Nanea Kalani and Chad Blair will be live blogging from the Capitol where lawmakers need to agree on all bills in advance of next Tuesday’s floor vote. Lawmakers are meeting all day to meet an 11:30 p.m. deadline for all fiscal bills.

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10:15 p.m. House, Senate Reach Deals on 3 Revenue Bills

After weeks of wrangling over the state budget, the House and Senate are finally finished.

The Senate Ways and Means and House Finance Committees sat down at 9:30 p.m. Friday after reaching an accord on three revenue-generating measures.

Senate Bill 570 was amended from the House version to delete the pension tax provision after WAM Chair David Ige made clear throughout the afternoon and evening that the Senate would not give in to the House demands.

Senate Bill 1186 was capped at $93 million in Transient Accommodations Tax for the four counties, a compromise between a lower Senate figure and a higher House proposal.

And House Bill 1039 will transfer some $60 million in increased rental car fees to the general fund — but only for one year. Previous versions would have transferred funds for each of the next two fiscal years.

After the three unanimous votes to move the bills out of committee, the Legislature was done with its work for the night. All bills not passed by now are dead.

Both Ige and House Finance Chair Marcus Oshiro said afterwards that the tax and fee increases were necessary to balance the budget.

Asked by reporters how voters would react to the hikes, Oshiro said that he hopes “people understand that these are trying times” and that the revenue increases came only after hundreds of millions of dollars in cuts weren’t sufficient to balance the budget.

“This is a very, very, very tight budget,” he said. “It’s a no-frills budget.”

Ige agreed, saying that voters “will be paying more in taxes and fees” but that lawmakers had little choice as they didn’t want to cut core programs that are being relied on even more heavily during the economic downturn.

Honolulu City Council Chair Nestor Garcia was among many in attendance in the packed crowd in Room 309 at the Capitol Friday night.

He told Civil Beat that the accommodations tax bill will cost the city $6 million to $7 million but that it represented a compromise between the House and Senate that was more palatable to the counties than the Senate’s version.

“I’m somewhat relieved,” Garcia said, saying the balancing act performed by legislators made sense to him as part of “the notion of shared sacrifice.”

Michael Levine

7:42 p.m. A Long Night Ahead

As House and Senate leadership negotiates behind closed doors, staffers, reporters, lobbyists and other concerned citizens mill about the darkened lanai at the Capitol or talk story in conference rooms and offices.

The group consensus from insiders and longtime observers is that it could be a very long night, as has been common in sessions past.

As she left Committee Room 309, Donna Kim said all revenue measures were granted an extension, meaning everything is on the table.

7:25 p.m. TAT Bill Delayed ‘Til 9:30 p.m.

Donna Mercado Kim, lead Senate negotiator on SB 1186, asked to reconvene conference committee at 9:30 p.m.

SB 1186 would raise $44 million in 2012 and $54 million in 2013 through capping the counties’ share of the TAT. It would not include a 2-percentage-point hike of the TAT on timeshares.

House and Senate conferrees have yet to agree on the cap amount. It originally was set at the fiscal 2010 level that the counties got — $90 million — but the Senate wants to lower it to $85 million.

7:15 p.m. About That $700 Million …

Of the key revenue bills that David Ige was eyeing earlier this afternoon to cover the state’s $500 million two-year deficit, one was deferred and two are stuck in conference committee.

Only $346 million is accounted for, with SB 754 passing out of committee. The measure would suspend GET exemptions for businesses and raise $173 million annually.

Another $218 million is still in limbo as SB 1186 (TAT grab) and HB 1039 (rental car fees) are still in conference committee as of 7:15 p.m.

Close to $104 million was lost with the deferral of SB 570 — the pension tax, plus ending ending income tax deductions and itemizations.

Blake Oshiro has asked House membership to be on-call until midnight should they be needed for a vote in conference committee. Presumably, Senate membership has been asked to do the same.

6:45 p.m. After Deadline, Bag Bill Floating in Mid-Air

The bag fee is just one of the bills stuck in purgatory in the minutes following the Senate’s 6 p.m. deadline for measures to pass out of committee.

The House and Senate Environmental Committees reached an agreement on Senate Bill 1363 Thursday, but Denny Coffman was never able to secure approval from the House Finance to move the bill forward. Even with Marcus Oshiro in Comittee Room 225 Friday afternoon giving his OK for other measures, the bag bill didn’t get a green light.

Senate Bill 367 — which would create a regulatory system for an undersea cable as part of the Big Wind project — is stuck in a similar spot. If the Senate and House leadership can’t agree to grant exemptions to continue negotiations, the bills will die.

One bill that already has Calvin Say‘s endorsement for an extension is House Bill 1039, which would generate about $120 million over the next two years from a rental car surcharge. Ways and Means deferred a question about an extension to Shan Tsutsui.

