HONOLULU — General excise taxes wouldn’t go up, but the state would use about $45 million in counties’ hotel tax money to help balance the budget, according to the latest version of the budget passed Monday. The Senate Ways and
HONOLULU — General excise taxes wouldn’t go up, but the state would use about $45 million in counties’ hotel tax money to help balance the budget, according to the latest version of the budget passed Monday.
The Senate Ways and Means Committee unanimously approved its version of the $10 billion state budget, advancing it to the full Senate.
A 1 percentage point general excise tax increase, which is paid on most transactions in the state, had previously been proposed by two Senate committees. The tax is currently 4.5 percent on O‘ahu and 4 percent elsewhere in Hawaii.
“The threat to our economy is too great. We cannot enact a policy today that would threaten businesses, especially small businesses that would lay off the very people we are trying to help,” said Committee Chairwoman Sen. Donna Mercado Kim, D-Kalihi Valley-Halawa.
The state will have to cut services, raise other taxes and take $45 million from various special funds to combat the deficit, projected at nearly $1.3 billion through June 2011.
County mayors have fought to keep their hotel tax money since Gov. Linda Lingle proposed scooping all of it — worth about $100 million.
The House version of the budget would have capped the counties’ share of hotel tax money at $94 million and allowed the state to take revenues exceeding that amount, while Monday’s Senate budget bill sets the cap at $50 million.
The Senate budget also would restore 12 of the 17 furlough days planned for next school year using $32.5 million from the Hurricane Relief Fund and $33.5 million from the general fund.
The House is still considering a measure that would spend $86 million from a hurricane relief fund to help restore furlough days.
The prison system would save $12.5 million by shutting one module at Halawa correctional facility and moving about 250 inmates to the mainland, Kim said.
If the full Senate approves the budget, it would go to a conference committee where Senate and House lawmakers would work on a compromise between the two proposals.
