Posted on: Saturday, October 20, 2001

The September 11th attack
Cayetano agrees to tax credit proposal

By Kevin Dayton
Advertiser Capitol Bureau Chief

Lawmakers and Gov. Ben Cayetano have tentatively agreed to offer 4 percent state tax credits to encourage people to build or renovate their homes in an effort to boost the building industry.

House and Senate lawmakers also appeared near agreement on a plan to authorize Cayetano to borrow and spend another $150 million on school repairs and maintenance, but appear firmly opposed to Cayetano's request to borrow $1 billion for state construction projects.

Lawmakers also intend to extend an existing 4 percent tax credit that was established to encourage hotel construction and renovations. House and Senate leaders said yesterday they are not sure yet how much the tax breaks might cost the state in lost tax collections.

Cayetano said he was disappointed lawmakers are not giving him everything he wants for construction, but said the tax credits "may accomplish the same results."

"That gives the average working person and his family an opportunity to achieve some savings if they buy a home or if they renovate and in a way that's what we're trying to do," he said. "We're trying to increase economic activity. And so if we give those kinds of tax breaks then it's harder for (the Legislature) to give me the amount of (construction projects) that I wanted."

"Under the circumstances I'm pleased," he said.

Cayetano and lawmakers agreed to use a portion of the money from the state settlement with tobacco companies to help finance the new medical school and cancer research complex planned for Kaka'ako.

However, lawmakers last night still had not decided whether to agree to a plan to borrow $120 million to finance a new University of Hawai'i at West O'ahu campus at Kapolei. House members have opposed borrowing money for projects that would have to be repaid from the state's general treasury.

Lawmakers also have reached a number of other tentative agreements in preparation for a six-day special session that begins Monday.

• To help Cayetano award contracts more quickly, lawmakers agreed they will give the governor emergency powers to award purchasing contracts worth up to $50,000 without competitive bidding, and construction contracts worth up to $250,000 without bidding, said House Vice Speaker Sylvia Luke, D-26th (Punchbowl, Pauoa). The measure also would require construction contracts to be awarded only to contractors who are Hawai'i residents. At least 75 percent of the contractor's employees working on the project must also be Hawai'i residents.

• Lawmakers also agreed to provide the Hawai'i Tourism Authority another $10 million in state money for a new Hawai'i marketing push.

• To assist people who lost their jobs after the Sept. 11 attacks, lawmakers said they will extend unemployment benefits for up to 13 weeks and stripped-down low-cost health coverage for laid-off workers.

• Tax breaks for transportation companies such as bus companies are also planned, along with a tax change that will allow some small businesses to delay paying payroll taxes.

• Lawmakers also plan to approve $21 million for additional airport, harbors and highway security.

• Lawmakers tentatively agreed to earmark another $1.5 million for a new "conservation corps" that would work to eradicate mosquitoes to fight the dengue fever outbreak, and to eradicate species such as miconia.

• Lawmakers also agreed to approve $1 million for agencies providing food and emergency shelter for the needy.