Governor keys on energy, tax credits in speech

The Republican governor used her final State of the State address to ask lawmakers to ban the construction of new fossil-fuel burning power plants and to pass a package of tax credits to boost Hawaii's economy and to create jobs.

"We will no longer allow our economic well-being to be dependent on burning oil and coal that must be shipped here over thousands of miles of open ocean," Lingle told lawmakers, dignitaries and the public gathered at the Hawaii Capitol.

The tax proposals would exempt some renewable energy projects from general excise taxes, provide a tax rebate on electric and hybrid vehicles and offer clean energy investment bonds.

A 10 percent construction and renovation tax credit for hotels and resorts could create 23,000 new jobs, she said.

The state's $1.2 billion budget deficit overshadowed Lingle as she enters her last year before leaving office.

Lingle acknowledged the need for state government to make more cuts after last year's reduction in programs, furloughs of employees and layoffs.

"Simply put, our state government is spending at a rate that substantially exceeds our revenues and at a level that cannot be sustained," Lingle said. "The midterm economic outlook requires that we further downsize government, prioritize the services we desire and can afford, and together devise innovative ways to meet the needs of Hawaii's people."

She also suggested income tax credits and a reduction in a planned unemployment tax hike that would hit some businesses with an extra $1,000 per employee per year starting this spring.

Lingle also wants voters to have their say on a constitutional amendment that would create a budget stabilization fund to help balance the budget in the future when the economy goes bad.

"This fund will shield us in future years from the need to raise taxes during periods when the economy is contracting and citizens can least afford to pay more," Lingle said.

The fund would be started from about $62 million sitting in the state's rainy day fund.

Then it would grow in future years. When tax revenues are increasing, 5 percent of the general fund's year-end balance would be put in the fund.

Republican National Committee Chairman Michael Steele, who is in town for the RNC's winter meeting, listened to Lingle's speech with the public in the audience.

Lingle is term-limited from seeking another term as governor, and she isn't running for any other political office this year.