wasn't what anybody had been talking about and it hadn't been carefully costed out," Lingle said.
House Speaker Calvin Say did not return phone calls regarding the issue.
Lingle said there was a chance she would have considered just the hotel tax credit, but that a credit for commercial renovation was "almost unknowable how many millions in lost revenue the state would face."
Max Sword, Outrigger industrial relations spokesman, said the hotel chain had not yet discussed the tax credits with Lingle and didn't have a comment.
Kim added, however, that Outrigger has not yet finished plans for the redevelopment and the tax credits could still be passed next year.