Welcome to Capitol Watch. There’s less than a month to go at the Hawaii Legislature and the budget crunch is taking center stage. Civil Beat is all over the story.

5:02 p.m. Maui Eligible for SBA Tsunami Relief

The U.S. Small Business Administration says qualified homeowners, renters, businesses and nonprofits in Maui County and Kalaupapa can apply for low-interest disaster loans to repair or replace materials damaged from the March 11 tsunami.

Affected residents (including renters), businesses and nonprofits can visit SBA Disaster Loan Outreach Centers beginning tomorrow at the Kihei Community Center on Maui and beginning Thursday at the Kilohana Community Center on Molokai.

The SBA center in Kailua-Kona remains open until April 21.

Click here or call (800) 659-2955 or (800) 877-8339 (TTY) for more info.

3:52 p.m. House Agrees to Tax Pensions on High Incomes

On the same day that the Senate killed a bill taxing pension incomes, the House passed a bill taxing pension income for people who make over $100,000 annually.

Senate Bill 570 also places temporary caps on claims for itemized tax deductions and delays standard deductions and personal exemption increases.

The vote was close, and some House dissidents voted with the GOP minority against the bill.

Barbara Marumoto, channeling AARP Hawaii, warned that the bill “could be a foot in the door” to tax the pensions of moderate and low-income levels “sooner rather than later … seniors are quaking in their boots … they are at the mercy of conference committee.”

But Marcus Oshiro said sections of SB 570 raise revenues that will “really help us address the billion-dollar shortfall and current shortfall.”

Karl Rhoads agreed, saying that the bill was “unfortunate but a fair way to do it.”

3:07 p.m. Ten Cent Fee on Plastic Bags Passes

The state House has approved a bill — Senate Bill 1363 — that would require retailers to charge 10 cents for each single-use plastic bag.

Discussion on the measure fell into two camps:

Sharon Har said the bill would hurt consumers at a time when everyone is hurting because of the economy. While the bill was well intentioned, it is ill-timed.

“We just passed a multitude of measures raising fees, raisng taxes,” said Har. “This is not the time for this bill!”

But Denny Coffman said lawmakers sometimes have to help people change their habits, and eliminating plastic bags from landfills and the ocean is a cause everyone should embrace.

Coffman added that Oahu consumers use 300 million plastic bags annually.

2:26 p.m. House Approves Buying Slaughterhouse

With little opposition, the state House approved passage of Senate Bill 249, which would allow the state to buy a slaughterhouse in Campbell Industrial Park on Oahu.

Joe Souki said he thought the idea set a bad precedent, but Corinne Ching said the purchase would promote locally grown beef and the agriculture industry as well as honor Hawaii’s paniolo culture.

Ching added, “We love our steaks — let’s be honest.”

1:41 p.m. LGBT Groups Welcome Gender Equity Bill

Equality Hawaii, a lesbian, gay, bisexual and transgender civil rights organization, and the Human Rights Campaign, a national LGBT civil rights organization, congratulated the state Senate for passing a bill today that codifies prohibitions against discrimination in employment on the basis of gender identity.

The bill passed 22 to 2, with Sam Slom and Mike Gabbard voting no.

Alan Spector, Equality Hawaii Co-Chair, said in a statement, “Providing employment protections to transgender citizens in Hawaii is a victory for civil rights and equal treatment under the law for all residents of our great state.”

The measure now heads to Neil Abercrombie for his signature.

12:18 p.m. Kawakami Replacement Chosen

The Garden Island reports that Kipukai Kualii will replace Derek Kawakami on the seven-member Kauai County Council.

The paper reports:

“The learning curve will be a very steep one, however, I’m confident I will be able to contribute from day one,” Kualii said in a press release he prepared prior to the special council meeting.

Kawakami was appointed by the governor to fill a state House vacancy.

11:14 a.m. Shield Law, Instant Runoff Voting Pass

House Bill 1376, the Shield Law protecting journalists from revealing notes and sources, passed third reading in the Senate and now heads to likely conference committee with the House.

The bill extends the sunset date on the law to June 30, 2013.

Sam Slom said he would have preferred a five-year extension, as was once discussed, and expressed amazement as to why the state Judiciary needs to study the law when it has already had three years to do so.

House Bill 638, setting up instant runoff voting for county-level elections, also heads to conference committee.

But a number of senators voted “aye with reservations,” suggesting its final passage is far from guaranteed.

10:53 a.m. Senate Passes State Budget

On a 24-1 vote, with the lone Republican voting “no,” the state Senate approved House Bill 200, which funds the state’s operating and capital improvement budget for the next two fiscal years.

