Fiscal drama unfolds as govs briefed in White House conference call

By Catherine Cruz
Published On: Dec 31 2012 06:41:00 PM HST

Local leaders comment on the impending fiscal cliff.

HONOLULU -

The impact on state and county budgets is being weighed as Congress reaches a tentative budget deal on what has been called the nation’s fiscal cliff.

Many were watching to see how the financial markets would react.

The stock markets closed up on this last day of the year.

Some believe it was boosted by early hints on an agreement on the tax levels and tax rates.

”So you're eliminating some of the confusion, some of the uncertainty. That's good. Markets hate uncertainty," said Harlan Cardinha, CEO of Cardinha and Co.

 The cutoff  for higher tax rates for married couples is set at $450,000 and $400,000 for single taxpayers.

The tax on dividends and capital gains will also not be skyrocking as high as some had earlier feared.

"That dark has been lifted in the marketplace, so the dividend coming from corporations aren’t going to be taxed at 43-44 percent, they will be taxed at 20 percent," said Harlan.

Economists preparing a key state economic forecast need to see specific numbers before they know what they'll tell lawmakers.

"It’s dicey. How do you quantify the hit?  Particularly because it’s scattered throughout the federal budget, and it's scattered throughout the Department of Defense, and it's difficult to quantify, I think," said Rick Kahle, chairman of the Council of Revenues.

That worry some moving target is something that the state budget chief has had to keep in mind in preparing the governors biennium budget. Currently it takes into account for $40- 45 million less in direct federal dollars into state government. 

But even with news that immediate across-the -board defense cuts may be averted, there is still some uneasiness about the long- term loss of federal dollars after the death of senior Sen. Dan Inouye.

"I think the loss of Inouye to us is a much bigger problem for us,  than the fiscal cliff because we know we are not going to cure that, in months, or years," Kahle said. 

Kahle and other economists will meet with money committees in the House and Senate on Friday to talk about the financial snapshot of the state.

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