Editorials

Thursday, May 9, 1996

An onerous preference for local companies

THE world is moving to lower barriers to trade and investment, but Hawaii's lawmakers haven't gotten the message. They have passed a bill that would require the state to select local firms for public works projects even if their bids are as much as 15 percent higher than those from companies based outside Hawaii, whether on the mainland or in foreign countries.

This is narrow, outdated, protectionist thinking, particularly inappropriate for a state that is trying to attract foreign and mainland investors. Unfortunately, Governor Cayetano intends to sign the bill. He should reconsider.

The measure actually builds on an existing law establishing a 5 percent preference for local contractors, but 15 percent is obviously a much bigger differential. The intention is to help local businesses and local workers. But it would be done at the expense of the taxpayers, who could be socked 15 percent more for the same product than they would otherwise pay.

The governor says the law allows discrimination "if there's a compelling state interest, and I think there's a compelling state interest in this area. We have a history of people being flown in from Micronesia and the mainland to take jobs. We're trying to correct that." But at what price?

It's the same as posting a notice saying non-Hawaii firms need not apply. It says the state isn't interested in awarding its contracts to the lowest bidder if it's from out of state.

To qualify for the differential on contracts of $5 million or less, companies would have to pay Hawaii state employment, general excise and income taxes for four consecutive years. To qualify on contracts of more than $5 million, companies would have to pay those taxes for eight consecutive years. So even if a company set up shop in Hawaii, it wouldn't be eligible for this preference for four years at a minimum.

Is that how this administration proposes to cut waste in state spending? Is that how it proposes to entice firms in other states and countries to do business here? Is that how it proposes to propel Hawaii into the mainstream of the world economy?


Other editorials in brief:

Politics as usual

SEN. Bob Dole has voted in the past to raise the federal gasoline tax by far more than 4.3 cents per gallon, but now he wants to repeal the increase imposed by President Clinton and the Democrats in 1993. Why? He's running for president, and he is looking for a way to attract votes. Meanwhile Clinton, who never proposed an increase in the minimum wage during the first two years of his term, when the Democrats controlled Congress, is seeking one now, when there is little chance of approval with the Republicans in control. Why? He's running for re-election, and this is a way to gain some political capital at the Republicans' expense.

These proposals have nothing to do with addressing the nation's real problems. The best that can be said of them is that their effects wouldn't be substantial enough to make the problems much worse. But the point is not addressing problems; it's winning votes.

Mauna Kea telescopes

OVER the last two decades, the summit of Mauna Kea has made the Big Island one of the premier astronomical observatory sites in the world. That reputation was enhanced when Keck I, the world's largest optical telescope, began operating five years ago. Now a twin, Keck II, has been dedicated and will be fully operational in October.

The potential contributions of the astronomical observations on Mauna Kea to knowledge of the universe are immense. For Hawaii, there is an added benefit: This is a unique opportunity to open the way to careers in science for the state's youth.





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Rupert E. Phillips,CEO

John M. Flanagan,Editor & Publisher

David Shapiro,Managing Editor

Diane Yukihiro Chang,Senior Editor & Editorial Page Editor

Frank Bridgewater & Michael Rovner,Assistant Managing Editors

A.A. Smyser,Contributing Editor



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