A private meeting with Abercrombie yields a plan that moves closer to a balanced budget
POSTED: 1:30 a.m. HST, Mar 4, 2011
The state House Finance Committee has moved nearly two dozen bills that would generate revenue or reduce benefit costs, an alternative blueprint to Gov. Neil Abercrombie's plan to help balance the state budget.
The bills, which will be up for consideration before the full House, would provide the revenue to pair with spending cuts the committee will likely make when it prepares its draft of the budget this month.
House Democrats discussed the bills yesterday in private caucus and in a private meeting with Abercrombie. In total the bills would generate an estimated $271.5 million in fiscal year 2012 and $357.6 million in fiscal year 2013 to help contain a projected two-year deficit of $700 million.
House lawmakers would generate the most revenue from a bill to suspend general excise tax exemptions on several business activities and impose a GET on those activities for the next few years. A bill to add a pension tax and repeal a state tax deduction for higher-income taxpayers would raise the second-largest amount.
A bill to temporarily cap itemized deductions would bring in the third-largest pot. The rest of the revenue would come from a variety of sources, an attempt by lawmakers to spread the burden.
The House is moving toward the alternatives because many of Abercrombie's tax revision and spending cut proposals have not been accepted as written by House and Senate lawmakers.
"It was generally about collaboration. Nothing that he has set forth was put in stone, and he's really looking forward to continuing to work with us toward crafting the budget and figuring out how we're going to get out of the hole," said state House Majority Leader Blake Oshiro (D, Halawa-Aiea) after the meeting with Abercrombie.
Abercrombie said after the meeting that several of the House bills are variations on his proposals. He has said for the past several weeks that he is open to alternatives.
"It's the legislative process at its best," the governor said.
The Finance Committee, worried about legal implications, agreed Wednesday night to end state Medicare Part B reimbursements, but only for public worker retirees hired after July.
The committee reconsidered a vote taken on Saturday on a broader proposal that would have contained spending on the benefit.
Abercrombie had originally proposed ending the reimbursements for all retired public workers, which would have saved the state an estimated $41.7 million in fiscal year 2012 and $46.8 million in fiscal year 2013.
The new version of the bill passed by the committee would not save the state any money until workers hired after July eventually retire.
Public-sector unions, and many retirees, objected to the governor's proposal. The state Attorney General's office also warned that the governor's proposal could invite a legal challenge by retirees who claim it is an accrued benefit protected by the state Constitution.
The committee opted yesterday to defer a bill that would split the health care premium cost between the state and public workers at 50-50 by law and make the issue non-negotiable in contract talks. The committee had voted to pass the bill on Saturday but reconsidered it out of concern with interfering with the collective-bargaining process.
Abercrombie and the public-worker unions have agreed to have government pay 60 percent of the premiums through the end of this fiscal year.