[ OUR OPINION ]
STATE lawmakers should have no trouble complying with Governor Lingle's call for a prompt end to political cronyism through specific changes in custom and law. Democrats in control of the Legislature will feel less comfortable coping with her tax cut for low-income residents while trying to balance the state's budget. That problem was absent from the new governor's State of the State Address but is sure to be paramount when legislators consider her economic proposals. Lingle speech leaves
budget questions
THE ISSUE The governor calls for restoring trust and improving schools and the economy.
Lingle's non-economic plans are refreshing and more easily implemented, in response to recent incidents of public corruption. She encouraged state workers to report to her any incidents of being pressured into political activity and told special interests that any "large gifts" to public officials will be viewed as bribes.
She also endorsed campaign-finance legislation prohibiting contributions to political candidates by "anyone benefiting from nonbid contracts." The Legislature passed such a bill in its last session, but Gov. Ben Cayetano vetoed it because legislators did not include themselves in the ban. That was not the "major flaw" that Cayetano contended, because legislators don't award contracts so have no way of paying back contractors.
The toughest sell in non-economic areas will be education. Lingle proposed that voters be allowed to decide whether to replace the statewide school system with local school boards. She proposed during the campaign that the state be carved into seven school districts.
Organized labor will bristle at her sensible proposal to take principals out of unions. Lingle also called for what amounts to a right-to-work system for employees of charter schools, which are now union shops. Public employee unions also can be expected to give a decent burial to her idea that counties "chart their own course in collective bargaining." Unions derive their strength from numbers and benefit from statewide contracts that embrace all county and state workers.
Cayetano vetoed a bill last year that would have provided a $75 million tax credit for a proposed aquarium and marine science center as part of the Ko Olina resort development, saying he opposed a tax credit for a single project. Lingle called it "a big deal" for the state, the construction industry and especially the Leeward Coast.
The biggest challenge for Lingle and legislators will be assembling a budget that accommodates her proposals while meeting the constitutional requirement that it be balanced. The $15 billion budget the Cayetano administration submitted to the Legislature last month envisioned a shortfall of $160 million, but that anticipated the use of $187 million from the Hawaii Hurricane Relief Fund.
Lingle opposed dipping into the fund, which means that the shortfall under the Cayetano budget would be $347 million.
Lingle promised to return $10.3 million in ceded-land revenue to the Office of Hawaiian Affairs. Legislators will not dare to refuse.
During her campaign, Lingle proposed repealing the excise tax on food and medical services, but she told legislators that can be done "when the economy improves." She did propose eliminating the 4 percent general excise tax on health insurance policies.
Most surprising, she called for raising the standard deduction for taxpayers who don't itemize to 50 percent of the federal standard deduction within three years and eventually to 100 percent. The state's standard deduction now is $1,500 for singles and $1,900 for a married couple, less than one-third of the federal levels.
Lingle pointed out that every state tax review since 1984 has recommended raising the deduction. Indeed, Marie Okamura, Cayetano's tax director, proposed raising the standard deduction as recently as 2001, but legislators were unwilling to approve such an increase during an economic slump. Now the Democratic Legislature is faced with rejecting an unquestionably progressive tax cut proposed by a Republican governor -- not a pleasant scenario.
Georgina Kawamura, the state budget director, told legislators last week that the governor's tax proposal would cost $30 million. Kawamura said "selected special funds that have outlived their purpose or have no justifiable purpose" may be used as a source for balancing the budget.
"There are lots of places in government to trim and there are some pieces to actually cut," Lingle said earlier this month. That remains to be shown.
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