Capitol View
THE lastest economic problem for the Cayetano administration may be too much money. Effects of
economic recoveryThe state is buoyed by reports that after nine years of famine, there's at least more than a little rice on the table. The state's economists are now predicting an expansion.
Back in November, the Bank of Hawaii looked at the figures from Asia and California and predicted that 2000 would at least continue the growth of the latter part of 1999.
To compound the good news, Paul Brewbaker, the bank's chief economist, this week said tax collections and the local economy in general are expected to grow.
The signs of success in Hawaii include hotels bringing in more tourists and, even better, making more money. The real estate market is looking at a possible double-digit increase in the rate of growth, according to the bank.
It has been a long time since anyone drew a graph with a line pointing up.
So enter the state, which is ready with a bucket of cold water.
Neal Miyahira, the state budget director, told senators this week that even though the state is going to end the fiscal year with a surplus of $147 million, there is still a lot of room for a deficit.
How can that be? We turn the corner, find a pot of gold and the state insists we are going broke.
The reason is simple -- public employees and taxes.
If the state gives public employees a 2 percent pay raise, by 2003 Hawaii will be $212 million in the red.
Cayetano points out that the planned series of tax cuts is not completed, but when it takes effect, the state will be generating even less money.
HAWAII is not Silicon Valley. The world is not demanding that IPOs start flowing from the Manoa Innovation Center and no one is predicting that this century will see Honolulu become the Zurich of the Pacific. So a trend line that rises does not mean prosperity and economic safety are here.
Still the relatively good news means that when Cayetano presents his plans to this year's Legislature, he will not be able to say he must cut the budget or cut jobs.
This is critical to the Cayetano administration's hopes to reform state government.
In response to questions from reporters last week, the governor reached a little further into his extended plan, saying he wants to do more than just reform civil service.
"Our pitch has always been that when you look down the road the system is too inflexible and rigid for a modern state," he said.
The whole plan then is not simply to change how state employees are managed, but how state government operates. That's a bigger calling, but one that transcends boom and bust economies.
Cayetano sees the changes envisioned as beneficial not just to the public but to the public workers, too.
"We have been telling the unions that in the long run the employees would be better off with an efficient system in place," he said.
Included in his proposals would be streamlined management, merit pay and for some new hires reduced benefits.
Although Cayetano has found allies for such a reform program in the state House, he has hardly any support from any faction in the Senate.
The Senate remained steadfast against government reform in times of no money, so now that the treasury is refilling, it isn't likely that it will come around by itself.
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Legislature BillsRichard Borreca reports on Hawaii's politics every Wednesday.
He can be reached by e-mail at rborreca@pixi.com