Questions loom In the face of Hawaii's worst economic crisis, Gov. Ben Cayetano's recovery plan has won the approval of the state's chief economist, but legislators are still questioning the plan.
over gov’s plan
Legislators want to explore
options and have a say in the
final economic resolutionBy Richard Borreca
rborreca@starbulletin.comSo far, not one Democratic legislator has had a word of encouragement for the $1 billion plan, and while Cayetano was talking about borrowing money on the bond market, the folks who set bond interest rates were nervously eyeing Hawaii and other tourist areas and considering raising their rates.
The governor said the state should take advantage of low interest rates to borrow money for bonds and use the money to help public schools.
"We will never be able to catch up unless these guys suck it up and go to the bond market when the rates have never been better," Cayetano said.
The governor, who has held a series of meetings with business and legislative leaders trying to drum up support for spending an extra $1 billion in construction, pointed to President Bush, who is considering spending $75 billion in federal economic recovery funds.
"He wants to do all these things. The alternative is to do nothing, and then you have a real meltdown of the economy," Cayetano said. "We need to shore up those areas of the economy that are fairly strong, such as construction."
Cayetano said he worries that private construction projects could be threatened by another downswing in the national economy, and then Hawaii would lose both its tourism and construction economies.
The Cayetano recovery plan, however, is still a work in progress. Yesterday, Cayetano said he was pulling back a $48 million tax cut for capital gains, saying it was too much of a hit for the state budget to handle.
He had included the capital gains tax cut because state personal income taxes are already being cut, and he said it would be fair to also include those who are in the stock market.
"But it is too big a hit, and we aren't going to press it," Cayetano said.
But Senate President Robert Bunda (D, Wahiawa-Haleiwa-North Shore) disputed that there was no alternative to $1 billion in state construction to bolster the economy.
"There are always alternatives. There's always something else for us to talk about," said Bunda, who confirmed that a five-day special session would begin Oct. 22.
"If he says we have to suck it up, I guess we're up to that challenge," said Bunda, who added that many of Cayetano's recommendations came from meetings he held with business, labor and tourism officials.
"I think the Legislature has to have some input and say in finding a solution," he said.
Sen. Brian Taniguchi (D, Manoa) chairman of the Ways and Means Committee, said he was in favor of increasing the spending on construction but said he did not think the state could handle much more than $100 million more in new construction because the bureaucracy could not process any more than that.
Also, Taniguchi said the state will have to coordinate school construction with the school calendar and the existing use of classrooms.
Right now, Taniguchi explained, the Education Department prefers to do all major construction in the summer while schools are closed, but if that is going to change, new specifications will have to be included to make sure the students are safely shielded from the construction.
Seiji Naya, director of the Department of Business, Economic Development & Tourism, said Cayetano's plan to pour state money into construction projects is the best way to go. "My personal feeling is, there could be huge unemployment," Naya said yesterday.
"To me, construction projects are the way to go," he said.
Later, Naya repeated his comments before the Exporter of the Year award ceremonies at Washington Place.
Cayetano welcomed Naya's support and likened the current economic problem to "being hit by a financial hurricane."
The Associated Press contributed to this report.
Legislature Directory
Hawaii Revised Statutes
Legislature Bills
