CRAIG T. KOJIMA / CKOJIMA@STARBULLETIN.COM Gov. Linda Lingle gave her State of State address yesterday in House chambers at the state Capitol. Behind her were House Speaker Calvin Say and Senate President Robert Bunda.

Lingle seeks
cuts in taxes

Democrats say the GOP governor
mirrored their ideas in her
State of the State address

As Gov. Linda Lingle calls for more than $50 million in tax cuts and tax credits, Democrats in the state Legislature are saying her State of the State speech yesterday sounded like it was given by a Democrat.

State of the State highlights » Raise the standard income tax deduction to 50 percent of the federal standard deduction. » Streamline the approval process for low-cost housing projects. » Lift the cap on new charter schools in the state. » Address traffic issues, including mass transit on Oahu. For more on these and other key proposals, see below.

"It was a good speech for a Democrat," said Rep Bob Herkes (D, Volcano-Kainaliu).

The Republican governor, in her third State of the State address, asked the Legislature for tax breaks for Hawaii's working poor, elaborating on a request she had made in the past two legislative sessions. The Lingle proposal would increase the take-home pay for lower- income workers by raising the income tax standard deduction.

"Passage of this bill means 27,000 people will no longer have to file state tax returns, and 78,000 more will see their taxes reduced," she said.

"This is the single most significant thing the Legislature can do if they want to help those individuals and families who are living paycheck to paycheck."

Sen. Brian Taniguchi, chairman of the Ways and Means committee, noted that he introduced a bill to lower the standard deduction for the working poor, but it failed to pass last year.

Lingle also proposed cutting taxes on food, medical service and nonprescription drugs for taxpayers and families earning less than $40,000 a year.

For those now living on welfare, Lingle proposes raising cash payments paid through the federal Temporary Assistance for Needy Families program.

Lingle also is looking to use federal TANF funds to "eliminate the current practice of reducing welfare benefits for parents who go to work to help support their families."

The plan would help 10,000 working parents, Lingle said. Also, parents who leave welfare for work would get bonuses of between $4,800 and $6,550. A $200-a-month bonus would go to welfare families who have exhausted welfare benefits before they obtained full-time employment.

Senate GOP leader Fred Hemmings said Democrats were trying to muddy the political waters by suggesting that Lingle's plans sounded like Democratic ideas.

"The majority party needs to stop playing spin politics and listen. We have always wanted to cut the tax on food and medicine, and we have said so for years," said Hemmings (R, Lanikai-Waimanalo). "She is not a Democrat. She is a Republican fighting for change."

Other Democrats took a cautious approach to Lingle's speech. Rep. Dwight Takamine (D, Hawi-Hilo) said the speech had something for everyone.

"It was like a Christmas tree," he said.

"I didn't bring my adding machine with me, but it looks like she is trying to spend some money," he added.

Taniguchi said he thought this was a year to be cautious with any significant tax cuts. He noted that Lingle projects a surplus of only $10 million by the 2008 fiscal year.

Lingle told reporters after the speech that because of the state's good economy, tax collections are up, and she is able to propose programs that cost money.

"But every tax credit we propose is already accounted for in the budget; there is nothing outside of the budget," Lingle said.

For instance, Lingle said, she is proposing $36 million in tax credits to be used to encourage the investment of venture capital money to assist start-up firms. Also, there would be a 20 percent business/research institute tax credit to strengthen the state's science and technology base.

And finally, Lingle is calling for increasing the 4 percent tax credit for motion picture production to 15 percent for productions on Oahu and 20 percent for productions on the neighbor islands. The proposal would also expand the definition to include commercials and digital media.