February 2008 | Small Business News
Senate President Colleen Hanabusa delivers her opening day speech while the Governor and others listen.
Hold on To Your Wallet!
Legislature In Session
Its that time of year again the State Legislature convened its regular session on Wednesday, January 16. The 60 working day session will extend until May 1.
Taxes, spending, the environment, the homeless, health and labor legislation will be at the top of the agenda during the opening days. An estimated 2,500 plus bills will be introduced with only about 10% ending up on the Governors desk.
This is a major election year so that will help color the session.
A week prior to the start of the session, the state Council on Revenues revised their previous revenue estimate downward (to 4.7%) meaning there will be many millions of dollars less for the government to spend. Undeterred, the states majority party still talks of high level spending, debt and more taxes.
As the economy cools locally and nationally, more revisions can be anticipated.
The Governor stressed personal responsibility in her January 22 State of the State speech and announced a separate tax relief package which seems meager compared to prior years and to government spending.
She then followed that with a $200 million additional spending proposal ($187 million in lands on Oahu and Hawaii Island and $13 million in cash) to settle Native Hawaiian ceded land claims with the Office of Hawaiian Affairs. She also agreed to an annual $15.1 million payment to OHA in perpetuity. Unlike the last formal proposal in 1999 under the Cayetano Administration (which OHA rejected), Lingle is willing to allow future lawsuits by Hawaiian beneficiaries so this agreement dont really settle all possible claims. The Legislature still has to approve the agreement and there is early criticism and doubt.
Then, the Governor surprised everyone with her proposal to buy the North Shore Oahu Turtle Bay Resorthotel, condos, 850 acres of prime ocean front land for preservation. Democrats and anti-development activists hailed the Governors proposal to board the keep the country country, train, but few discussed private property rights or the estimated cost of up to $1 billion.
The majority party wants more government spending, new taxes, $400 million for University of Hawaii repairs, additional energy mandates and even stronger and more business repressive environmental restraints growing out of last years Hawaii Superferry battle.
The beleaguered minority party, relegated to 7 of 51 House members and 4 of 25 Senate members, proposed meaningful tax reductions, spending cuts, medical malpractice insurance tort reform to stop the losses of Island medical professionals, and incentives for home ownership and personal choices. Most of their bills wont even be heard by the majority who control all aspects of the legislative process.
As reported last month, the Senate has adopted a paperless process which can result in paper reduction but increases in costs and personnel associated with the legislative computer and website process.
Whether or not it makes for better government remains to be seen. SBH will continue to provide you with updated reports on this Session and the status of key business bills.
Thousands show up for opening day at the State Capitol.
Governor Releases Tax Proposals
Governor Linda Lingle announced on January 17 a targeted package of tax relief measures totaling $102.1 million over two years ($42.6 million in FY09 and $59.5 million in FY10) to help ease the high cost of living for Hawaii residents.
The measures include providing an additional tax exemption for families with children, increasing the dependent care credit for families with children or aging parents, reducing the tax burden some seniors must pay on their income during retirement, providing a refundable tax credit for modifying a home to accommodate an aging or disabled family member, and helping parents save for their childs college education.
In addition, taxpayers once again qualify for a one-time tax refund as mandated under the State Constitution because of the large surplus over the past two years.
It is critical that we provide meaningful, immediate tax relief to middle and lower income families, as well as our kupuna to help them cope with the high cost of living, said Gov. Lingle. While the states moderated economic growth will not allow the type of comprehensive, wide ranging tax relief my Administration has proposed in prior years, our supplemental budget includes targeted tax relief to help those who need it most.
Targeted tax relief will also put more dollars back into the economy to spur economic activity.
Governor Lingle announces her tax relief package at a capitol news conference.
The Administrations 2008 tax relief package includes:
Ohana Tax Reduction Act of 2008: To ease the burden on taxpayers raising children and caring for kupuna, the Administration is proposing the Ohana Tax Reduction Act of 2008, which would expand and enhance the tax credit for adult care or child care costs and provide an additional tax exemption for children 18 years or younger.
Retirement with Dignity Tax Relief Act of 2008: The Administration is proposing a measure to help retirees keep more of their retirement income. In Hawaii, government retirees and those who retired from a private company with an employer-funded pension plan do not have to pay state income taxes on their pensions. However, individuals who worked for most small businesses with 401(k) and IRA retirement accounts must pay income taxes on either all or a portion of the retirement income they receive.
Aging in Place Tax Credit: To make it easier and more practical for seniors to stay in their own homes or with their family, the Administration is proposing a refundable tax credit of up to 50 percent of the costs to modify a personal residence to accommodate an aging or disabled family member. Examples of qualifying expenditures include grab bars in a shower or bathtub, ramps or inclines, and larger doorways for wheelchairs. The maximum credit would be $2,500 for a single taxpayer or $5,000 for a married couple. The tax credits would save residents $8 million per year.
Constitutional Rebate: For the second year in a row, Hawaii taxpayers are once again entitled to a constitutionally required tax refund. Under the Hawaii State Constitution, a tax refund is required whenever the states general fund balance exceeds 5 percent of general fund revenues for two successive fiscal years. The amount and form of the refund will be determined during the legislative session.
Hawaii College Savings Plan Enhancement: To help parents save for their childs higher education, the Administration is again proposing up to a $10,000 deduction on state tax returns for single filers and $20,000 for married filers.
Reduction on Cell Phone Bills Cell Phone Tax: In 2004, a surcharge of 66 cents per month was placed on each cell phone line to implement the emergency locator system known as Wireless Enhanced 911. The surcharge provided the funding needed to acquire technology that enables emergency dispatch operators receiving 911 calls from wireless phones to see the callers identification and location. The system has been implemented and is operating in most urban locales and will be expanded to remote rural areas. The Administration proposes to reduce the surcharge to 43 cents per month, saving $2.5 million per year for cell phone users statewide.
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