Speaker outlines ‘Vision’ for House
In a 17 minute speech that ushered in the 28th session of the state Legislature, House Speaker Joe Souki called on members to be visionaries with a capital "V."
Souki, a Maui Democrat, outlined various tax proposals, the most controversial of which would tax pensioners who earn a net income of $100,000 or more at a higher rate.
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"Our tax laws… make allowances for seniors whose incomes are usually fixed and very limited. That is the right thing to do-for most of them," said the speaker. "But very wealthy seniors who draw over $100,000 in pensions per person are also the beneficiaries of those tax considerations. Let's fix that anomaly so that everyone pays their fair share no matter where their income comes from."
The Hawaii chapter of the AARP was blindsided by Souki's proposal, saying it was unaware of the idea until the opening day speech.
"It's kind of a bolt out of left field, we didn't see this coming," said AARP state Director Barbara Kim Stanton. "We are shocked and greatly disappointed in the speaker's actions."
Gov. Neil Abercrombie was quickly shot down when he outlined a similar plan to tax pensioners shortly after taking office. During a question and answer session with reporters, Souki called the proposal a "talking point" that will be determined by the "fairness of it all."
Republican Gene Ward, who represents East Oahu, said Souki's proposal would punish people who have worked hard all their lives and are now retired.
"Speaker Souki's call for a pension tax on older, well-off residents of Hawaii is like Governor Abercrombie's Pension Tax of 2011. It's simply unfair and a bad idea," said the representative.
Meanwhile, Souki also called for the elimination of higher state income tax brackets, which are scheduled to sunset in 2015. The higher rates were approved by lawmakers as the state dealt with fallout from the Great Recession.
The speaker noted Hawaii's rebounding economy allows lawmakers to create "real opportunities." However, according to state Budget Dir. Kalbert Young, the state has about $25 billion in unfunded liabilities, with $5 billion of that owned by the counties.
Rep. Bob McDermott, a west Oahu Republican, said he was encouraged by Souki's call for tax relief, but said it's critical for Hawaii to get a handle on commitments to state workers.
"We owe it to the retirees, we have an obligation," said McDermott.
During last year's legislative session, lawmakers set aside $217 million to support pension and health fund accounts, $100 million for the current fiscal year and $117 million the next. Young said the amount will continue to increase until contributions reach an annual requirement of $520 million.
Souki's speech also contained a carrot for county mayors. The speaker proposed lifting the cap on the counties' share of the hotel room tax, which currently stands at $93 million. Honolulu receives the lion's share at $41 million. Souki said the state should study the possibility of taxing internet sales from out-of-state companies to make up for any loss in revenue to the state. Honolulu Mayor Kirk Caldwell said it's time for counties to be better compensated for all the services they provide to Hawaii's visitor industry.
"We do a great job and we believe we need more revenue to ensure that we continue that job," said Caldwell.
Meanwhile, Souki stopped short of calling for the legalization of marijuana, but said in a state that already has medical pot, dispensaries are a natural progression.
"I think we need to fix that gap in the law before we talk about anything else," he said.
The session began with the House honoring dozens of former representatives who had served in the chamber since statehood in 1959.
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