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Thursday, May 4, 2000

Hawaii State Seal

Isle businesses
give lawmakers
passing grade

The minimum-wage rejection
and the hotel tax credit both
received praise

By Russ Lynch


Business groups are praising the just-closed session of the state Legislature both for what it did and what it didn't do.

They're especially glad a minimum-wage increase did not pass, yet they say much more could have been done to help Hawaii's economy.

Legislature 2000 "I thought any urgency to improve Hawaii's business climate was visibly missing," said Bette Tatum, head of the National Federation of Independent Business in Hawaii.

"What we got killed helped business more than anything."

Tatum praised legislators for not passing an increase in the minimum wage.

"Small business cannot afford it at this time," because they still have not recovered from the setback in the Hawaii economy through the 1990s, she said.

Although a proposed 50 cents increase in the minimum wage might not seem like much, she said, raising it to $5.75 from $5.25 would create a "trickle-up" effect and workers making $8 an hour, for example, would demand a proportionate increase.

Stanley W. Hong, president and chief executive officer of the Chamber of Commerce of Hawaii, and Tim Lyons, executive vice president of the Hawaii Business League, agreed that raising the minimum wage was a bad idea.

Lyons said a proposal to tie it to the national minimum wage was even worse, because the mainland is booming while Hawaii is still struggling. If that proposal had passed, Hawaii small businesses would have been disproportionately affected, he said.

Both Hong and Lyons said there were good pro-business measures that passed.

Hong noted the tax credit for construction of resort facilities, which is intended to help hotel owners renovate their properties.

Gov. Ben Cayetano, angry because the Legislature voted to save hotel owners millions while failing to help Hawaii's poor with a minimum-wage increase, has said he may veto the hotel tax credit bill.

Hong said the tax credit will be good for the economy and employment.

"While visitors are beginning to return to our islands due to the commitment of funds for tourism promotion, Hawaii's hotel industry is still in a precarious state. Much of its infrastructure is in serious disrepair," he said.

The tax credit will help revitalize Hawaii's visitor accommodations infrastructure, stimulate the construction industry and create new job opportunities, Hong said.

"The hotel tax credit is going to be a big help, if the governor signs it," said Lyons, whose organization represents mostly small businesses.

It will not only benefit the construction industry and the hotels, but also peripheral businesses around the hotels, such as shops and restaurants, Lyons said.

"In 1990 or so, when the economy went sour, hotels should have been thinking about renovations but they they just didn't," Lyons said, adding that the credit will help them move ahead with renovations.

Overall, Lyons described the 2000 session as "probably one of the best sessions we've had for quite a while."

There were no sweeping changes to benefit business and the positive effects of some measures won't necessarily trickle down to small businesses, he said. Still, Lyons added, some changes were made that will benefit specific sectors.

One that his group liked is a specific closing date, in 2001, to the employment training fund, which is financed by a surtax on the unemployment insurance premiums all businesses have to pay. A bill to phase it out was passed years ago but every year the sunset date was extended for another year.

Businesses don't object to improving the skills of workers but they don't see why they should pay to help a competitor get more highly skilled labor, he said.

The newly passed credits to help develop high-technology businesses also will help the economy, Lyons said, and he liked a measure to speed up payments by contractors to subcontractors and by government agencies to contractors.

Business groups also were glad that the Legislature did not pass a bill that would have brought treatments for mental health problems and drug and alcohol abuse into required coverage in employee health plans.

"Between all these things and the fact that the minimum wage didn't pass, it was an OK session," he said.

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