Fix infrastructure, lawmakers told

Better facilities would "level the playing field," an expert says

Providing incentives for a specific sector of the economy, whether it be technology or construction, might not be the best approach for lawmakers as they craft the supplemental state budget during a time of slowing tax revenues, an economist warned last week.

"Part of the problem of targeting any specific industry is we don't know that that industry is going to be the next growth industry," said Carl Bonham, executive director of the University of Hawaii Economic Research Organization.

The point was discussed Friday as Bonham and other members of the Council on Revenues briefed the Legislature's money committees.

Earlier last week the council predicted 4.9 percent revenue growth in the current fiscal year, down from a 5.7 percent forecast in August.

Council members, whose forecasts are used by lawmakers when crafting the state budget, cited a continued decline in tourism in lowering their expectations.

Given the decline in visitors, Senate Ways and Means Chairwoman Rosalyn Baker questioned Bonham and Council on Revenues Chairman Paul Brewbaker whether it behooved the Legislature to explore ways of diversifying the economy.

Last year, prompted by Gov. Linda Lingle, much of the legislative focus was placed on spurring investment in innovation and technology and shifting the state's educational structure to promote growth in those areas.

Bonham said his approach would be to "level the playing field" by improving roads, sewers, schools, buildings and other basics to benefit everyone. New industries "will develop if they can make it here -- in other words, if we can provide the basic infrastructure," he said.

Brewbaker was more supportive of investing in other areas of the economy, saying that "for some of these emerging sectors that have a strong technology component, the high growth (in jobs) has been profound."

Both stopped short of saying which approach the Legislature should take.

"We're out in the middle of the Pacific, so you can't just say that having good schools and having good roads and that is going to be enough of a reason to get people to look at us if we don't invest in some other areas as well," said Baker (D, Honokohau-Makena).