Look for federal, not state, tax breaks

THE ISSUE Gov. Linda Lingle has proposed tax cuts of $102 million during the next two years.

Gov. Linda Lingle faces a fight from the Legislature concerning her proposal to cut taxes by $102 million during the next two years amid calls for major repairs at the University of Hawaii's Manoa campus. Tax relief is more likely to come from the federal government in an attempt to prevent the country from sinking into a recession.

The state Council on Revenues earlier this month lowered its forecast of the state's economic growth during the current fiscal year from 5.7 percent to 4.9 percent because of a decline in tourism and fallout from the nationwide mortgage crisis. In the wake of June Jones' departure as UH football coach, university officials estimated necessary infrastructure repairs at as much as $400 million.

The state's economy could improve because of federal tax rebates proposed by President Bush to counter the housing slump and credit crisis. Bush proposed rebates of $100 billion for individuals and $50 billion for businesses.

Leaders of the Democratic Congress support the proposal and hope to reach a deal with the White House in a few days. Congressional aides say the plan would result in rebates of up to $800 for individuals and $1,600 for married couples, limited to individuals with incomes of $85,000 or less and couples making $110,000 or less.

Prompt federal rebates of that size not only would directly benefit Hawaii residents but could stimulate tourism by enabling mainland families to vacation in the islands.