Small businesses
to lobby for
privatization

Merchants will seek
reform at the next
legislative session

Star-Bulletin staff

A group of small local businesses has placed privatization at the top of its legislative wish list for the upcoming state session.

The 150 business people who attended Hawaii Congress on Small Business last week at the Ilikai Hotel want the current state law amended to give state and county governments maximum latitude to privatize and also to determine the true costs of government services.

Privatization also was requested at the 1996 state Legislature after the first Congress on Small Business three years ago.

"It was watered down at the Legislature and then came the state Supreme Court decision which said no state worker can be laid off," said Bette Tatum, state director of the National Federal of Independent Business. "We'd like to have more flexibility so we could transfer workers."

Tatum, who co-chaired the second congress with Old Lahaina Luau owner Tim Moore, said privatization was the No. 2 priority three years ago, behind workers' compensation reform.

"We've made some progress," Tatum said. "We did get some good changes on workers' compensation and we got the limited liability corporation."

But she said the number of small businesses in Hawaii has dropped to about 25,000 this year from about 29,000 three years ago.

"Businesses are leaving the state and this concerns everyone," Tatum said. "The Hawaii Congress on Small Business is a nonpartisan effort. We focus on fiscal conservatism and not political differences."

Tatum said the recommendations will go to the Senate president and House speaker for drafting into proposed legislation.

She said the first congress led to the Hawaii Small Business Regulatory Flexibility Act and the introduction of innovations such as the one-page Basic Business Application that consolidated a dozen different tax forms, licenses and permits totaling about 20 pages.

This year's recommendations include:

Privatization: Extend Act 230, the current privatization law, beyond its three-year period, until it is fully implemented. Appoint the committee called for in Act 230 to do the required review of department costs.

Economic development and international trade. Eliminate excessive duplication of regulations and functions of state and county agencies.

Insurance and labor. Reform Hawaii's tort law to prevent frivolous lawsuits, requiring the loser to pay attorney fees, costs and expenses to protect innocent defendants. Put a cap on noneconomic damages such as pain and suffering.

Taxation. Implement performance-based state budgeting to reduce cost of government. Replace the general excise tax with a tax on retail sales, excluding food and medical care. Simplify state income tax to a return based on percentage of federal income tax.

Capital formation. Join 48 other states and adopt a Small Corporate Offering (SCOR) program to make it easier for a small business to raise money through a stock offering.

SCOR is a process approved by the federal Securities and Exchange Commission which uses a series of forms, rather than a full prospectus, for companies raising up to $5 million, said John Chock, president of the Hawaii Strategic Development Corp., an agency attached to the state Department of Business Economic Development & Tourism.

Also, the congress wants the Legislature to abolish the "merit review" process that allows the state Department of Commerce and Consumer Affairs to pass judgment on these stock offerings.