Five economists
suggest Cayetano has rose-
colored glasses on

The state budget director isn't persuaded,
'It's politics, braddah'

By Mike Yuen
Star-Bulletin

Five isle economists say Democratic Gov. Ben Cayetano's re-election campaign is painting an unrealistic and rosy picture of the state's economy when it has deteriorated during his first term and shows no signs of immediately improving.

But state Budget Director Earl Anzai countered: "It's politics, braddah. I can refute everything they said. It is politics from the Lingle camp."

Two of the economists acknowledged that they are supporting Republican gubernatorial nominee Linda Lingle, Maui's mayor. They are Lou Rose, a University of Hawaii economics professor, and Leroy Laney, vice chairman of the state Council on Revenues, who also teaches at Hawaii Pacific University.

UH professors David McClain, Walter Miklius and Jack Suyderhoud also believe that Cayetano hasn't revived the state's sluggish economy, but they were not at a news conference yesterday and reporters could not find out if they supported a particular gubernatorial candidate.

As an indicator as to what's happening in Hawaii, Rose pointed to Moody's Investor Service earlier this year downgrading Hawaii's bond rating from AAA to AA because of the state's fiscal situation.

Anzai, however, said the academics can't even get the facts right as the state was actually downgraded from AA to A.

"I find it ironic that we got downgraded to the same level as Maui County," Anzai said.

Cayetano has been boasting that he inherited a projected shortfall of $750 million and turned that into a surplus of $154 million as of June 30. The economists said that was done by raiding special funds to prop up the state's general treasury.

Laney said a long-term look at the general excise tax, the state's largest source of tax revenue, shows it has been flat for the past 15 months. Also, he's not optimistic that tourism and construction will be on the upswing.

Laney, who favors privatization, said Hawaii's governor needs to take drastic action to improve the economy, like how President Reagan handled the air traffic controllers strike by hiring replacement workers and not giving strikers back their jobs.

The economists said the state could be paying the semiautonomous Office of Hawaiian Affairs as much as $1.2 billion to settle OHA's ceded land claims, which would throw Cayetano's budget out of whack.

What they apparently don't know, Anzai countered, is that the settlement could in large part be land and concessions.

"It upsets me. These guys are so full of it," Anzai said.