Two major proposals to increase the state’s general excise tax died Monday in the Senate money committee despite strong support from the Hawaii State Teachers Association and groups advocating for the elderly.

Senate Bill 2599, introduced by Sen. Michelle Kidani, would have increased the GET by 1 percent to fund education reforms ranging from cooling classrooms to establishing universal preschool and reducing class sizes.

And Senate Bill 2478, introduced by Sen. Roz Baker, called for upping the GET by a half-percent to provide a long-term care benefit of up to $70 a day for 365 days. The days would not have to be used consecutively.

Senate Ways and Means Chair Jill Tokuda said lawmakers explored both proposed tax increases but ultimately decided to defer them indefinitely.

Senate Ways and Means Chair Jill Tokuda, center, said Monday that lawmakers explored both proposed tax increases but ultimately decided to defer them indefinitely.

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The teachers union had championed SB 2599 since unveiling the plan last December, and educators rallied at the Capitol in support of the measure in early February. It cleared the Senate Education Committee before hitting a wall in Ways and Means.

HSTA President Corey Rosenlee told lawmakers that the tax hike would bring in an estimated $750 million to $850 million per year, which could “rectify our state’s chronic underfunding of public schools.”

Business groups, including the Chamber of Commerce, came out in strong opposition along with Wes Machida, the state budget director.

Some aspects of the bill are still alive in separate pieces of legislation.

Measures to provide funding to cool off classrooms in public schools, for instance, are still moving forward in the House and Senate, but there are questions about how much money should be appropriated and from what source.

Money For Caregivers

Anyone who had filed a Hawaii state income tax for the past 10 years would have received a benefit of up to $70 a day under SB 2478. The money would help pay for long-term care services such as hiring a qualified caregiver to take care of a loved one.

Kevin Simowitz, political director of Caring Across Generations, called the Senate Ways and Means Committee’s decision to kill the bill “disappointing.”

Sen. Jill Tokuda, who chairs the committee, said lawmakers looked at what they could do with both tax bills, but ultimately decided to indefinitely defer them.

“This long-term care program would be a major social program akin to Social Security.” — Wes Machida, state budget director

Simowitz said the plan now is to focus on the House side, where a similar version of the bill is awaiting a hearing before the Finance Committee, chaired by Rep. Sylvia Luke.

Machida asked for the bill to be held until the economic impact and operational requirements can be studied.

“This long-term care program would be a major social program akin to Social Security for Hawaii and prudence must be exercised in its implementation,” Machida said in his testimony Monday.

The Tax Foundation of Hawaii’s staff told lawmakers that increasing the GET, a regressive tax similar to a sales tax, would increase the state’s already high cost of living, disproportionately impact the poor and potentially shutter small businesses.

The GET is currently about 4 percent on the neighbor islands and 4.5 percent on Oahu due to a half-percent surcharge to fund Honolulu’s 20-mile rail project.

More than 200 pages of written testimony were submitted for lawmakers to consider regarding SB 2478. This was in addition to more than 100 pages that came in Feb. 10 when the bill cleared the Senate consumer protection, health and human services committees.

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