Michael Levine

6:43 p.m. Special-Fund Raid, End to GET Exemptions Pass Out of Committee

Lawmakers agreed on conference drafts for the bills allowing them to raid special funds and end GET exemptions for certain businesses.

  • SB 120 would repeal some special and revolving funds: $21.8 million in fiscal 2012
  • SB 754 would suspend GET exemptions for businesses: $175 million a year

The TAT bill, on the other hand, is still being discussed. Lawmakers will reconvene conference committee on SB 1186 at 7 p.m.

The bill would raise $44 million in 2012 and $54 million in 2013 through capping the counties’ share of the TAT. It would not include a 2-percentage-point hike of the TAT on timeshares.
House and Senate conferrees have yet to agree on the cap amount. It originally was set at the fiscal 2010 level that the counties got — $102 million — but the Senate wants to lower it to $85 million.

6:26 p.m. Slaughterhouse Bill Dies

Barring a miraculous revival, Senate Bill 249 — the bill allowing the state to buy an Oahu slaughterhouse to help local agriculture — is dead this session.

The deadline for all fiscal bills isn’t until 6:30 p.m., but House and Senate conferees never held a meeting to discuss the bill.

Unless House and Senate leadership allow a waiver for SB 249, permitting an extension of time to vote on the measure, it is dead for the session.

As with all bills introduced this session, however, it can come back next year.

6:11 p.m. Pension Tax Killed

Lawmakers couldn’t come to terms on a pension tax, and effectively killed Senate Bill 570 and House Bill 1092.

David Ige said: “Again, we are not willing to tax pensions.”

A defeated Marcus Oshiro replied: “This issue is deferred for this session.”

Also included in those bills were proposals to repeal income tax deductions and itemizations for higher income earners.

5:50 p.m. Liquor Tax Dead

House and Senate lawmakers killed Senate Bill 741, which would have raised the state’s liquor tax by 20 percent.

“From our perspective, we don’t need it,” David Ige said.

Marcus Oshiro suggested the committee come back to the bill later tonight, but Ige reminded him that they face a 6 p.m. deadline.

“OK, well defer, maybe to next year, maybe,” Oshiro said.

5:16 p.m. Gov Signs More Bills

Neil Abercrombie signed eight more bills into law today.

They include, according to a press release from the governor’s office:

House Bill 1035: Places a moratorium on any enhancement of benefits from the Employees’ Retirement System until the system’s funded ratio is at 100 percent. This measure allows for improvement of the ERS and protects its funded status.

Senate Bill 1293: Establishes an emergency appropriation for the remainder of the current fiscal year to provide financial assistance for Temporary Assistance for Needy Families (TANF), a program helping eligible adults with dependent children.

The governor has until July 12 to sign into law all measures passed out of the Legislature, which adjourns May 5.

4:50 p.m. Hawaiian Recognition Bill Heads for Floor Votes

Senate Bill 1520, which formally recognizes Native Hawaiian people as “the only indigenous, aboriginal, maoli people of Hawaii,” was approved by House and Senate conferees.

The measure also formally begins a process of creating a list of people who are of Native Hawaiian descent. Funds will be set aside to create a commission that will collect and register names.

SB 1520 now awaits floor votes on Tuesday. If passed, it goes to the governor’s desk for his signature.

Malama Solomon said in a statement that “this is a historic and positive step in the reconciliation process between the State of Hawaii and the Native Hawaiian people. By having the formal recognition by all of the people of these islands, this bill serves as strong evidence and testimony for our case pending before Congress for federal recognition of the Native Hawaiian people.”

4:30 p.m. Ige Outlines $700 Million in New Revenue

In conference committee on several revenue measures, David Ige outlined four bills that would eliminate the $500 million gap facing the state over the next two years.

He shared the figures with House conferrees with the message that the Senate believes the state doesn’t need to tax pensioners.

  • SB 754, which would suspend GET exemptions for businesses: $173 million
  • SB 1186, which would cap how much TAT revenue the counties receive: $44 million
  • SB 570 (Senate’s version without pension tax), which would repeal the state’s standard income tax deduction and itemized deductions for higher income earners: $51.8 million
  • HB 1039, which would tap into car rental fees: $60.8 million

Ige said those measures would “at minimum” bring in $328 million in fiscal 2012 and $386 million the following year.

“That’s $700 million which would close completely the budget gap that we’re facing,” he said.

4:20 p.m. Casino Bill Dead … for Now

SB 1247, the ATDC bill that was turned into a gambling bill, was deferred in conference committee.

Joe Souki said he was advised by House Finance and leadership that they would not approve the controversial legislation.

“For the record, I am quite disappointed,” said Souki. “We do need the revenue. The state has been having falling revenue over the past year and we are not able to maintain the quality of services as we’d like to. And if things continue this way, the state of Hawaii quality of Hawaii will continue to deteriorate.”

