Lingle says tax-credits bill flawed by addition
By Gordon Y.K. Pang
Advertiser Capitol Bureau
Gov. Linda Lingle said she might veto a bill that would give tax credits to those who build or renovate hotels because of a clause inserted at the last minute that would extend it to non-hotel projects.
Advertiser library photo • Dec. 4, 2002
"I was clear with the legislators and with the major developers that I did not support adding in the commercial reconstruction and renovation, along with hotel renovations," Lingle said yesterday. "It shouldn't be a surprise if that gets vetoed."
House Majority Leader Scott Saiki said including non-hotel development was the House position all along.
Legislative leaders can't agree on how the late addition to the bill happened — whether it was by design or an oversight.
Lingle said she wants to hear all sides before making a decision. She has 45 days from the May 1 adjournment of the Legislature to act.
House Bill 1400 is an extension of an existing hotel construction and remodeling tax credit that was approved in the aftermath of Sept. 11 and was scheduled to expire this summer. It gives a 10 percent credit on costs incurred through July 1.
The new bill extends the credit for seven years, but lowers it to 8 percent over the next three years and then 4 percent for the four years after that.
What irked Lingle and Senate leaders was the inclusion of language that allows developers of non-hotel commercial facilities within "qualified resort areas" such as Waikiki also to receive the credits.
The Department of Taxation estimated the cost at between $17 million and $26 million, with $5 million to $10 million of that from non-hotel development.
"I thought the hotels were something I would be willing look at, (although) I wasn't even sold on that, but then in the end, they threw this in," Lingle said. "I'm not sure why they did that, because they knew what my feeling was."
Senate President Robert Bunda, D-22nd (North Shore, Wahiawa), said the commercial construction portion of the bill was slipped into the measure near the conference committee deadline by mistake.
Bunda said he wasn't surprised by Lingle's remarks that she was leaning toward vetoing the bill.
"I think she's looking at it from purely a financial point of view," he said.
But House Majority Leader Scott Saiki, D-22nd (McCully, Pawa'a), said including non-hotel development was the House position all along and that senators agreed to it in conference committee.
Saiki added that he was "surprised" by Lingle's reservations because both Republican and Democratic legislators in the House supported the bill. "I think the reason why there was bipartisan support for this bill is because the members recognized that construction is the one area of the economy that has been positive even after Sept. 11," Saiki said. "Our economy depends upon the construction industry at this point in time."
Rick Egged, president of the Waikiki Improvement Association, said he and other supporters of expanding the tax credit hope to persuade Lingle not to veto the bill.
"There are not a lot of additional projects that would qualify, and that's why I think the concern about its impact is overstated," Egged said.
Staff writer Lynda Arakawa contributed to this report. Reach Gordon Y.K. Pang at gpang@honoluluadvertiser.com or 525-8070.
