Posted on: Thursday, May 8, 2003

EDITORIAL
Veto for hotel credits should apply to all bills

Gov. Linda Lingle says she might veto a hotel construction tax-credit measure because it was expanded at the last minute to include nonhotel projects.

If she does decide to veto, she should also veto a Ko Olina resort tax-credit bill which — at least to legislative minds — was very much part of a package with the construction credit.

The hotel construction bill extends existing tax credits offered to hotels for construction or remodeling. The 10 percent credit was supposed to expire this summer, but lawmakers extended it for another seven years. And the credit will actually go for seven years beyond that, but at a lower rate.

The Ko Olina credit would be worth up to $7.5 million each year for 10 years on qualified development costs at the Ko Olina Resort and Marina. It is supposed to stimulate development of a world-class aquarium on the site.

Lingle says she has concerns about how much the hotel renovation credit would "cost" the state in lost tax revenues. The estimate is between $17 million and $26 million.

She was also upset that lawmakers at the last minute extended the hotel credit to other projects within "qualified resort areas" such as Waikiki. This adds another $5 million to $10 million to the tab.

Actually, there is some logic to this extension. If the idea of the credits is to encourage upgrading of our premier resort area, why should they be limited to hotels?

And there is also a fairness issue: A hotel could win credits for upgrading its restaurants, for instance, while a free-standing restaurant down the street could not.

But if the larger issue is whether the state can afford these credits, then Lingle should seriously consider vetoing both the construction and Ko Olina bills. The logic should be the same.