In a sketch of their priorities for the upcoming session, state House and Senate Democrats said yesterday they would invest money from a projected state budget surplus into public education, housing, economic development and alternative energy.

At a news conference at a lo'i for taro at Anuenue School in Palolo Valley, Democrats said they are leaning toward using part of a $574 million surplus for long-deferred infrastructure improvements. Their broad goals for the session did not include tax relief, as Gov. Linda Lingle and some Democrats have recommended, but it remains a possibility given the state's strong economy and voter anger on O'ahu over rising property taxes.

State House Majority Leader Marcus Oshiro, D-39th (Wahiawa), said infrastructure improvements would benefit the state more than what he described as the politically expedient course of "tax giveaways."

"I think it's responsible. I think it's bold," Oshiro said of the majority package, which represented a consensus among House and Senate Democrats.

Democrats are expected to be more aggressive about explaining their differences with the Republican governor in opening day speeches Wednesday. Last month, Lingle said more than half of the estimated surplus — or $300 million — should be used for tax relief.

Like last year, Senate President Robert Bunda, D-22nd (North Shore, Wahiawa), is likely to call for tax relief for the lower and middle classes. House Speaker Calvin Say, D-20th (St. Louis Heights, Palolo, Wilhelmina Rise), has been more reticent but has said he would not take tax relief off the table.

PROPERTY TAX CONCERNS

A property tax revolt on O'ahu could spill over to the state Legislature and pressure lawmakers to use some of the surplus for tax relief, especially if the state Council on Revenues continues to predict economic growth. The tax relief proposals now under serious consideration at the Capitol are an increase in the standard income tax deduction or a tax credit for the working poor.

Next year, if the surplus continues, lawmakers would be required under the state Constitution to return some of the money as tax relief.

"The bottom line is people are saying, 'Hey, look, fix our schools. Give the money, give the surplus, back to the people. Give it in areas where there are unmet needs. And so we listened,' " Bunda said.

Senate Minority Leader Fred Hemmings, R-25th (Kailua, Waimanalo, Hawai'i Kai), said Democrats appear to want to spend more state money instead of being more efficient or developing stronger partnerships with the private sector. He also believes the public will demand that some of the surplus go to immediate tax relief.

"We are paying gourmet prices in government and we're not getting our money's worth," Hemmings said.

SPENDING DIFFERENCES

The package released yesterday shows that Democrats and the Lingle administration differ substantially on how much to spend on school repair and maintenance to whittle a $525 million backlog.

Lingle has proposed $40 million in cash and about $23 million in capital improvement money for repair and maintenance, along with an additional $27 million for school construction. Democrats said they want to provide at least $150 million for repair and maintenance and shelter improvements at schools through a combination of cash and bonds.

The state Department of Education had asked the governor to recommend $160 million for classroom renovations and $100 million in school building improvements as part of a total $368 million capital improvement budget. The discussion on repair and maintenance has focused mostly on the classroom renovation money, but the department's initial request was much more extensive.

Lawmakers passed an education-reform package in 2004 that by next school year will give schools more control over money and curriculum. Rep. Roy Takumi, D-36th (Pearl City, Palisades), chairman of the House Education Committee, said the repair and maintenance money would follow that commitment.

"We send a real message to the children of this state when we say, 'We care about your school,' but on the other hand, your roof is leaky or your toilet is broken," said Takumi. "We expect to address that this session in a very aggressive way."

Reach Derrick DePledge at ddepledge@honoluluadvertiser.com.