Capitol View

By Richard Borreca

Wednesday, September 29, 1999

Signs that economy
is rebounding

IN government, you are only as good as your last bond sale.

So when Hawaii earlier this month was able to sell $300 million in general obligation bonds at an average interest rate of 5.5 percent, it was relatively good news.

The rate, according to Gov. Ben Cayetano, was one of the lowest rates in a decade.

The reports of the bond sale were another small indication that Hawaii's downward spiral has ended.

Neal Miyahira, state budget director, was more bullish. He said the state got a favorable rate because of indications that the state economy is rebounding.

The successful bond sale follows the other good news of September. The Council on Revenues sees a smidgen more money in this year's pot. While the estimate is up just $15 million in state tax collections, it does represent a positive trend.

"Every little bit helps," Cayetano said.

Still there are no celebratory champagne corks flying at Washington Place, because there are still miles of bad road to cover before Hawaii is free and clear.

The governor's cabinet members and budget officers are right now working on plans to cut or move portions of the state's budget.

Miyahira explains that instead of the usual orders to cut budgets by department, the plan this time is to look at the budget by what government does.

If the distinction at first escapes you, hang in there. It is critical.

Say you have been living way over your budget and you announce that the family must cut back. Employing the state's old plan, you would simply announce that everybody has 10 percent less to spend.

But under the plan now being used, you would announce that to save money we are skipping new "back to school" clothes and next summer we are spending our vacation here. But everyone keeps their allowances, food budgets and cars.

When government does the budgeting, instead of spending money on clothes and allowances, the decisions are about cutting social service programs, dropping economic development services or how much money to devote to specific education programs.

Miyahira, however, cautioned that some areas of the state budget are not likely to be touched, such as existing educational work loads.

At the same time that the state is reviewing and changing budgets by programs, it also is looking to change how people work.

All summer long the state's civil service officials have been meeting in order to reach some decisions as to how to change public employee rules.

TAKEN together, changes or deletions in state programs and overhauling the civil service system add up to a shock to the state bureaucracy.

Every governor promises to reform the state government, but few are actually able to out-muscle the fiefdoms built up over the years. In practical terms, the governor gets four or eight years, while the bureaucracy is more than willing to hunker down and wait.

Miyahira says Cayetano, who will be responsible for three more state budgets, wants to "leave the state in better shape than he found it."

With his new strategy, Cayetano has opened new fronts in his battle for government reform. How he frames the discussion this winter and then executes his plan during the next legislative session will determine how much he is actually able to accomplish in this last term.

Richard Borreca reports on Hawaii's politics every Wednesday.
He can be reached by e-mail at

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