The Legislature closes
with Cayetano 'disappointed' but
he still gives it a B or B+Could have, should have... Gov. 'disappointed'
By Mike Yuen and Craig Gima
Star-BulletinThe extended 1998 Legislature, which began with promises of bold action, staggered to a close early this morning with some of its own members saying that their work wasn't as far-reaching as it should have been.
More needs to be done to reinvigorate Hawaii's ailing economy and downsize government, they said.
"Perhaps what this Legislature will be known as is: 'The Legislature which could have, should have, and which did not,'" said Sen. Randy Iwase (D, Mililani), leader of the Senate's bipartisan dissident faction. "There were high expectations for us to accomplish great things to deal with this economy, and we did not accomplish those tasks."
But Gov. Ben Cayetano, who at the 11th hour managed to salvage a plan cutting personal income taxes $752 million over four years, wasn't as harsh in his assessment.
"I think the economists and businesspeople might be disappointed that the Legislature didn't pass a reduced corporate tax. I'm disappointed in that, too," Cayetano said. "But the tax reductions are going to help small businesses because most of them file their taxes through the personal income tax."
Cayetano this morning said the Legislature deserves at least a B+ grade for its work. Despite criticism from mainland experts that the tax measures will do little to stimulate the economy, the governor noted that 10 of 13 proposals submitted by his Economic Revitalization Task Force passed -- an 80 percent success rate "that members of the task force can be very, very proud of."
But he acknowledged that more needs to be done and said getting a corporate tax reduction and additional cuts in personal income tax rates would be top priorities for the next legislative session.
For Senate President Norman Mizuguchi (D, Aiea) and House Speaker Joe Souki (D, Wailuku), also members of the task force, the Legislature laid the foundation for improving the economy.
They pointed to the tax relief plan; the streamlining of the permit process for businesses; and allowing private businesses to perform certain government services while establishing a process to determine when a service is best performed by government or the private sector.
They also noted that the University of Hawaii, which can have a major role in shaping the isle economy, has been given autonomy to manage its affairs; and that a tourism authority has been created with permanent funding for marketing and promotion.
"In accomplishing 80 percent of the (task force) plan, we have basically done the people's work," Souki said, joining Cayetano and other members of the task force at a news conference this morning.
Mizuguchi also saw the abandonment of a general excise tax increase tied to the House's tax reduction plan as a triumph for the public. But House Finance Chairman Calvin Say (D, Palolo) has stressed that as long as the state's seven-year economic slump continues, raising the excise tax, now at 4 percent, will remain an option.
Rep. Michael White (D, Lahaina) pointed to a cost factor that he believes lawmakers must soon tame: the escalating cost of public workers benefits that account for 15 percent of the state's annual general-treasury expenditures. Salaries account for another 38 percent."The dance is over," White said. "They (the public-employee unions) can't be expecting all the very, very healthy benefits they've got that are far in excess of the private sector. If they're going to expect (pay) increases, maybe they'll have to give up some of the benefits."
White also called for curbs on "bumping." That practice allows senior state workers who are laid off to claim the jobs of junior employees and keep the higher salary from their previous position.
Arguments by Senate dissidents and House Republicans shared common themes during last night's debate on the state budget and related-fiscal bills: The cuts were minimal, and they did not signal a serious attempt to downsize government.
House and Senate Republicans also protested fee increases, such as school lunches and the copying charge for public documents. It's another form of taxation, they said.
"This budget, like the session we are finally winding up, is a triumph of business as usual over hope," said House Minority Leader Quentin Kawananakoa (R, Nuuanu).
Sen. Malama Solomon (D, Kohala) added: "If this is the best the Senate can do, heaven help the state of Hawaii."
The supplemental budget that was approved last night trims $112 million from the state's current two-year, $6 billion general-fund spending plan. Also rejected was another $39 million in proposed spending.
Forty-two workers will be laid off. During the session, the House was proposing to lay off 129; the Senate, as many as 437.
The budget bill, said Senate Ways and Means Co-Chairwoman Rosalyn Baker (D, Lahaina), preserves "vital services and programs at the community level," such as prenatal care and peer education.
