State legislators yesterday completed a workmanlike session where they took careful steps to improve affordable housing, healthcare and the environment while passing a new two-year state budget that anticipates an economic slowdown.

State House and Senate Democratic leaders never were quite able to define their main theme at the start of the session in January — sustainability — and several of their more ambitious ideas failed to materialize. But they said yesterday they believe they made progress and would continue to try over the next several years to make the Islands a more affordable place to live while protecting the environment.

State Senate President Colleen Hanabusa, D-21st (Nanakuli, Makaha), who this session became the first woman to lead a chamber of the Legislature, said lawmakers opted for tax relief targeted to the poor and new spending that benefits public education and the most vulnerable.

"Look at what many of our constituents have said: 'Don't give us back $100 or $25, fix the schools or take care of the homeless,' " she told senators. "And that is what this body did."

Lawmakers provided money toward keeping Kukui Gardens in Chinatown affordable and for improving and increasing other affordable units and homeless shelters. They agreed to bring the financially ailing Kahuku Hospital into the state's public-hospital system and promoted greater autonomy by creating stronger regional affiliates within that system. They restored health-insurance rate regulation over insurance industry objections.

They also agreed to a three-year pilot project with the Hawai'i Medical Service Association to provide basic health insurance to thousands of children who are not covered by the state insurance program for the poor or by private insurance.

In response to last year's fatal Kaloko dam disaster on Kaua'i, lawmakers created a special fund to strengthen the state's dam inspection and maintenance program. Lawmakers also approved money for pedestrian safety, including improving crossing signals and identifying dangerous intersections for the elderly, in light of nearly a dozen pedestrian fatalities this year.

GREENHOUSE GASES

Democrats and Republicans praised a bill that seeks to reduce greenhouse gas emissions in Hawai'i by about 15 percent by 2020. The bill also attempts to reduce the state's dependence on oil by promoting alternative energy, such as windfarms and solar panels and water heaters, and encouraging the use of more fuel-efficient hybrid vehicles.

Lawmakers passed out an economic innovation package worth more than $17 million over two years to help stimulate job growth in science and technology, as well as work force training. Innovation was a major priority for Gov. Linda Lingle this session, and the package mirrored several of her proposals.

But lawmakers failed to follow through on some of their own priorities. They dropped plans to streamline building permits for developers of affordable housing and to curtail housing speculation through higher taxes. They failed to agree on fast-tracking permits for developers who incorporate recycling, renewable energy and affordable housing into their projects. They discarded plans for a state earned income tax credit for the working poor.

And they killed a tax incentive for economic development on the Leeward Coast that would have replaced a controversial tax credit originally targeted at an aquarium for the Ko Olina resort.

Last session, lawmakers eagerly sparred over how to spend a budget surplus that wound up coming in at a record $732 million. This session, working with an estimated surplus of $466 million by the end of the fiscal year this June and projections of steady 6 percent state revenue growth, lawmakers turned more cautious. Over the past week, House Democrats in particular have warned of falling revenue that could lead economists to adjust growth projections downward.

NEW SPENDING

The two-year $20.8 billion state budget — including $10.3 billion in general (locally raised) funds — emphasizes new spending on public education and health and human services. A modest $50 million tax-relief package gives a one-time rebate and a permanent food credit to lower- and middle-income residents. A revival of an 11-cent-per-gallon tax break on ethanol-blended gasoline would cost the state $32 million and could save consumers money if passed on by the oil and gasoline industry.

State House Rep. Marcus Oshiro, D-39th (Wahiawa), chairman of the House Finance Committee, characterized the session as productive, "where the people's needs came first."

"We took the fiscally responsible and prudent course in the budget and the bills and our tax package," Oshiro said.

But Republicans described the tax relief as paltry and questioned whether it satisfied the constitutional requirement for a tax rebate after two consecutive years of substantial budget surpluses. Lawmakers had met the requirement in the past through rebates to all state taxpayers, most often just $1.

State Sen. Sam Slom, R-8th (Kahala, Hawai'i Kai), said lower- and middle-income taxpayers were not the ones responsible for creating the economic growth that led to the budget surpluses. "This bill is a sham and a fraud," he said.

POWER REASSERTED

Both majority Democrats and Lingle came into the session politically stronger after last year's elections. But rather than cede any ground to the Republican governor — who won a mandate statewide in November — Democrats instead reasserted their power. Democrats limited the governor's ability to choose appointments to the University of Hawai'i Board of Regents and to fill vacancies in the Legislature and U.S. Senate.

Senate Democrats, for the first time since Lingle took office, rejected two of her Cabinet nominees after confirmation hearings that turned out to be the most dramatic and emotional moments of the session.

Iwalani White was rejected as director of the state Department of Public Safety over complaints about her management style. Peter Young failed to get a second term as director of the state Department of Land and Natural Resources over management questions in the boating and state historic preservation divisions and at the Bureau of Conveyances.

DECISION DEFENDED

Some senators were also concerned that the department was not more aggressive about inspecting dams before the fatal breach at Kaloko that killed seven people.

The Senate, also for the first time, approved subpoenas to protect witnesses who wanted to testify at the confirmation hearings. A Senate panel also went into closed sessions at the request of the state attorney general's office and the state Ethics Commission to hear about criminal and ethics probes at the Bureau of Conveyances.

Several editorial and opinion writers criticized the confirmation hearings, but Hanabusa defended how the Senate approached its advise and consent role. "So because the media doesn't agree, that doesn't make it that we were wrong," she said.

State Senate Minority Leader Fred Hemmings, R-25th (Kailua, Waimanalo, Hawai'i Kai), said the session would likely be remembered for the confirmation hearings and by what he called the Democrats' bending to the wishes of labor unions, especially the Hawai'i Government Employees Association.

OVERRIDE VOTES

The HGEA had opposed Young and was among the public-worker unions behind a bill that grants unions the right to negotiate worker transfers and assignments during collective bargaining.

"That whole process constituted a predetermined indictment and conviction of the nominees until such time as they could prove themselves worthy of advice and consent," Hemmings said of the confirmation hearings.

On the last day of the 60-day session, the House and Senate cast dozens of final votes on bills that had been agreed to late last week or amended on Tuesday.

The Senate, following the House on Tuesday, voted to override Lingle's veto of a bill that requires pharmaceutical companies participating in the Hawai'i Rx Plus program to provide rebates on prescription drugs.

The House, however, chose not to follow the Senate and overturn the governor's veto of a bill that would have allowed Hawai'i to join an interstate compact to elect the president by national popular vote instead of through the Electoral College. That means the veto stands.

Hawai'i would have been the second state, after Maryland, to agree to join the compact.

"I truly believe that we can look back and be proud of the work we accomplished for the state of Hawai'i," Say told his colleagues. "We had a solid session."