UPDATED 1/26/11 3:05 p.m.

Editor’s note: This article has been updated to include budget figures.

Gov. Neil Abercrombie‘s budget plan to solve Hawaii’s $844 million deficit includes five new taxes and fees and cuts to social services.

Interestingly, although the governor is a liberal Democrat, the demographics most affected by his proposals are the poor and elderly. Included in his State of the State speech Monday were plans to cut Medicaid and welfare benefits, increase taxes and add new fees. Absent were any plans to repeal tax exemptions that benefit the rich.

The governor also proposed what he called the “New Day Work Projects,” a capital improvement program to attack unemployment and “jumpstart” business.

Here’s a rundown of Abercrombie’s financial proposals.

Raise Taxes, Raise Revenue

Abercrombie plans to raise taxes — a move he has previously said was off the table. His two proposed “fixes” to the state’s tax code include repealing state tax deductions and taxing retirement income. The governor wants to impose new fees on sodas and up the alcohol tax. He also wants to expand the Transient Accommodations Tax — also known as the T.A.T. — to include more timeshare occupants.

• Repeal the state tax deduction for state taxes, which he described as “an absurdity in the tax code, the elimination of which is long overdue.” He said this change will affect all taxpayers who itemize deductions and could produce $99 million in savings in fiscal 2012.

• An “overdue” increase in the state’s alcohol tax. Abercrombie proposes doubling the current tax rates to generate an extra $20 million annually. Liquor tax collections and licenses generated about $44 million for the state’s general fund in fiscal 2010, according to the state Tax Department. Wholesale liquor is taxed in Hawaii at the following rates:

• Implementing a new fee on sodas and sugary drinks. The move is expected to generate $50 million annually. Abercrombie said: “We can no longer ignore the fact that consumption of these and other such products contribute to rising public health costs. Revenues from these fees will be used to repair the public health infrastructure and also to fund prevention and education programs.” He mentioned child obesity and diabetes as contributors to health-care costs “screaming out of control because we have not controlled ourselves.”

• Taxing retirement income at the state level. “This is no real sacrifice,” he said, deviating from his prepared remarks. “This is the least I think we can do.” But, he said the proposal “includes a provision so that those who are most dependent on their pensions will not be taxed.” The move is expected to generate about $30 million annually starting in 2013.

• Increasing the hotel room tax for timeshare occupants. The increase could produce an estimated $30 million a year. The T.A.T. is a fee of 9.25 percent charged on room or apartment rent of any facility that will house a “transient.” But the tax isn’t automatically applied to timeshare occupancy because there may be several types of occupants, including the owners, guests who use vacation points or trades, or renters. “We need to ensure that our visitor industry is sustainable by bringing the impact fees paid by the increasing number of timeshare occupants into alignment with hotel room occupants who pay the transient accommodations tax,” Abercrombie said. In fiscal 2010, the tax generated about $32 million for the state’s general fund. The counties’ share amounts to approximately $90 million each year, and the Hawaii Tourism Authority gets between $70 million and $80 million to market Hawaii as a destination.

Cutting Government Services

Abercrombie plans to scale back state-funded social services and cut welfare and Medicare reimbursements. He talked about “modernizing” the terms of the sorely underfunded Hawaii Employees’ Retirement System.

• Eliminating the state-funded reimbursement for federal Medicare Part B benefits for retired state employees. The adjustment could save the state $42 million a year.

Medicare Part B pays for doctors’ fees and outpatient medical expenses. Retired state workers covered under the Hawaii Employer-Union Health Benefits Trust Fund (EUTF) are required by state law when reaching age 65 to enroll in the Medicare Part B program. The monthly premium for 2011 is set at $115.40 (up $19 from 2010), which is deducted from a retiree’s Social Security or pension. The state currently reimburses public retirees for this cost on a quarterly basis in March, June, September and December. The EUTF covers benefits for 93,415 retirees, according to its most recent annual report.

“I am proposing that we end the current practice of state funded reimbursement for federal Medicare Part B benefits for Hawaii government employees,” Abercrombie said. “I am personally one of those recipients of this benefit from my previous service in state government. But it is a bonus paid for by taxpayers that can no longer be justified in light of our current fiscal and social crisis. I did not earn it and cannot justify asking taxpayers, public and private, to pay for it.”

• Reducing the state’s Temporary Assistance to Needy Families (TANF) program, or welfare benefits. The administration wants to cut the program by about $29.5 million.

Abercrombie devoted three vague sentences to this proposal: “We will have to scale back on those social services for which funding no longer exists,” he said. “There are some contracts entered into by the previous administration that assumed the existence of additional federal funds for Temporary Assistance for Needy Families. These unfunded contracts are for worthy programs, and we must now find new ways to support our neighbors.”

The state’s Department of Human Services says it handles 9,499 TANF cases per month. The program costs for fiscal 2011 are about $98.9 million from federal government via a block grant.

• Cutting Medicaid benefits. Cuts to the program’s budget is expected to save about $37.5 million a year.

Abercrombie said: “We must acknowledge, without flinching, the fact that the rising cost of health care also requires that we cut back on benefits provided to Medicaid patients in the coming years in order to sustain health coverage of any kind for eligible individuals and families.”

• “Modernizing” the Hawaii Employees’ Retirement system.

“I will be filing a bill to modernize the terms of our employee retirement system to reflect the economic and social realities of today, so that it can be sustained into the future,” Abercrombie said. “Absent action in this regard, the retirement system itself is in jeopardy.”

New Day Work Projects

• Abercrombie said he has “ambitious capital improvement plans” for the University of Hawaii system and for the state’s transportation infrastructure. While he did not provide any dollar amounts, he said his administration would update state buildings that have been vacant for years and make them energy efficient. He also said he would stop spending on capital improvement for Aloha Stadium until an advisory group could come up with a plan for the future of sports on Oahu.

He also said Lt. Gov. Brian Schatz is leading efforts to bring additional federal dollars to Hawaii.