Other Views

Saturday, April 11, 1997

---

One man’s view of
legislating under pressure

By Bob Bonar

Editor's note: Bob Bonar is a member of the Community
Revitalization Coalition, a group representing mostly human service workers
and providers that is pushing for a five-day recess in the legislative session to hold
community meetings to discuss the impact of economic revitalization proposals.

Part I: Legislation under distress

As one who has spent more time around the Capitol during this legislative session than the average citizen, and more time talking with the average citizen than the average legislator, I offer a few personal observations.

For the most part our elected officials are doing the best they can, with the information they have, within the time span that we have collectively provided, and given the level of lobbying with which they are assaulted.

Despite the many folks who wander around asserting that they have the solutions to all of our economic and social ills, they don't. Democracy and living in the community are messy. We all have stakes in the costs and benefits of any decisions.

Whatever collection of bills intended to restructure government and redesign the tax system passes both houses will require tradeoffs.

There appears to be a consensus among our elected officials that they must make some dramatic changes in our tax code and in the structure of our government. There are powerful interests working hard to shape the changes in a manner that will best serve their constituencies. We would do well to pay attention to where the money will flow under each proposal.

As with any advertising, take a careful look at what you are being asked to buy and take a careful look at the tradeoffs. Those powerful interests are telling you about the upside of their plan. Press them for the downside. If we are cutting taxes, where will we cut the spending and who will lose on the basis of that cutting?

Part II: All ERTF, or nothing?

The Economic Revitalization Task Force (ERTF) offered a package of recommendations. We were repeatedly told the whole thing had to be considered as a package. What currently exists as proposed changes is barely recognizable from what the "package"once was. So, maybe now we don't need the whole package. You can't have it both ways.

We have a complex set of problems, requiring complex solutions. Any package of recommended changes should reasonably be expected to lay out the costs, benefits and time lines.

Indeed, this is reasonable to expect from any good business plan. However, the manner in which the powers-that-be have chosen to set the stage for "revitalizing" our economy has had more to do with politics and public relations than engaging our communities in a reasoned discussion about what will make Hawaii the best place to live for our children, youth and families.

One of our legislative leaders has often said, "In politics, perception is everything." Advertising works and the campaign that has been offered in support of the ERTF package has been designed to create the perception that things will be better if it is passed. Ask the question: Better for whom?

These comments will be looked on as anti-ERTF and that would be missing the point. They are, instead, an insistence for processes that more fully include the stake holders, and for a level of information that will more fully disclose the tradeoffs.

We do not, at this point, know what the outcomes will be with respect to legislative decision-making and their effects on our economy and the various stake holders in our community. Whatever those effects, make your elected official accountable.

Part III: Little guy hurts most

While the focus of the public relations effort has been on the tax code changes affecting revenue, the most important changes must occur on the spending side. The ERTF plan is not one where there is a sharing of pain.

If you look at the expenditures for the various sectors of government the major growing costs are those related to the benefit packages for state employees and specifically in the ERS and the Public Employee Health Fund.

A March 24 article in the Star-Bulletin detailed the accelerating costs with respect to the Public Employees Health Fund. In fiscal year 1990, that fund cost the state $53.7 million; in 1999 the projected cost will be $229.50 million. The ERTF package does nothing to address those growing costs.

Under the ERTF package, the franchise tax would be cut in half. In 1997 one of our major banks recorded a net income of $113.7 million on revenues of $690 million and paid $10 million in taxes for a rate of 1.8 percent.

By way of comparison, a medium-sized neighbor island hotel recorded a net income of $115,045 on revenues of $21.6 million and paid taxes of $1.8 million for a rate of 8.3 percent.

Time-share units have not been subject to the same taxation as hotels. Treating time-share units the same can generate something on the order of $17 million in tax revenue.

The above exemplify a lack of fairness of sharing the pain. When you look at the composition of the ERTF membership and then at the recommendations, it become evident that there is a basis for the pervasive cynicism when it comes to government.

While I have great respect for many members of the task force and appreciate the challenge involved in building a consensus package, it is apparent that the process was biased from the beginning. The process that has played out since the unveiling of the recommendations has been divisive, pitting one group of special interests against another.

I will naively suggest that the greatest challenge for our elected officials, at this point, is setting aside their re-election concerns of votes and money, and setting aside the self-serving arguments of special interest on the way to forging a package that will serve all of us better.

Be brave, folks.

---

Bob Bonar is executivc director of the
Hawaii Youth Services Network.