Politicians set stage for surplus debate

Lawmakers and the governor will offer competing plans for spending an extra $574 million

STATE lawmakers and the governor drew battle lines yesterday on what to do with the projected $574 million surplus: spending more money to fix schools and other needed programs, or easing the tax bite on residents.

Lawmakers opened the 2006 legislative session yesterday, presenting their ideas on how to spend the record surplus.

While Gov. Linda Lingle will unveil her proposals Monday in her State of the State address, she has proposed returning $300 million of the surplus to residents in some form of tax refund.

Lingle said, "Bottom line, it is great to be able talk about how to spend the surplus as opposed how to face looming deficits."

While she spotted areas such as disaster preparedness and renewable energy where her plans and the Legislature's "are in alignment," she expressed concern over House Speaker Calvin Say's anti-tax cut stance.

"I was disappointed that the House didn't talk about tax relief or lessening the burden on people who are facing the high cost of living," Lingle said in a meeting with reporters after the Legislature's opening-day speeches. "I thought it showed an insensitivity to what thousands of people face who are living paycheck to paycheck.

"The surplus belongs to the people of Hawaii, and they have worked hard for us to get to this point and they deserve some substantial tax relief."

Just who is responsible for the surplus was an issue of contention, too.

In his opening-day speech, House Majority Leaders Marcus Oshiro (D, Wahiawa-Poamoho) credited the Democratic majority and Lingle's predecessor, Democratic Gov. Ben Cayetano, for passing the "sound fiscal policy" that has led to today's budget surplus.

"I just wanted to give credit where credit is due," Oshiro said afterward.

Lingle, who faces re-election this year, has said the state's booming economy and the fiscal discipline exercised by her administration to create it will be a key issue in the campaign season.

She said Oshiro was "rewriting history."

"I thought it was interesting to have him take credit for the surplus -- he didn't take credit for the deficit we had when we got here," Lingle said.

"It is very fair for the people of Hawaii to take credit and to tie that credit to the very prudent fiscal management," Lingle said when asked if it was fair that she take credit for the surplus. "We resisted to spend more money than we had. Those calls were very loud and persistent. We were able to hold the line."

Others who attended opening day said they felt leaders struck the right tone for responsibly managing the surplus, although Big Island Mayor Harry Kim said he was hoping to hear more talk about what has become his island's most pressing need.

"I was hoping that an unpopular subject -- the judicial system, the prison system -- would be mentioned as one of the greatest areas of deferred maintenance and in extreme need of a total overhaul," Kim said.

U.S. Rep. Ed Case said he was disappointed that there was no mention yesterday of setting aside some money in the state's rainy-day fund. Lingle has said her budget plan includes doubling the fund to $110 million.

State Schools Superintendent Patricia Hamamoto said she was "encouraged" to hear lawmakers list school repairs and maintenance as a top priority for the state's budget surplus.

Democrats have proposed $150 million for repair and maintenance of public schools and $80 million for operations.

Lingle's supplemental budget sets aside $40 million in cash for school repair and maintenance, and $50 million for capital improvement projects. The $40 million would be available for schools immediately.

"We propose money on the cash side," she said. "The (Department of Education) needs to move forward.

"There should be no school with a bathroom that is not functioning. They have the money. There should not be one broken restroom in the state of Hawaii in any school, anywhere."

U.S. Rep. Neil Abercrombie said he was ready to help the Legislature in obtaining federal funds to help where they are needed. "We believe the federal funds and projects have been the keystone in providing the opportunity for the surplus in the first place," he said.

Recalling his days in the state Legislature in the 1990s, Case remembered how he and his fellow lawmakers dealt with more difficult financial times.

Times are different now.

"It certainly is a different debate," Case said. "On the other hand, it is just as difficult a debate as when you're in the puka like we were in the 1990s because it still comes down to, Are you going to act responsibly and in a manner that is a long-term solution to the most people in our state?

"It's a tremendous opportunity, but it could go in the wrong direction if we don't do it carefully."

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