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2011 LEGISLATIVE SESSION


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Measures to grab money from counties survive

By B.J. Reyes

POSTED:
LAST UPDATED: 12:31 a.m. HST, Mar 10, 2011



The state Senate has kept alive a bill to scoop an unspecified amount from the general excise tax surcharge on Oahu for rail projects, while the House advanced a proposal to cap the amount of money from the hotel room tax that goes to counties.

As lawmakers approach a deadline tomorrow to complete work and exchange bills, the moves show both sides are at least willing to look at the possibility of dipping into county coffers to help balance the state budget.

Gov. Neil Abercrombie pledged early on to leave the counties' share of the transient accommodations tax alone, while city and county leaders have pledged to fight any attempt to scoop money traditionally allocated their way.

In presenting his city budget for the upcoming fiscal year, Mayor Peter Carlisle presented a spending plan $114 million higher than last year, saying "every dollar of TAT is crucial to meet obligations."

REVENUE OPTIONS

The state House and Senate moved dozens of bills between chambers yesterday as they approached the midway point of the 60-day session, including several that would generate revenue and help with the state's budget deficit.

» HB 1092: Imposes a pension tax and repeals a state income tax deduction on higher-income taxpayers.

» HB 799: Suspends general excise tax exemptions on several business activities and imposes a GET on those activities of 2 percent, 3 percent and 4 percent over the next few years.

» HB 794: Temporarily caps itemized deductions.

» HB 306: Repeals a tax credit on out-of-state income and imposes a tax on direct satellite television providers.

» HB 793: Delays an increase in the standard deduction and personal exemption.

» HB 1043/SB 1270: Diverts money from the state's hurricane relief fund.

» SB 935: Uses money from the state's rainy day fund to pay for essential state programs.

House Bill 795 would cap the amount of TAT money going to counties at the lesser of 45 percent of the total collected, roughly equivalent to the amount counties receive now, or $102 million, the actual amount distributed to counties in the last fiscal year.

Although he expressed some reservations, Maui Rep. Angus McKelvey (D, Olowalu-Kapalua) said the proposal could have some unintended "beneficial consequences," such as giving counties a concrete start on budget planning.

"They know how much money they have, then that gives them the ability to move forward on their budget," McKelvey said.

In the Senate, the proposal to use money generated by the GET rail surcharge originally diverted $200 million from the city to the state with plans to issue $300 million in general obligation bonds to offset the loss of tax revenues to the city. The surcharge also would be extended by two years to 2024.

The Senate has advanced the bill with blank amounts, keeping it alive for further discussion.

City Council Budget Chairman Ernie Martin said he and colleagues were closely monitoring all county-related proposals.

"The City Council is opposed to any measure that would impact the city's budget and force an increase in property taxes," Martin said.

Meanwhile, a proposal to divert half of the tax collected on public utilities failed to advance out of the House and appears dead for the session.

The city had estimated the loss from the public utilities tax at about $22.5 million.

CORRECTION: Rep. Angus McKelvey (D, Olowalu-Kapalua) said he was opposed to any state raid of the counties' share of hotel room tax money, but that capping the amount given to them at 2010 levels would give the counties a concrete start on budget planning. However, he did not refer to this as an unintended "beneficial consequence" of the proposal, as was reported in a earlier version of this story.






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