Gov. Linda Lingle yesterday proposed a two-year, $102 million tax relief package that would award tax breaks to help people care for the elderly and children, save for a college education, protect retirement income and reduce cell phone bills.

The governor, at a news conference at the state Capitol, said tax relief is critical to help people cope with the state's high cost of living. The governor described the package as modest and targeted given the state's slower revenue growth, which has led her administration to make budget restrictions.

"We tried to take into account the current revenue trends and yet the high cost of living that people are struggling with," Lingle said. "And we wanted to come up with a package that was doable for us financially over the long term, that was very targeted, and was focused on families, those people really struggling."

State House and Senate Democrats said significant tax relief is unlikely this session because of the slowing economy. State lawmakers are required by the state constitution, however, to provide a tax refund because the budget surplus has exceeded projected revenues for two consecutive years.

State House Speaker Calvin Say, D-20th (St. Louis Heights, Palolo Valley, Wilhelmina Rise), said lawmakers would likely meet the constitutional requirement with a token $1 tax refund — as they often have in the past — or modest relief targeted at the poor.

"You want cuts in service for the general public? I really don't think so, because government's responsibility is to serve the general public on all the different programs that we have," Say told reporters.

State Senate President Colleen Hanabusa, D-21st (Nanakuli, Makaha), questioned whether the actual benefit to people from Lingle's tax proposals would outweigh taking money away from other state programs or narrowing the budget surplus to cover the costs.

Lingle's supplemental budget request estimated a $475 million surplus at the end of this fiscal year and a $213 million surplus at the close of the next fiscal year. But both of those numbers have to be adjusted downward after the state Council on Revenues this month lowered revenue projections after slower growth through the first six months of the fiscal year.

The Lingle administration has warned of continued budget restrictions this year and lawmakers are assuming they have less to spend for next fiscal year. The concern about how much cash is available has led to talk about investing in bond-financed capital improvement projects at the University of Hawai'i, public schools and state airports and harbors.

Hanabusa said the council could again lower revenue projections at its next meeting in March. "I'm not sure that that's prudent given the fact that we don't know what's going to happen," she said of Lingle's tax proposal.

The Republican governor and majority Democrats have disagreed on tax relief for the past five sessions. Although Lingle has wanted tax relief every session, Democrats have adopted tax packages mostly aimed at low- and middle-income residents the past two sessions.

Lingle yesterday listed the constitutionally required tax refund — although she did not suggest the form or dollar amount — and five other tax-break proposals: