Editorials
Wednesday, January 13, 1999

Speaker Say’s
advice on tax cuts
is prudent

GOVERNOR Cayetano's proposal to reduce state income tax rates again has encountered a highly placed skeptic -- House Speaker Calvin Say. As the former chairman of the House Finance Committee, Say probably knows as much about the state's fiscal situation as any legislator.

The speaker prudently advises waiting a year or two to consider further reductions, to provide time to observe the effects of the tax cut enacted last year. That measure lowered the highest income tax rate gradually from 10 percent to 8.25 percent in 2002. Cayetano proposes reducing the top rate to 7.25 percent in 2002. Last year's tax cuts are expected to cost the state $760 million over four years, and the additional reduction could cost $200 million.

Such projections are always provisional and if the tax cuts succeed in stimulating the economy state revenues might not suffer. But the state must balance its budget, and legislators are faced with the need to reduce spending when they cut taxes.

At the same time that the governor is seeking a tax cut, the Department of Education is calling for increased spending on the schools. The new superintendent, Paul LeMahieu, says they need at least $68 million more for each of the next two years -- considerably more than the governor proposes.

This includes $56 million over two years to meet the requirements of special needs students under the so-called Felix consent decree. Cayetano proposes $40 million for this program.

The executive budget, while proposing a 12 percent increase for schools and libraries, does not include any money requested by the DOE to implement academic achievement standards and develop a comprehensive assessment system. Such a system is essential to efforts to raise achievement levels.

Matching revenues with spending is always a balancing act, and it is particularly tricky in a weak economy. Both tax reduction and increased spending on education are desirable, but combining them will be a challenge in these difficult times.

No Y2K doomsday

DOOMSDAY has been forecast for next New Year's Day, brought on by computer problems in dealing with digital changes to accommodate the new millennium, but don't count on it. The problem was recognized years ago, and government agencies and private companies have come a long way in coping with the problem.

The problem is real but probably has been exaggerated. Y2K, its symbol, will not be the first computer problem to have come up on the monitor, but it strikes fear because it is perhaps the only one that lay people understand: In the 1950s and 1960s, computer designers sought to save space by dropping the "19" from the years used in their computers. The fact that computers containing references to years extend the problem to all segments of government and the economy justifies a high level of concern.

President Clinton last week announced that the Social Security System has completed preparations for conversion from from 1999 to 2000. The administration has a goal of ensuring that all critical federal computer systems are Y2K compliant by March 31. The state of Hawaii has begun to survey all emergency operations. Many state agencies began preparations long ago. The city reports it has fixed 53 of 60 of its computer systems that were found to need adjustment.

Hawaiian Electric Co. has the good fortune of being outside the mainland grid, where it could be infected by another area's failure. Spokesman Charles Freedman says he cannot guarantee a flawless changeover to 2000 even though Heco has been working on the problem for years. The company has a manual backup it can use to operate its system in the event of a Y2K computer breakdown.

The most annoying, though less critical, glitches may occur in other areas of Hawaii's private sector. State Sen. Sam Slom, president of the Small Business Association, says his members have shown little interest in the problem since he started publicizing it two years ago. Slom told the Star-Bulletin's Richard Borreca that they consider it a low priority.

Some predict a widespread breakdown of food and fuel distribution, frozen elevators and financial chaos, but this seems unlikely. While problems may occur because of infection from other parts of the world where such preparation has been lacking, catastrophe should be averted by conscientious preparation in the United States and other advanced countries.

Black farmers’ claims

A measure of redress for discrimination against black farmers by the federal government is promised in the agreement of the U.S. Department of Agriculture to pay as much as $300 million under a consent decree to settle a lawsuit filed by the National Black Farmers Association on behalf of its 14,000 members.

Under the agreement, black farmers who have current discrimination cases or who file affidavits of bias in the handling of loan applications will qualify for $50,000 awards.

Anti-black discrimination in loans worsened with the Reagan administration's 1983 abolition of the USDA's Office of Civil Rights, the only place where minority farmers could lodge complaints. Hundreds of black farmers may have been forced to forfeit their property because they were unfairly denied federal loans.

To his credit, President Clinton restored the civil rights office. Agriculture Secretary Dan Glickman made the effort to win compensation a personal crusade.

The consent decree comes too late for many victims of discrimination, but it is a significant contribution to the effort to right the wrongs of America's past.

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