Cayetano
maps out 2nd-
term plan

He contrasts his help
on taxes with Lingle's vision,
which must start with
budget cuts, he says

By Mike Yuen
Star-Bulletin

Corporate tax breaks, including a five-year "tax holiday" for high-technology firms that establish offices in the isles, are part of a four-year plan that Democratic Gov. Ben Cayetano promises.

It will be a detailed plan, Cayetano said of his second-term agenda, to be unveiled at a news conference today. That's to drive home to voters that there's a significant difference between what he has to offer and Republican challenger Linda Lingle's blueprint for Hawaii, said Cayetano, who characterized Lingle's plan as vague and lacking in specifics.

Lingle, Maui's mayor, hasn't said how she's going to pay for her initiatives. "She's starting from a base where she believes the state is $500 million in the hole," Cayetano said. That means before she can undertake any initiatives, she must first slash the state budget, he added.

"Half-a-billion dollars is nearly double the budget of the University of Hawaii. She hasn't told us where she's going to cut. She hasn't told anybody," said Cayetano, who is projecting the state will end the current fiscal year, which began July 1, with a balance of $311 million. The recently concluded fiscal year ended with a balance of $154 million.

The Lingle campaign remains unconvinced of Cayetano's rosy financial picture. "The (actual) $154 million surplus that he brags about is less than half the $388 million surplus that he inherited," said Lingle spokesman Randy Roth. "Also, his budget figures don't reflect obligations to fund already-negotiated union pay raises and contributions to the state retirement system. These two items alone have been estimated at about $200 million."

Cayetano yesterday would not reveal the full scope of his new four-year plan. But some elements of the plan have emerged:

A five-year tax exemption for high-tech firms relocating to the isles which excludes them from the corporate income tax and general excise tax.

A high-tech park in Kakaako, where technology firms could lease space. Firms doing a high level of business would get low rent.

A reduction in corporate income tax rates -- the highest is at 6.4 percent. This was an initiative of Cayetano's touted economic revitalization task force that the Legislature did not approve.

A tax exemption for exported professional services. This would mean, for example, that isle architects and engineers working on projects in Asia wouldn't have to pay taxes on that work. This is another task force proposal that died in the Legislature this year.

Cayetano said he won't make a second attempt to raise the 4 percent general excise tax, acknowledging no public support for the move.

Lingle's proposals include dividing government acquisition of supplies and services into smaller lots to allow small businesses to compete for government contracts; giving a 5 percent cash rebate to companies that create more jobs; and getting a top-notch film school to establish an Asia-Pacific campus in Hawaii.

And like Cayetano, Lingle wants to develop a high-tech center and eliminate the excise tax on exported professional services.

Lingle, Cayetano debate on television Star-Bulletin The Cayetano-Lingle debate goes on at 7 p.m. tomorrow on KITV-4. Gubernatorial candidates Linda Lingle and Gov. Ben Cayetano will be in an hourlong debate. Anchor Tina Shelton will moderate the show at the KITV-4 studio. Candidates will be questioned by KITV reporters Ann Botticelli, Denby Fawcett, Daryl Huff and Keoki Kerr. There will be no studio audience and no call-ins. The public is encouraged to e-mail at news4@kitv.com, visit KITV's Web site, http://www.kitv.com, or call NEWS-4 today at 535-0440 with questions for the candidates.