With a $4.9 billion general fund budget precariously balanced on tax law changes, the Legislature is moving to an expected adjournment tomorrow.

In this year of failing businesses and job losses, lawmakers and Gov. Linda Lingle had to deal with a $1.2 billion budget shortfall over two years.

The bill that passed yesterday, House Bill 2200, accepted many of Lingle's funding cuts but also juggled some state worker positions.

The budget Lingle gave lawmakers had cut 1,300 positions; the Legislature's final version restored nearly 500 of those positions, meaning that the state still had shed 800 jobs.

“;This budget reflects our core values, core beliefs, and puts rare and precious dollars where most needed and necessary,”; House Finance Chairman Marcus Oshiro said. “;I find solace in our decisions because our critical needs are addressed, vulnerable populations will be served, children at risk will be safe and our kupuna and disabled will be protected and respected.”;

GOP minority leader Lynn Finnegan said that while the House Republicans disagreed on some points, both sides were hoping to accomplish the same thing: taking care of the needs of the state.

“;I think the goals are good — a sustainable future, defining core government services, recovering from this economic downfall,”; she said.

In the Senate, only Hawaii Kai Republican Sen. Sam Slom voted against the bill.

“;This budget is balanced on the backs of those who will be called to pay more taxes, fees and surcharges and will still do without services,”; he said.

Sen. Donna Mercado Kim, Ways and Means Committee chairwoman, was forced to argue that one of the budget's good points was it did not require a general excise tax increase. But she warned that a GET hike might be necessary next year.

“;We will be faced with this again next year, and we may have to come in with a broad-based tax,”; Kim said in a floor speech.

After the session, Senate President Colleen Hanabusa told reporters she thinks revenues will rise, the state will rebound and no tax increases will be needed.

    Tax on cigarettes, gift cards go up

 

 

But State House money chairman Marcus Oshiro was pleased the budget was balanced without hiking the excise tax or taking hotel room tax revenues from the counties.

 

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“;It is my understanding that the budget is balanced,”; Hanabusa said. “;There is a surplus, albeit a small one.”;

To reach a balanced budget, lawmakers had to cancel a series of tax credits given to high-technology investors under Act 221.

The bills passed with a slim 14-to-11 margin and lots of criticism.

“;Repealing Act 221 six months early will send the message to the investment community not just locally, but nationally and internationally as well, that Hawaii is not a good place to invest. Our tax and investment laws are not dependable; they lack certainty, credibility and are unreliable for business planning and execution,”; said Maui Democratic Sen. Roz Baker.

While it was raising taxes and cutting budgets, the Legislature did approve Senate Bill 2423, which increased the salary of the superintendent of education and other education officials to $160,000 from $150,000 and offered up to $90,000 in performance bonuses.

Sen. Norman Sakamoto, the bill's sponsor, said it would allow education officials to show through action “;what they can do.”;

Sen. Will Espero criticized the bill, although he voted for it, saying any bonus money should go to the schools and not to school officials.

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Star-Bulletin reporter B.J. Reyes contributed to this report.