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Senate Considers Raiding Hurricane Fund, Tax Hike

Senator Say They Will Not Use Rainy Day Fund For Education

POSTED: 5:25 pm HST February 1, 2010
UPDATED: 8:20 pm HST February 1, 2010

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A state Senate committee on Monday approved taking millions of dollars from the state's hurricane relief fund to reduce the number of public school furlough days.

It is early in the legislative session and there are several proposals floating around to solve school furloughs. The proposal that passed on Monday does not include tax hikes, but it is not without controversy.

The governor's insurance commissioner submitted testimony to three Senate committees opposing plans to take money out of the hurricane relief fund to end school furloughs. He said he is worried the money would be needed if there is an insurance crisis following a hurricane.

The committees approved taking $75 million out of the hurricane fund, about half the money that is needed to restore student furloughs this year and next.

The Hawaii Government Employees Association said the state should not use hurricane money for the schools alone.

"It would be irresponsible for the Legislature to limit its attention to only the (Department of Education) without addressing the loss of services in other vital programs that impact public health and safety throughout the state," said Lei DeSha, of the HGEA.

HGEA's employees have already faced wage cuts, furloughs and layoffs in more than a dozen state departments and agencies.

The Senate committees also heard testimony about raising the excise tax to end furloughs.

Representatives from social services programs said that if the state is raising taxes, some of that money should be used to help non-school services as well.

Social services advocates were relieved when Senate Education Chairman Norman Sakamoto announced the Senate did not plan to use money from the state's rainy day fund to end furlough Fridays at public schools. That is because social service agencies hope to use rainy day money to shore up their programs.

"Thank you for not pitting the seniors against the kids," said AARP Hawaii President Barbara Kim Stanton.

"The homeless in our parks and streets will affect tourism. Individuals with mental illness who are not monitored to take their medications will end up in the streets or in emergency rooms," said Debbie Shimizu, of the Association of Social Workers.

The Senate Education Committee also considered a bill that would raise the excise tax by 1 percentage point, meaning residents would pay about 25 percent more for goods and services.

"Any such measure should include generous tax credits to ensure that Hawaii's working and middle class citizens do not bear the brunt of the increase," Hawaii State Teachers Association Executive Director Jim Williams said.

Senators said that if they raise taxes to end furloughs, they would include proposals to ease the tax hikes' effect on the needy.

"The bill did mention food tax credit and doubling the standard deduction," Sakamoto said.

Sen. Fred Hemmings, the lone Republican on the committees, voted against all the proposals, including those to use hurricane fund money.

"And I regret that we have to do this when the better way to solve our financial plight is to start building budgets that are realistic and downsize government," Hemmings said.

The Senate committees deferred deciding on the more-controversial excise tax proposal. They at first planned to postpone discussion until Friday, but then realized it was a furlough Friday when many state workers will not be at work. So, they put it off to Monday.

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