In the House, there was no debate on Cayetano's tax relief plan since the bill came up just before midnight, and members asked that their prepared remarks be inserted in the House Journal. Cayetano granted a two-hour extension to allow the House to complete its agenda. As a result, the Legislature adjourned nine days later than scheduled.
Earlier in the night, the House suddenly agreed to Senate amendments to two bills that give between $10 million and $12 million in excise tax exemptions to management companies that provide payroll and personnel services to telecommunications companies, and small businesses that pay the 0.5 percent wholesale tax rate on goods purchased from distributors.
Supporters say the wholesaler bill will help smaller companies compete with "big box" retailers by reducing the tax's "pyramiding" -- the application of the excise tax at every level of production, distribution and sale -- on smaller wholesalers operating in Hawaii.
"These particular two measures, where we had agreement with the Senate, fell through the cracks," Say explained.
In the Senate, Iwase said lawmakers did not go far enough in addressing stress-related workers' compensation claims.
While lawmakers approved a bill that raised the hotel room tax from 6.0 percent to 7.25 percent, it drew fire particularly from neighbor island legislators who did not like the distribution formula that gave the counties $24 million less.
Sen. Lehua Fernandes Salling (D, Kapaa) said Kauai will be hard pressed to make up the lost revenue.
Fernandes Salling also criticized a provision in the measure that creates the equivalent of the hotel room tax on time-share resort rentals. Kauai has more than half of all the time-share units in the state.
Star-Bulletin reporter Keith Kosaki
contributed to this report
UH autonomy
By Debra Barayuga
doesn’t translate into more
money; cuts needed
Star-BulletinMore autonomy for the University of Hawaii hasn't translated into more funding.
The UH needs to find between $11 million and $13.5 million for fiscal year 1999 after the Legislature this session cut its budget by 5 percent, to $259 million.
"It's still a very heavy cut, but considering the fact that at one time they were planning for even higher cuts, we're pleased and glad it's not higher," said Eugene Imai, senior vice president for administration.
It is too early to say to what degree programs will be affected by the cut, but every program will feel some impact, he said.
The UH's strategic master plan will help guide departments in determining where to make cuts.
"Any announcement makes a big impact on students whether they plan to enroll," Imai said. "It's with great care that we work on the final decisions."
The program cuts would need to be approved by the Board of Regents.
Two faculty committees formed to consider how to deal with the anticipated cuts earlier had come up with proposals such as eliminating the UH law and medical schools, or making them self-sufficient.
Their report was never officially introduced, Imai said, adding he has not seen the document.
A bill passed by the Legislature giving the UH more autonomy, as proposed by the governor's Economic Revitalization Task Force, is significant, he said.
"The whole premise was, by removing many of the opera
tional constraints the University of Hawaii faces, it would be possible to react more quickly to opportunities that result in economic benefit to the state," Imai said.
The UH autonomy measure allows the university to become more self-sufficient, hire its own attorneys, consolidate special and revolving funds, and be exempt from some restrictions in procurement and concession laws.
It also allows regents to indemnify collaborating institutions from lawsuits.
In the past, the UH has been forced to delay or pass over projects because it had difficulty granting collaborating institutions indemnity from lawsuits.
The university still is required to comply with the overall intent of procurement laws for goods and services but -- since it is no longer bound by certain restrictions -- can react to more opportunities for the university and the state, Imai said.
Speaker's chief of staff
Star-Bulletin
named ombudsmanHouse Speaker Joe Souki's chief of staff, Robin Matsunaga, has been named the state's new ombudsman. Matsunaga was unanimously appointed to a six-year term that begins July 1 during a joint session of the House and Senate last night. He replaces Yen Lew, who recently retired because of illness.
In his $85,300-a-year post, Matsunaga will investigate citizens' complaints against state agencies.
Prior to becoming Souki's chief of staff in December 1992, Matsunaga served as committee clerk when Souki (D, Wailuku) was chairman of the House Finance panel.
Matsunaga also has worked as a state Transportation Department program-evaluation analyst supervisor.
He received his master's in business administration from the University of Hawaii.
