Gov targets
business costs,
education

He plans tax reforms
costing $150 million—
without government cuts

By Mike Yuen
Star-Bulletin

Democratic Gov. Ben Cayetano has shown that he can come up with plans.

"His problem has been getting something positive implemented, putting in place the kind of changes our state needs to get turned around," said Republican gubernatorial nominee Linda Lingle. Her statement came after Cayetano unveiled initiatives yesterday that the governor said would guide his second term.

For the most part, the proposals are a continuation of efforts he launched during his first four years. His focus on making Hawaii a center for higher education, health care and business also echoed broad themes that Lingle has sounded. When Lingle revealed her blueprint for Hawaii, Cayetano said her plan looked strikingly similar to his.

Lingle, who was carrying a copy of Cayetano's 1994 plan with her, said it is more instructive to look at what Cayetano has promised and what he has accomplished rather than to assess his new promises.

Cayetano promised, in his own words, "to develop a world-class economy" that can compete globally, but that hasn't happened, Lingle said.

Nor has Cayetano kept his vow to "restore faith in state government" and to "clear up the governance" by the statewide public schools system, Lingle said. Cayetano favors having the governor appoint the Board of Education. Lingle envisions county school boards that are elected.

Cayetano continued his criticism of Lingle "for going around this state, scaring the daylights out of people by telling them we have a half-a-billion-dollar deficit."

The isle economy is moving upward, Cayetano asserted, because new small businesses are creating jobs, construction work is increasing and because there's more consumer consumption as a result of reforms that lowered workers' compensation and property and automobile insurance premiums.

Cayetano said his tax reform initiatives would cost about $150 million, but they won't mean government cutbacks because his administration is projecting a cash balance of $311 million at the end of this fiscal year, which closes June 30. Lingle wasn't able to put a price tag on her initiatives.

His initiatives to improve the state's business climate include:

Trying once more to win legislative approval to cut the corporate income tax -- the highest rate is 6.4 percent -- by at least 33 percent; to exempt exported professional services from the 4 percent general excise tax; and to reduce the pyramiding of the excise tax, particularly in the health care industry.

Offering tax credits, such as to venture capitalists to encourage investing in start-up technology companies in Hawaii.

Developing a high-tech park in Kakaako where new tenants could get a five-year exemption from state taxes.

Offering a retraining tax credit, which would cover computer classes and management and technical training.

Cayetano said he wants the Board of Education, principals and teachers to reform school curriculum. "Our teachers should be required to teach only what they've been trained to teach."