Sunday, November 4, 2001


Gov blasts Legislature
for shortfall in action

But some lawmakers say the state
can't do much for the economy

Retailers give mixed reactions to session

By Richard Borreca

The Legislature squandered an opportunity to address the state's jarring economic crisis with bold action during its just-concluded special session, according to Gov. Ben Cayetano.

Other leaders also expressed doubts on whether what was accomplished in the two-week session will meet the needs of a state that has seen tens of thousands of workers sidelined since Sept. 11.

Cayetano wanted $1 billion in new state building and repairs to bolster the construction industry and asked for capital gains tax cuts to bring in investors. But he was unable to get legislators' support.

"I basically pitched them a softball. They could have hit it out of the park, but instead they chose to bunt," Cayetano said in an interview Friday before he left for a 10-day trip to New York and Georgia, where he will promote Hawaii tourism.

Cayetano said not enough members of the Legislature believed the state was in a crisis, so they failed to take enough steps to move the economy.

But other lawmakers said going into special session may have been a mistake because there is not much the state can do to help in a recession caused by a global slowdown in tourism.

"It would have been better if the governor didn't call us back," said Rep. Joe Souki (D, Wailuku), transportation committee chairman and former House speaker.

"It raises the hopes of the public, but what do they expect 76 legislators to do in a week -- solve all the problems of the economy?" he said. "I hope we don't become the scapegoat."

Rep. Brian Schatz (D, Makiki) also defended the Legislature, saying lawmakers acted to handle an immediate crisis.

"I think the people understand what is needed now is steady leadership," he said.

Yet Sen. Suzanne Chun Oakland (D, Palama-Alewa Heights) worried that the newly unemployed, now numbering 23,000, are not getting enough help from the state.

"Many of the unemployed were working two or three part-time jobs and unemployment won't cover them," she said.

Immediately after the Sept. 11 attacks, Hawaii started feeling the impact as tourist arrivals plummeted and businesses began laying off employees. Cayetano started prepping the legislators two weeks before he called the special session Oct. 22.

With the administration worried that the public's fear of flying would ruin Hawaii's tourism industry, Cayetano asked for extra money to keep construction moving. Legislators countered there was not enough money for the state to spend and chopped his $1 billion request down to $100 million.

"In the beginning, I thought everyone understood the gravity of the situation," Cayetano said. "The way I look at it, if you have concerns about the CIP (capital improvement projects) I am proposing and you think it is too much of a jump, you tell me what is the alternative. Just tell me what is the alternative.

"I really feel there are too many of them that don't understand the gravity of the situation. I'm from the school that you prime the pump instead of watch an economic meltdown, and that is what is what is going to happen," Cayetano said.

Cayetano insisted that the Legislature was unable to come up with any program that will provide new jobs in the face of an economic crisis.

The governor was joined in his criticism of the Legislature by Lowell Kalapa, executive director of the Hawaii Tax Foundation. He called the Legislature's product "the same old rehashed stuff."

The tax credit for home renovations and hotel construction, Kalapa said, will have little impact because they last only until July, which is not enough time to plan a major renovation.

"You have to restore consumer confidence," Kalapa said. "None of the measures recognize the idea of restoring consumer confidence. You do that by putting money back in people's pockets."

Kalapa agreed that the $1 billion in construction would have helped the economy, but added that it takes three years from project authorization to actually spending the money, so Cayetano would have had trouble spending the extra money.

"If he wants to kick butt in DAGS (Department of Accounting & General Services), then it could work and I would credit the governor," Kalapa said.

He said the Republicans' call for a retail tax holiday would not have helped and could possibly hurt.

"The tax holiday is nuts," Kalapa said. "It would give more employment for one week; it wouldn't do anything to keep a steady work force employed."

Instead, he said, the Legislature should have enacted an across-the-board tax cut, such as a permanent income tax reduction.

"You have to put money back in people's hands," Kalapa said.

But Cayetano said that when the Legislature returns in January for the regular session, it is going to be faced with a negative revenue picture and will not be able to cut taxes anymore.

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