It’s not clear at this point whether the budget will be able to make up the $1.3 billion projected deficit — for example, the Senate version cuts $600 million from the governor’s version of the budget.

Those details and others will have to be worked out in conference committee with the state House.

But senators complimented David Ige‘s Ways and Means Committee for its work and expressed satisfaction that the budget favors education and social services that help the poor and elderly.

“We are guilty of raising taxes to take care of people, and I take pride in that,” said Ron Kouchi.

Weeping, Suzanne Chun Oakland said, “People having been saying to the Legislature ‘thanks for helping the most vulnerable.'”

But Glenn Wakai warned that the budget was “lackluster” in terms of producing jobs in fields like renewable energy.

10:06 a.m. Senate Rejects Taxing Pension Income

The state Senate has decided not to tax pension income of government retirees, as House Bill 1092 proposes.

The bill was part of the governor’s legislative package to raise revenue. But lawmakers, heeding worries from seniors who depend on the income, changed the bill to apply it to those earning higher incomes.

Clayton Hee said the Senate had to reject HB 1092, based on legal advice from David Louie, who said the bill would likely invite lawsuits.

“It could take years to litigate,” said Hee, who proposed a floor amendment to remove the section of the bill taxing the pension income. “It is prudent. … This is the right and proper thing to do.”

This move will create a hole in the state budget, as both Neil Abercrombie and the Senate were counting on some form of a pension tax to raise revenues.

But Hee’s amendment would also stop higher-income taxpayers from claiming an income tax deduction, which Hee said would raise $40 million annually.

9:31 a.m. Inouye ‘Silent’ on Akaka Seat

POLITICO reports that Dan Inouye has had little to say publicly about the contest to replace his colleague Dan Akaka in 2012 — in part because of “intra-party squabbles” that temporarily sent a Republican to Congress from the traditionally Democrat Hawaii.

The article says:

Inouye’s decision to stay out of the race is a sign of how Hawaiian politics is starting to change — where a new generation of Democrats is emerging after the senior senator dominated the islands’ political scene for the last half century.

“I’m a good Democrat, and I want to see a Democrat win that seat,” Inouye told POLITICO. “Although some may characterize me as a political boss, I am not a political boss.

“I will not force anyone to run for this or that, and I will not take sides in the primary,” he added. “This is for the voters to decide. If the people of Hawaii decide Ed Case is going to be the nominee, I’ll vote for him. But most importantly, we need a Democrat to replace Dan Akaka.”

Voting on Second Crossover Bills

It is the 47th day of the 60-day session, and the state House and Senate will separately vote on hundreds of bills to meet Thursday’s deadline.

If a bill doesn’t survive by today, it’s very likely dead for 2011. But anything can happen in conference committee between the chambers.

One thing to watch: Will the House and Senate complete business in record time, as they did last month for first crossover?

Reporters pray that it is so.

Reapportionment’s Big Task

The Hawaii Reapportionment Commission, meeting for the first time yesterday afternoon, selected Republican Dylan Nonaka and Democrat Tony Takatani to head up a search for a chair.

The nine-member board has just 100 days to draw new lines for Hawaii’s 1st and 2nd Congressional Districts, 25 state Senate districts and 51 state House districts.

Raw data from the 2010 Census shows that Mazie Hirono‘s mostly rural 2nd district has grown to more than 701,000 people while Colleen Hanabusa‘s 1st District — mostly urban Honolulu — has shrunk to just 658,000 people. The Reapportionment Commission will have to redraw the Oahu lines to make each district number roughly 680,000 people so that it totals the state’s 1.36 million population.

Meanwhile, similar population shifts have affected state Legislature districts, notably in East Honolulu and West Oahu. Come the 2012 election, many voters could be voting in new districts for different politicians.

Hearing: Justice Reinvestment

Senate Pubic Safety, Government Operations and Military Affairs — the Legislature’s longest-named committee, by the way — is scheduled to discuss “how Justice Reinvestment can help Hawaii by analyzing our Criminal Justice System.”

Policy analyst Anne Bettesworth and Marshall Clement, project director from the Council on State Governments Justice Center, will discuss how justice reinvestment — a data-driven approach to reduce corrections spending and reinvest savings to decrease crime and strengthen neighborhoods — has been working in other jurisdictions.

“The cost of incarceration across the country has risen to more than $70 billion in recent years, with more than 2.4 million Americans now in prison and jails,” said Will Espero in a press statement. “We need to reverse this trend, while simultaneously keeping our communities safe.”

Catch up on previous coverage:

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