State budget set for final passage

House and Senate lawmakers rushed to wrap up the state budget negotiations Friday, reaching agreement on a new deal that authorizes nearly $14.44 billion in state spending on operations in the year that begins July 1, and clears the way for more funding for disaster relief to help the recovery from flooding on Oahu and Kauai.

The budget does not assume any new tax increases, but House Finance Chairwoman Sylvia Luke said a number of tax proposals and increases will be up for further discussion during conference committee meetings next week.

“After looking at the different tax bills, I don’t think the tax bills would yield anything substantial, so that did not come into play when we looked at this budget,” said Luke (D, Punchbowl-Pauoa- Nuuanu).

Gov. David Ige’s administration is projecting a carryover balance of more than $1 billion when the current fiscal year ends June 30, and that combined with strong tax collections in recent months means “I think for now we we don’t need to do extensive tax policy changes,” she said.

Lawmakers have considered a variety of tax proposals this year, including increasing the state conveyance tax, increasing taxes on timeshare properties and taxing hotel resort fees. They also discussed increasing cigarette taxes and taxing e-cigarettes, and requiring online retailers to collect and remit excise taxes to the state for online retail purchases.

Those tax proposals will be hashed out further next week, but Luke said she does not support an increase in the conveyance tax because “conveyance tax artificially increases a property value, and that could potentially lead to an increase in home prices,” she said.

Luke also has said she is not in favor of increasing cigarette taxes this year.

House and Senate negotiators agreed to boost funding for the Kupuna Caregivers program to $1.2 million for next year to support families that are providing care for an elderly or disabled member, which Luke said is enough money to allow about 900 families to tap into the program for weekly assistance.

Lawmakers included $15 million in the budget to fund a variety of services for the homeless, which was about $3 million more than the Ige administration requested.

Luke said the budget is scheduled for final votes Wednesday in the House and Senate, which will then clear the way for final action on SB 192 to provide disaster relief to help the recovery from the recent flooding.

That measure will provide up to $100 million in disaster relief funding for Kauai and another $25 million for Oahu, and will also direct more than $80 million in tobacco settlement money into the state’s Emergency and Budget Reserve Fund, or “rainy day fund.” That would boost the balance of the rainy day fund to nearly $400 million.

Lawmakers also agreed on a two-year, $4.65 billion construction budget that includes:

>> $50 million to finance additional affordable rental housing statewide.

>> $83 million for improvements to University of Hawaii- Manoa facilities.

>> $228 million for improvements at Daniel K. Inouye International Airport.

>> $69 million for design and construction of a federal inspection station at Ellison Onizuka Kona International Airport.

>> $40 million for new housing and other improvements at the Women’s Community Correctional Center.

>> $71.2 million for land acquisition and construction for a new roadway and/or realignment, and extending Daniel K. Inouye Highway from the Hilo terminus to Queen Kaahumanu Highway.

>> $70 million for plans, land acquisition, design, construction and equipment for an extension of Lahaina Bypass Road.

>> $77 million for construction, ground and site improvements for the new East Kapolei Middle School.

>> $63 million for construction and equipment for the new Kihei High School.