A major environmental and energy conservation bill died yesterday when the state Legislature failed to override Gov. Linda Lingle's veto of the measure.

The so-called barrel tax bill (House Bill 1271) would have raised the price of gasoline by two to three cents per gallon by increasing the state tax on a barrel of oil from five cents to $1.05.

The bill was opposed by Hawaii's small and vulnerable airline industry, according to Senate President Colleen Hanabusa.

“;We can't afford to have another airline go down,”; Hanabusa (D, Nanakuli-Makua) told reporters after the special legislative session called to override Lingle's vetoes.

House Speaker Calvin Say (D, St. Louis Heights-Wilhelmina Rise-Palolo Valley) said the Legislature should have overridden the veto. He called the bill “;one of the monumental energy bills of the session.”;

Supporters in the community also were disappointed.

  State Lawmakers Uphold Governor's Veto On Oil Tax Hike

 

In a surprise move, State lawmakers today upheld the governor's veto of a bill that would have increased the tax on all petroleum products in Hawaii.

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“;For years, we've talked about moving towards renewable energy and ensuring Hawaii's food security,”; said Robert D. Harris, director of the Sierra Club Hawaii Chapter. “;Given our current energy crisis, it is inconceivable the Senate would not support a relatively manini tax in order to fund our clean energy future.”;

In her veto message, Lingle said the bill would have hurt the poor and helped the rich, because poor people pay a larger proportion of their income for gasoline.

“;These taxes on the poor would most benefit businesses and wealthier individuals who can afford to purchase a photovoltaic system or invest in a solar panel company,”; Lingle said in her veto message.

In all, Democrats controlled the action by overriding 38 of Lingle 57 vetoes. In comparison, last year Lingle issued 58 vetoes, according to the Legislature, and 18 were overridden.

Republican Lingle attacked the legislative leadership, saying the overrides hurt the state.

“;By their actions today, the majority party in the state Legislature continues to deny the state is in a financial crisis. Almost every person who lives in Hawaii has to cope with the loss of a job or an increase in taxes. They know firsthand the reality of our present economic situation as they face a difficult future,”; Lingle said.

The governor did not veto one of the most controversial bills of the year, Senate Bill 199. It wasn't known whether she will sign the bill or allow it to become law without her signature.

The bill is important because it means that the state will get to keep an estimated $150 million that would have had to be paid out to high-tech investors over two years.

Investors and businesses benefiting from the investment say the tax credits were essential to attracting technology development in Hawaii. Opponents said the original Act 221 was too generous and simply provided a tax shelter for the wealthy.

The state Tax Department has estimated that the state has paid $747 million in tax credits since the law was enacted in 2001.

In an unusual break with his boss, Lt. Gov. James “;Duke”; Aiona, who is running for governor, said he disagreed with Lingle's decision to approve the tax credit changes.

Aiona said he thought the bill was flawed and would hurt Hawaii's high-tech industry.

“;While I recognize the need to alter certain provisions of the high-tech tax credit, this flawed measure has the potential to cripple an industry that we have worked for nearly a decade to build up in order to diversify our economy,”; Aiona said.

Aiona said he worries that the bill sends the “;wrong message.”;

“;Investors and businesses plan years in advance and fundamentally changing the rules midstream is short-sighted and detrimental to our future,”; he said.