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Legislators’ focus pivots on revenue projections

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State lawmakers Tuesday maintained their focus on economic recovery while they awaited word on whether projected revenue growth will be enough to keep the state budget on track.

Legislation to expand state construction, streamline permitting and procurement and offer tax credits to promote hotel renovation and the film industry is alive as the midpoint of the 60-day session approaches.

State House and Senate leaders will learn today whether the state Council on Revenues will affirm the 11.5 percent growth forecast for the fiscal year that ends in June. If the revenue forecast holds, the two-year budget will remain in balance, and lawmakers will likely concentrate on adjustments to contain projected deficits in the six-year financial plan. But if the council significantly reduces the forecast, Gov. Neil Abercrombie and legislators will have to shift their attention to the budget in the remaining weeks of the session.

"I think we definitely are trying to keep our eye on the budget. The revenue numbers are still coming in, and we’re cautiously optimistic but we always want to be prepared in case something doesn’t turn out like we anticipated," said Senate President Shan Tsu­tsui (D, Wai­luku-Kahu­lui).

The Senate last month moved out its aggressive $500 million investment in state construction to reduce a backlog of repair and maintenance projects at public schools, hospitals and other state buildings. On Thursday senators are expected to give final approval to a bill — already passed by the House — to delay an increase in the unemployment insurance tax that could save businesses $107 million this year.

The House is behind a package of bills to encourage research and development and investments in the entertainment, high-technology and aerospace sectors. House lawmakers also want to make a state policy statement in support of several large projects over the next decade, including Hono­lulu rail transit, the Thirty Meter Telescope on Mauna Kea, an interisland power cable and a condominium in Kakaako that would be the state’s tallest.

House members dropped plans to exempt certain state and county projects from environmental review after objections from the environmental community but are still interested in streamlining procurement. Lawmakers would set time limits on administrative and judicial review and require citizens who challenge contract awards to post protest bonds that would be forfeited if their protests fail.

"I think we’re on target, especially jobs for construction. That’s one of the industries of the overall economy that hasn’t bounced back, that’s having a harder time," said House Majority Leader Pono Chong (D, Mau­na­wili-Kane­ohe).

House Minority Leader Gene Ward (R, Kalama Valley-Hawaii Kai) warned that legislators may be going too far with regulatory exemptions, cautioning that "together they make a really bad stew."

The House and Senate have prepared hundreds of bills to exchange between the chambers by Thursday, an internal procedural deadline known as first crossover. The House Finance Committee is also expected to have its draft of the supplemental state budget ready for a House vote next week. The budget draft would then move to the Senate for consideration.

On Tuesday the Senate voted overwhelmingly to advance a $200 million settlement between the state and the state Office of Hawaiian Affairs of OHA’s share of revenue from former crown lands since 1978. Under the deal, the state would transfer state-controlled property in Kaka­ako for OHA to develop.

The Senate also approved a bill that would give OHA more flexibility to develop high-rise apartments in Kaka­ako. The two bills now go before the House.

Senate Majority Leader Brickwood Galu­te­ria (D, Downtown-Waikiki) described the settlement as a "major milestone at the most critical stage in the reconcilation process" with Native Hawaiians.

But Sen. Clayton Hee (D, Kahuku-Kane­ohe) said previous estimates have suggested that Native Hawaiians are due from $300 million to $1.2 billion in former crown land revenue. He also said that the settlement leaves too much discretion over the Kaka­ako land to the Hawaii Community Development Authority.

"It’s an extension of the sad history of the treatment of Native Hawaiians by political leaders," he said.

Senators, looking to help the tourism industry, passed a bill that would provide a general excise tax exemption for hotel and resort construction or renovation projects completed by June 2017. Hotels and resorts would also be eligible for a tax credit to offset wages paid to workers after the construction or renovation.

The Senate and House approved different versions of an expanded film and digital media tax credit with incentives to hire local workers for production crews.

The Senate also kept alive a bill that would require businesses to impose a fee on single-use plastic bags to encourage consumers to use alternatives. Businesses would keep a portion of the proceeds from the fee, with money also going for state environmental protection initiatives.

While legislation to legalize gambling has stalled, senators passed a bill that would create a commission to study the social and economic costs and benefits of different forms of gambling.

In the House, members approved bills that would standardize public school bell schedules and require the state Department of Education to establish a performance evaluation program for teachers and educational officers.

Brushing off criticism from state regulators and private bankers, legislators also advanced bills that could lead to the creation of a state bank that could offer loans for alternative energy and high-technology projects or help rescue homeowners facing mortgage foreclosure.

Both the House and Senate passed bills that would potentially allow the Hawaii Health Systems Corp. to acquire the former Hawaii Medical Center-East in Liliha, which closed as part of HMC’s bankruptcy.

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