Unless gambling is revived in another vehicle, it would appear that it’s dead for this session.

In other news, Donna Mercado Kim said Senate leadership will not be extending time for any bills past 6 p.m.

4 p.m. House Still Pushing for Pension Tax

Marcus Oshiro presented Senate conferees on Senate Bill 570 — the pension tax bill — with a new draft that would lessen any impact on state and county pensioners.

David Ige again reiterated that the Senate does not support the idea of taxing pensioners.

The House added in the pension tax component to the Senate’s version that would instead only repeal the state’s standard income tax deduction and itemized deductions for higher income earners. Without the pension tax piece, Ige says the bill would generate $51.8 million a year.

The new House proposal introduced Friday would keep the same income thresholds — $100,000 for individual filers, $150,000 for head of household and $200,000 for joint filers in total federal adjusted gross income — but would provide exemptions for pension income.

These are the proposed exemptions:

  • $24,000 in pension income for individuals who earn $100,000 in federal AGI
  • $36,000 in pension income for head of households who earn $150,000 in federal AGI
  • $48,000 in pension income for couples earning $200,000 in federal AGI

The average state government retiree earns a pension of $23,000, according to the Hawaii Employees’ Retirement System.

The pension piece would generate an extra $7 million in fiscal 2012 and $16 million the following year, in addition to the $51.8 million generated by the repealing of the income tax deduction and itemizations.

Ige said the Senate will consider the proposal, but “prefers just not to tax pensions.” He also said he believes the $51.8 million the bill would generate without the pension component “would go a long way toward balancing the budget.”

The committee will reconvene at 5:15 p.m.

3:48 p.m. Carvalho Worried About TAT Cap

Kauai Mayor Bernard P. Carvalho, Jr., released a statement on the latest draft of Senate Bill 1186, which would reduce the amount of transient accommodations tax revenues that would be distributed to the counties.

“Although we understand the need for a temporary cap, the counties are very concerned about the Senate’s proposal to lower the cap on TAT distributions to $85 million,” he said. “Such a drastic cut would have significant impacts for us, as the TAT is our second largest source of revenue behind real property taxes.”

Carvalho added, “At this point I endorse the House position, which would cap TAT distribution to the counties at the 2010 level, or roughly $102 million.”

3:08 p.m. Reps. Cabanilla, Carroll MIA

Yesterday was day 57 of the 60-day legislative session, right smack in the middle of conference committee craziness at the Capitol.

Most House reps are hard at work, but at least two — Rida Cabanilla and Mele Carroll — have not been around much, at least physically.

According to the House attendance sheet, both have missed every daily roll call since April 23.

Carroll has missed a total of 19 roll calls this session, the most of any House member. (The Senate does not post its attendance record online.)

Cabanilla has missed seven total. Only Marcus Oshiro has missed more than her — eight in all — but far less that Carroll.

House reps with perfect daily roll call attendance records include Della Au Belatti, Isaac Choy, Cindy Evans, George Fontaine, Linda Ichiyama, Aaron Johanson, Sylvia Luke, Joey Manahan, Dee Morikawa, Mark Nakashima, Karl Rhoads, Jimmy Tokioka, Gene Ward and Ryan Yamane.

2:35 p.m. To Defer or Not To Defer

Karl Rhoads told committee conferees on HB 575 — the measure pertaining to salaries for top members of the legislative, executive and judiciary branches — that he wanted to defer action on the bill.

“There are concerns about the technical problems in the Senate Draft 2,” he said, adding that lawmakers had been overwhelmed with worries that salaries were being increased “in the middle of a budget crisis.”

Clayton Hee agreed to the deferral, which would likely have pushed the bill to next session.

And then Hee, smiling behind his sunglasses at Rhoads**, changed his mind a few minutes later.

The lawmakers are now set to reconvene on HB 575 at 5 p.m.

1:54 p.m. GOP Calls Casino Bill ‘Back-room Dealing’

House Minority members issued a press release demanding that a last minute “gut and replace” trick to legalize gambling in Hawaii be stopped.

“This bill will forever change Hawaii from a beautiful family destination into just another place to gamble,” said George Fontaine. “The legislation appears to violate Article III of the State Constitution which requires that each bill embrace one topic expressed in its title.”
THE GOP says House rules also “explicitly forbid inserting a new or unrelated subject.”

Republicans say SB 1247 has been resurrected as a gambling bill because “efforts by pro-gambling lobbyists have increased in the last few days. Constituents have reported receiving automated phone calls telling them they need to choose between gambling and increased taxes.”

“The back-room dealing must stop. We urge our Senate colleagues to reject this legally flawed bill and return to the task of completing the budget and passing final legislation prior to our May 5th adjournment,” said Cynthia Thielen.

