Balancing the State Budget 2010: How the Legislature closed a $1.2 billion shortfall

Hawaii State House of Representatives

Balancing the State Budget

2010:How the Legislature closed a $1.2 billion

shortfall

Budget Priorities Balancing the Budget 2010

Support education

Preserve the safety net for the poor, the disadvantaged, and the elderly

Protect the health and welfare of our citizens

Reduce spending

Increase revenue

Budget Priorities Balancing the Budget 2010

What we did not do?

We DID NOT raise the General Excise Tax

We DID NOT increase income taxes on low and moderate- income families

We DID NOT take away the Transient Accommodations Tax from the Counties

Budget Overview Balancing the Budget 2010

Gen-eral Fund Budget

Cuts &

Lapses

54.3%

Tax Re-

fund Delay18.8%

Credit ad-

just-ments

, loop-holes, penal-ties, en-

forcement12.6%

Non-Gen-eral

Fund Chang

es5.3%

Cash CIP

Lapses

4.3%

Tax Revenue Increases4.0%

Fee Revenue Increase0.6% Source Amount

Cuts/ Lapses

$794.4

Tax Refund Delay

$275.0

Credit Adj., loopholes, penalties, enforcement

$185.0

Non-General Fund

$77.8

Cash CIP Lapses

$62.5

Taxes $58.5

Fees $9.5

TOTAL $1.2 billion

How the legislature close d the $1.2 billion budget gap

Budget Breakdown Balancing the Budget 2010

What was funded? Added $22 million to the Department of Education

Added > $1 million to restore 25 plant quarantine inspectors

Restored $3 million for state libraries

Restored $4.3 million for 112 Child Welfare Service and Child Support Enforcement positionss

Added $3 million for Charter Schools

Added $64 million for payments owed to Medicaid providers

Added $1.3 million for Specialty Courts

Added ~$2 million for community health centers statewide

The Money Bills Balancing the Budget 2010

Which tax bills did we pass to help generate revenue for the state?

Cap on itemized deductions

Cigarette Tax

Barrel Tax

Transfer of excess balances from special funds

Estate Tax

Defer high tech investment credits

The Money Bills Balancing the Budget 2010

HB1907: A temporary cap on itemized deductions

$150K+ adjusted gross income

$300K+ adjusted gross income

Capped at $25K

Capped at $50K

The Money Bills Balancing the Budget 2010

HB1985: Cigarette Tax

Increases the cigarette tax by 1 cent per cigarette, raising about $10.8million per year in revenue.

The Money Bills Balancing the Budget 2010

HB2421:Barrel Tax

Adds $1 to the tax on a barrel of imported oil to fund energy and food security programs, renewable energy tax credits and agricultural inspectors.

Barrel Tax Balancing the Budget 2010

Although 60 per cent - about $13.2 million – will temporarily go to the general fund, this will help pay for over $48 million renewable energy and agriculture initiatives.

$18 million projected cost to State for the 2009 renewable energy system income tax credit

$9.2 to the Department of Agriculture for programs and inspector positions

$21 to the College of Tropical Agriculture and Human Resources

Barrel Tax Balancing the Budget 2010

Consider this:

$8.6 billion dollars is spent each year in Hawaii to import foreign oil

“We simply must balance our demand for energy with our rapidly shrinking resources. By acting now we can control our future instead of letting the future control us.” – Jimmy Carter

Barrel Tax Balancing the Budget 2010

Rising energy cost is the major factor that increases the cost of living. For example, here are the 12 month changes from the March 2010 DBEDT Energy Report:

Crude oil: $48.10 to $81.29  -- 69% price increaseAverage Gasoline prices: $2.43 to $3.46 per gallon -- 42% price increaseForecast:  Crude oil $100.00 per barrel by year end  --- 22% price increase

And this:

Barrel Tax Balancing the Budget 2010

Est. Annual Impact on Hawaii Drivers $15.00 /driver / year

Est. Monthly Impact on Hawaii Drivers $1.25 / driver/ month

Est. Impact on Drivers Per Gallon 2.5 ¢ / gallon

Est. Annual Impact on Residential Electricity Bill $9.36 / Household / Year

Est. Monthly Impact on Residential Electricity Bill $0.78/Household/month

Est. Impact on Residential Electricity Bill Per Day 2.6  ¢ /Household/day

How will the tax affect you?

Barrel Tax Balancing the Budget 2010

Efficiency and Conservation Tips Websites

HECO Energy Saving Tool Kit

Fuel Efficiency

Consumer Energy Tips

“The cost of doing nothing will have a far greater impact and leave Hawaii vulnerable to energy pricing volatility and supply disruptions beyond our control. The barrel tax should be regarded as an investment for the future economic vitality and sustainability of Hawaii.”

Remember…

The Money Bills Balancing the Budget 2010

HB2452: Transfer of excess balances from special funds

Collects $46 million from various special funds and transfers excess to general fund (HB2452)

The Money Bills Balancing the Budget 2010

HB2866: Estate Tax

Allows decedent an exemption of up to $3.5 million before being subject to any taxes

The Money Bills Balancing the Budget 2010

SB2401: Temporarily suspends the claiming of credits, for three years, to 2013

SB2001: Provides for early repeal of the state high tech credits but extends the tax credit for research activities by one year, saving the state $13 million

Deferring high tech investment credits

Education Balancing the Budget 2010

Restore School Furlough Days with $67 million from the Hurricane Relief Fund (SB2124)

Governor appointed Board of Education (ConAm) (HB2124 & HB2377)

Requiring 185 days of school days for our children (SB 2486)

Human Services Balancing the Budget 2010

$23M from Rainy Day Fund for critical education, human services and health programs (SB2469)

EPOD as pilot project for Oahu only, keeping public assistance and welfare offices open on outer islands (SB2650)

Health Balancing the Budget 2010

Extended matching funds to receive Medicaid funding for hospitals (HB2084)

Colorectal Cancer Insurance Coverage (SB2599)

Addressed the monitoring of health and sanitation conditions in food establishments (HB2688)

Public Safety Balancing the Budget 2010

Fireworks Task Force

Counties can enact more stringent ordinances than state law

Those involved in illegal fireworks can lose their property

(HB1987 & SB1059)

Judiciary / Crime Balancing the Budget 2010

Updating Campaign Financing Law (HB2003)

Harsher penalties for graffiti violators (HB2129)

Sexual Human trafficking as Class A and Class B felonies (SB2045)

Employment Balancing the Budget 2010

Lowered the cost of unemployment insurance for business (HB2169)

80% of jobs for state and county construction procurement projects must go to state residents (SB2840)

Housing Balancing the Budget 2010

Housing First Special Fund, which will help to get homeless off the streets and into stable housing (HB2318)

Environment Balancing the Budget 2010

Preserving public access to Hawaii beaches(HB1808)

No leaf blowers in residential zones except during specific hours of the day (SB466)

Agriculture Balancing the Budget 2010

Fines and penalties for intentional spreading or introducing of invasive species (HB1684)

Strengthening agriculture inspection and biosecurity laws (SB2523)

MAHALO! Balancing the Budget 2010

The House of Representatives is proud to serve the State of Hawaii and thanks everyone who participated in the legislative process this session.

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