Cuts and tax refund delays will balance state budget

Almost all of the budget cuts recommended by Gov. Linda Lingle were included in the state budget passed at the end of April by the state Legislature with $1.1 billion of the projected $1.2 billion shortfall coming from Lingle's cuts. The biggest of these comes from furloughing state workers, which would save $366.7 million.

The second largest chunk comes from delaying $275 million in state income tax refunds until the new fiscal year, which starts in July. That change means next year the state will either have to make up the $275 million or continue to delay tax refunds until July.

The Legislature put back some of the heavily publicized Lingle budget cuts such as reductions in the number of state agriculture inspectors and the eligibility case workers with the Human Services Department, but it added another $93 million in additional cuts and increased taxes by $58.5 million. The biggest tax increase was $26.3 million to be collected by halting itemized deductions for high-income taxpayers. The $1-a-barrel increase for imported oil is expected to bring in another $13.2 million. The Legislature also saved $93.3 million by deferring tax credits for high-tech investments. Democrats in the Legislature have yet to decide whether to return for a veto override session in July if Lingle vetoes any tax bills.

Next year, lawmakers are likely to again face the question of whether to raise the general excise tax. During debate on the Senate floor, Sen. Donna Mercado Kim, Ways and Means Committee chairwoman, warned that without an improvement to the state's economy, a GET increase might be likely. Finance Committee Chair, Rep. Marcus Oshiro said he would again push to cut tax exemptions.

Environmental organizations say the Legislative session could have been worse

From KAHEA, the Hawaiian environmental alliance: “This legislative session didn’t turn out to be as bad as it could have been for our natural and cultural resources.  By mid-session this year, there were proposals to drastically weaken our environmental impact statement law, transfer 54 percent of the Division of Aquatic Resources to the Hawaii Institute of Marine Biology for groundskeepers, and to grant corporations extended leases to exploit our ocean. Thanks to the advocacy of so many, none of these proposals passed. … Legislators did manage to pass some good bills: laws that make it a felony to intentionally kill Hawaiian monk seals, require solar water heaters on new homes and prevent beachfront landowners from using naupaka to block public access to and along the shoreline. … An audit will happen for Mauna Kea – albeit a self-audit ... we see it as a step in the right direction by the Legislature.”