Thursday, May 6, 1999

Legislature scored
modest achievements

Bullet The issue: Weighing the record of the 1999 legislative session
Bullet Our view: Reducing the pyramiding of the general excise tax could help the economy.

DESPITE all the justified grumbling over the Senate's shameful rejection of Margery Bronster and Earl Anzai, the 1999 session of the Legislature wasn't a total disaster. It did accomplish something to help the economy. Reducing the pyramiding of the general excise tax on services is significant, even historic. This has been a heavy burden on business for 40 years.

Phasing in the reduction over seven years was opposed by the business community because it will weaken its stimulatory effect. However, it was too much to expect that the Legislature would approve an immediate full reduction in the face of pressing demands for spending.

Coupled with the reduction in personal income tax rates approved last year, the pyramiding reduction constitutes a real -- though gradual -- easing of the tax burden, which is the best thing the Legislature can do for the economy. Another boost could come from the proposed tax credit for resort construction, but Governor Cayetano is balking.

The Legislature raised the daily surcharge on rental cars from $2 to $3, making this the second year in a row that the visitor industry's taxes have been increased -- not a good idea. Fortunately the lawmakers rejected Cayetano's proposal of a new tax on cars less than 10 years old.

The problem remains as to how to balance future budgets in the face of the tax cuts. The failure of the bill to examine civil service reform, which could make government more efficient, was disheartening. So was the approval of funding for public employee raises, which the state can't afford. This was only partially offset by a two-year freeze on future raises. In both the civil service reform and pay raise cases, the public employee unions demonstrated their continuing political clout.

In a different category is the pay raise for judges, who haven't had one for eight years.

Shifting money out of special funds and -- the latest expedient -- taking money away from the public employee retirement fund to balance the budget and finance the pay raise smack of desperation. They belie the governor's claims during last year's election campaign that the state could afford the raises because the economy is improving.

Aside from the tax reduction measures, the Legislature deserves applause for approving stiffer penalties for child abuse and drunken driving, both matters of major concern. Placing the burden of proof on the defense on the issue of mental or emotional distress was welcome in view of the experience in the Kimberly Pada attempted murder trial.

The lawmakers also showed sound judgment in rejecting proposals to give the Board of Education tax powers and to require buyers of Hawaii businesses to retain all employees for one year. The latter ill-conceived idea would be a great way to discourage investment here.

Perhaps the greatest disappointment among the measures that failed was the authorization to borrow up to $130 million to build a new prison. This leaves the Cayetano administration frustrated in its attempt to cope with the severe overcrowding of the state prison system.

Almost as frustrating was the failure to provide $10 million to the state Health Department for community-based treatment of patients now at the Hawaii State Hospital, which may come under federal control as a result.

Both failures demonstrate a refusal to accept responsibility to deal with pressing problems.

Despite the governor's pitch for a fireworks ban, the effort to put some teeth into fireworks controls fizzled again. Legislators don't have the stomach to deal effectively with such a controversial issue, despite the glaring need for action.

But never mind weighing the pros and cons. The perception that the 1999 Legislature will be remembered primarily for the Senate's firing of Bronster and Anzai is probably correct.


Nuclear reductions

Bullet The issue: Russia's parliament has refused to ratify the START II treaty.
Bullet Our view: Approval and further reductions in nuclear warheads can be expected later.

THE United States and Russia have reduced their nuclear warheads considerably since the fall of the Soviet Union. Further cutbacks have been stalled by Russian lawmakers' outrage over the NATO bombings of Kosovo, but no concern about a nuclear confrontation is warranted. The Russian parliament's approval of the Start II treaty will simply have to wait for a more opportune moment.

As stipulated by START I, each country's number of strategic nuclear warheads is approaching 6,000, down from 10,000 at the start of the decade. START II would reduce them to 3,500 warheads each. The United States has spent hundreds of millions of dollars to help Russia reduce the stockpile and build safe storage sites.

START II was ratified by the U.S. Senate in 1996, three years after it was signed. Russia's parliament has been on the verge of ratifying it, but U.S. and allied attacks on Russia's friends, Iraq and Yugoslavia, have caused it to balk. Approval would be politically risky while the NATO bombing of Kosovo is being denounced by Russian hard-liners.

Despite the posturing and delay, the U.S. and Russia are believed to be quietly pressing forward with the plan to reduce nuclear warheads and open talks on START III to bring each side down to about 2,000 deployable warheads.

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