Legislature OKs care bill

By Lynda Arakawa and Gordon Y.K. Pang
Advertiser Capitol Bureau

A $10 monthly income tax to pay for a state long-term-care program won approval from both houses of the Legislature last night but likely will not be able to survive an expected veto by Gov. Linda Lingle.

Lingle could not be reached for comment last night, but, as late as Monday, maintained her opposition to new taxes and has all but said she would veto the bill.

Lingle has 45 days from the day she receives the bill to either sign it, veto it, or allow it to become law without her signature. An override of a gubernatorial veto would require a two-thirds vote of both houses. It would also require the Legislature to reconvene in a special session.

The bill was one of hundreds that received their final votes by House and Senate lawmakers in marathon sessions yesterday, sending them to the governor. The legislative session ends tomorrow.

The long-term-care bill, Senate Bill 1088, imposes an income tax of $120 a year to pay for a long-term-care program. The tax would increase to $276 a year by the end of 2011. Those who pay the tax for 10 years would be eligible for the full $70-a-day cash benefit for up to one year. The cash benefit would grow to $83.58 per day in 2013.

The tax would be imposed on all workers except those below the poverty level.

The bill also would provide long-term-care insurance policyholders a maximum tax credit of $120 a year for five years and a maximum credit of $180 a year for the following five years.

The measure was supported by many Democrats, although some joined the 15 House and five Senate Republicans who voted against it.

Opponents of the bill said the program did not provide enough long-term-care coverage, and said it required taxpayers to contribute for 10 years before being able to use the full benefits. They also said it would be a burden on residents and was a disincentive to purchasing private long-term-care insurance.

Supporters defended the program as sound, saying it would cover most long-term-care needs, and that the state needs to address Medicaid long-term-care costs.

Senate Minority Leader Fred Hemmings, R-25th (Kailua, Waimanalo, Hawai'i Kai), called the program a "hoax" and an "economic disaster" and said it gives residents, particularly the elderly, the false impression they will be adequately covered.

But Senate Health Committee Chairwoman Roz Baker, D-5th (West Maui, South Maui), said taxpayers already pay about $400 in taxes a year for Medicaid, and that the monthly $10 long-term-care tax is little for the benefit received. Without the long-term-care program, she said, the costs to taxpayers for Medicaid would be even greater.

Meanwhile, two major tax-credit bills are caught in a chess match between House and Senate leaders.

Senate leaders indicated they will likely recommend rejecting a bill that extends the hotel construction and remodeling tax credit to 8 percent for three years and 4 percent the following four years. The bill is largely supported by the House leadership.

The Senate leadership said new Tax Department figures show the hotel construction and renovation tax-credit measure would cost the state $17 million to $26 million, and that passing it would result in an unbalanced budget.

The Senate initially decided to send the bill back to committee but later revived it, with leadership saying they wanted to at least give senators a chance to review the bill. The bill is scheduled for a vote tomorrow in the House and Senate.

The House leadership, in the meantime, postponed voting until tomorrow on a bill that would provide tax credits for development at the Ko Olina Marina and Resort. That bill is heavily supported in the Senate.

The bill, which passed the Senate yesterday, would establish a 7.5 percent tax credit for 10 years on qualified development costs at the Ko Olina Marina and Resort beginning in 2005.

House Speaker Calvin Say, D-20th (St. Louis Heights, Palolo, Wilhelmina Rise), said he decided to hold onto the Ko Olina bill until tomorrow after hearing that the Senate was looking at shooting down the hotel renovation tax credit proposal.

"We want to package them as two," Say said when asked why the Ko Olina bill, favored by Senate leaders, was being delayed until tomorrow. "I'm just concerned that they may recommit later on if we passed Ko Olina out first."

Say said he disputes the Tax Department figures about the hotel construction and renovation tax-credit bill.

Lawmakers also moved out the $7.6 billion biennial general fund budget for the state that promises to restore some money for public schools and the University of Hawai'i system, although public-school officials wanted more money for repair and maintenance.

"During the past two weeks, I believe your conference committee was able to craft a budget that not only is balanced, but balances without raising taxes," said House Finance Chairman Dwight Takamine, D-1st (N. Hilo, Hamakua, N. Kohala). "And it also restores previous cuts to public education."

Senate Ways and Means Committee Chairman Brian Taniguchi, D-10th (Manoa, McCully), said the budget adopts much of the cuts recommended by the Lingle administration, and that budget increases are a result of additional collective-bargaining costs from previous agreements, not a growth in government.

Democrats and even some Republicans praised themselves for minimizing tax increases while not raiding the Hawai'i Hurricane Relief Fund or narrowing the qualifications for the controversial Act 221 tax credit program for high-tech companies, a move the administration believes would save $55 million over the biennium.

However, the budget plan does take $10 million from the rainy-day fund to restore "safety net" programs in health and human services, and uses about $75 million from special funds. The administration had proposed taking $42.7 million from special funds to help balance the budget.

Not all lawmakers were thrilled with the budget. Some House Republicans questioned the amount that had been restored to education programs. Others noted that the cuts made by the Lingle administration actually came from proposed departmental budgets greater than those for the current year.

"The cuts were the reductions in the rate of growth," said Rep. Mark Moses, R-40th (Makakilo, Kapolei, Royal Kunia). "We actually grew the budget again."

Still, Moses said, "I think we made tremendous progress over previous budgets."

State Rep. Chris Halford, R-11th (S. Maui), was the sole lawmaker to vote against the budget, noting that it was not based on audited figures. Halford also objected to other parts of the budget, including the House majority's decision to keep the status quo in the Act 221 program.

Other bills passed by the Legislature yesterday would:

• Require companies to give meal breaks to employees working eight hours or more.
• Allow the Department of Transportation to set up a revenue fund for a passenger facility charge. The Lingle administration seeks authority to impose the fee.
• Require the Department of Health to conduct surprise annual visits of care homes to check on the health and welfare of care-home clients.
• Provide economic relief for airport concessionaires by giving them breaks on their rent until gross receipts return to pre-Sept. 11 levels. Republicans unsuccessfully sought an amendment that would have allowed the attorney general leeway in negotiations. The governor has threatened to veto the bill without the amendment.
• Make permanent a law that requires insurance coverage for serious mental illnesses to be equal to that provided for other medical conditions.
• Entitle paid or unpaid employment leave to victims of domestic violence, sexual assault and stalking.
• Establish that government and government employees are not liable for injuries at public skateboard parks except when the injury is a result of the government's failure to maintain or repair the park.

A bill that would require children to be age 5 by Aug. 1 to enter kindergarten at public schools was shelved by the House despite being approved in the Senate, meaning the measure is dead for the year.

Reach Lynda Arakawa at larakawa@honoluluadvertiser.com and Gordon Y.K. Pang at gpang@honoluluadvertiser.com. Or reach either at 525-8070.

Correction: State Sen. Roz Baker represents the 5th district, West Maui and South Maui. Her district was incorrectly described in a previous version of this story.