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The Honolulu Advertiser
Posted on: Saturday, May 31, 2003

Lingle objects to bill extending hotel tax credit

By Lynda Arakawa
Advertiser Capitol Bureau

Gov. Linda Lingle yesterday reaffirmed she does not support a bill extending tax credits for hotel construction and renovation, but stopped short of saying she would veto it.

Her comments came a day after she signed a bill providing $75 million in tax credits over 10 years for development of an aquarium and other facilities at the Ko Olina Resort.

Outrigger Enterprises executives yesterday met with Lingle to discuss the merits of the hotel construction and renovation tax credit bill. Outrigger wants the hotel tax credit for its planned $300 million redevelopment in Waikiki, including a first phase that primarily entails commercial construction.

The current 10 percent tax credit for hotel construction and remodeling is due to expire this year. The bill would extend it for seven more years, at 8 percent for the first three years and 4 percent thereafter. Lingle repeated that the Ko Olina bill is different because it is capped at $75 million, while the hotel construction and remodeling tax credit is "open-ended," with no ceiling on costs to the state.

Lingle said she told Outrigger officials that she does not favor the bill, but added she would not say if she would veto it, or any other bill, until she formally notifies the Legislature. She has until June 23 to notify the Legislature of vetoes.

The governor has objected to the bill being expanded to also offer tax credits to commercial construction in a resort area, saying that would result in an unanticipated drain on tax revenues to the state.

"They have information they feel that justifies the credit," Lingle said of Outrigger. "And I respect what they've done for Hawai'i and the number of people they employ but I didn't think it was financially responsible for the state at this time."

David Carey, chief executive of Outrigger Enterprises Inc., said the bill is a "business development" measure.

"There's general excise taxes generated by the construction, there's income tax generated by the construction workers and the money that goes to the construction workers is also spent in the community," he said.

In an unrelated matter, Lingle yesterday signed into law a bill that requires the state Office of Veterans' Services, upon request of a deceased Filipino-American veteran's survivor or interested party, to pay up to $2,500 for funeral services and to transport the veteran's remains to the Philippines.

She also signed into law a bill designating the Hawai'i Sports Hall of Fame as the State of Hawai'i Museum of Sports History in the Islands.