Gov. Linda Lingle, in her most specific warning to lawmakers this session, said yesterday she would veto any increases in income, hotel-room and general-excise taxes that lawmakers have kept alive as options to close the state's budget deficit.

The Republican governor, who is usually reluctant to discuss potential vetoes, said she wanted to avoid a budget crisis with majority Democrats. "I'm trying to caution legislators in advance so that we don't get into a crisis situation," the governor said.

Lingle also said she has asked county mayors to back her suggestion for $278 million in labor savings through collective bargaining. In return, she will urge lawmakers not to withhold hotel-room taxes for counties to help close the deficit.

State House and Senate Democrats, noting the governor has also taken state worker layoffs off the table in budget talks, questioned the wisdom of Lingle issuing such an ultimatum. The Senate is expected to approve its draft of the budget soon. House and Senate lawmakers will meet in conference committee later this month on the final draft.

If lawmakers adopt tax increases, and the governor vetoes the bills, it would force lawmakers to either override the vetoes or leave a gap in the state budget the governor and lawmakers would have to address.

State Sen. Shan Tsutsui, D-4th (Kahului), the vice chairman of the Senate Ways and Means Committee, said lawmakers wanted to preserve a combination of options going into conference. "I don't think that she should be dictating what we do now until we send the budget over and she has full control of the budget and all these bills," he said.

State Rep. Marcus Oshiro, D-39th (Wahiawa), the chairman of the House Finance Committee, said he was disappointed.

"This is way too early to draw these lines in the sand," he said. "I don't think she's dealing with reality. Her budget is based upon the assumption that she can work out something with labor, find additional savings in the budget, not lay off anyone, and not raise any fees or taxes.

"I don't know of any governor in this same situation who would dare say that."

Lawmakers have kept alive bills that would increase income taxes on the affluent and raise the hotel-room tax. House and Senate leaders have soured on an increase to the general-excise tax, which is considered the broadest and most regressive tax option, but labor-union leaders are telling lawmakers they would back them if they opted to raise the tax.

HOTEL-ROOM TAXES

Lawmakers also have a bill that would temporarily take hotel-room taxes from the counties to help with the deficit. County mayors, including Honolulu Mayor Mufi Hannemann, have opposed the state keeping the counties' share of hotel-room taxes, arguing it would leave holes in county budgets. Lawmakers are considering a bill that would allow counties to establish a retail sales tax to help offset the loss of hotel-room tax revenue.

"My point to them was," Lingle said of the counties, "I need you to support me in realizing labor savings in order for me to fight for you guys to keep this transient accommodations tax."

Lawmakers have not accepted Lingle's labor savings estimate, because they believe the figure is too speculative since contract talks with public-sector labor unions are ongoing. Lingle would not discuss the progress of the talks, citing confidentiality, but state and union sources have said the direction had changed and that furloughs might be the new path.

Lawmakers, anticipating potential wage and benefit cuts to state workers, are moving to share in the sacrifice.

SALARY CUTS

The state Senate Ways and Means Committee and the Senate Judiciary and Government Operations Committee agreed yesterday to a 5 percent pay cut and a salary freeze through 2011 for the executive, judicial and legislative branches.

The pay cut and salary freeze would apply to 208 of the state's top officials, including the governor, lieutenant governor, state department directors, judges and state lawmakers. If the bill passes, the pay cut would be imposed in July and salaries would be frozen as they stand at the end of June.

The bill would also reduce vacation and sick leave for the executive and judicial branches comparable to any reductions negotiated for top-level administrators.

The pay freeze would save the state $4.1 million over the two-year budget cycle, while the pay cuts would save extra money.

The bill, while cutting pay, does not roll back the salary increases that executive, judicial and legislative branch leaders received over the past few years after recommendations of a voter-approved salary commission.