1:28 p.m. Marks to Head Reapportionment Committee

The Hawaii Supreme Court has selected retired Family Court Judge Victoria Marks to run the 2011 Reapportionment Commission.

Marks, who retired in 2009 of 21 years on the bench, is the ninth member of the commission; the other eight member were not able to select a chair on their own, prompting the high court to step in.

A total of 18 people applied for the job.

1:12 p.m. Casino Bill Attracts Attention

Conference Room 224 was packed until just a few minutes ago. That’s because lobbyists, reporters and others were waiting to hear what happens to Senate Bill 1247, the casino bill.

But, after a little cryptic banter between conference committee chairs Donovan Dela Cruz and Joe Souki, the meeting on SB 1247 was pushed back until 4:15 p.m.

SB 1247 still hasn’t been rewritten to include the new language about a casino; it still refers to abolishing the Aloha Tower Development Corporation.

Time is running out, however.

A lobbyist who supports a casino whispered to me, “Be prepared to work through the weekend.”

12:17 p.m. Lawmakers’ Salaries May Rise

House and Senate committee conferees pushed back decision making this morning on House Bill 575, which would maintain a 5-percent pay cut for legislative, judicial and executive salaries until Dec. 31, 2013.

The cut was imposed two years ago and was set to expire June 30. In recognition of the tight fiscal situation, some lawmakers thought this was not the time to get their salary reinstated.

The lawmakers will reconvene at 2 p.m. They have several options before them concerning HB 575, none terribly popular:

1) They can pass the bill as currently written, though come Jan. 1, 2014, the salaries would jump significantly in order to comply with what the Salary Commission recommended and what the Legislature agreed to in 2008.

2) They can pass a proposed conference draft offered by the Senate, which would restore the salaries to the higher levels (they were to have gone into effect in July 2009) this July and then impose a 5 percent cut for two years — effectively giving them more money than they are making now.

3) They can pass a second CD 1 from the House that would not increase the salaries until July 2013. Right now, some lawmakers in both chambers are leaning toward the former CD 1, not the latter.

4) They can choose to kill the bill, in which case the salaries all go up this July 1.

5) They can rewrite the bill so the 5 percent cut stays intact until the economy improves.

This issue doesn’t just concern lawmakers. Rod Maile of the state’s courts system wrote lawmakers April 26 saying the judiciary is having trouble keeping judges because Hawaii salaries are so low compared to mainland states.

Bottom line: Unless option No. 5 is selected, salaries for all three branches of government are likely to increase one way or another at a time when the governor has been calling for more sacrifice.

“This is an easy issue to demagogue because we have not had a cost-of-living increase in 12 years,” Karl Rhoads told Civil Beat. “But the timing is terrible. When the Salary Commission recommended raising the salaries, it was in 2007 and the economy was booming.”

10:58 a.m. He’s a Traveling Dan

Dan Inouye has been making headlines in his trip to Asia this week:

• In Saigon, the senator “voiced his support for Vietnam’s proposal to promptly establish a Vietnam-US friendship parliamentarians’ group,” according to Saigon Daily. Inouye “thanked Vietnam and its army for their help in seeking US MIA (missing in action).”

• In the Philippines, a visit by the senator caused some to speculate that Inouye was in the country to revive a U.S. military base in Subic, something the Philippine Daily Inquirer said was not the case: “The United States has no plans to reestablish a military base at Subic Bay Freeport, according to the US Embassy in refuting suggestions that the visit of two US senators foreshadows the return of American presence to the former naval base.”

• In Japan, according to Japan Today, Inouye “pressed Japan to reach a conclusion by the self-imposed deadline of May on the issue of where to relocate a key U.S. military air base in Okinawa Prefecture. Inouye, a veteran Japanese-American senator from Hawaii, said the United States has decided to be ‘patient and careful’ in commenting about Japan’s recent postponement of a decision on the issue of the relocation of the U.S. Marine Corps’ Futenma Air Station.”

Countdown to Midnight

The filing deadline for all fiscal bills is late tonight. If a bill involving money doesn’t make the cut, it’s a pretty good bet it’s dead this session.

The full schedule of conference committee meetings today can be viewed here. But big agenda items include a number of bills involving raising taxes and eliminating GET exemptions, and several bills that raid funds and tax pension income and time shares.

Among other measures being discussed:

SB 99, which restructures the Public Utilities Commission.

SB 651, which involves improving the mortgage foreclosure process.

SB 1520, which involves local recognition of Native Hawaiians.

HB 838, which makes an emergency appropriation of $664,000 to pay for staff on the Reapportionment Commission.

SB 1458, which sets up a 5-year pilot program for medical marijuana distribution.

SB 1363, which charges for checkout bags at stores.


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