Cayetano cautious about
tax credits for Ko Olina

He says the state needs a
cohesive economic strategy

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By Pat Omandam
pomandam@starbulletin.com

Gov. Ben Cayetano said granting state tax credits for further private development at the Ko Olina resort in West Oahu might be a big mistake.

It is just one of many proposed ideas moving in this legislative session that "have not been very well thought through," the governor said.

"As the session has gone on, one of the things that I'm concerned about is that there doesn't seem to be any kind of cohesive economic stimulus plan downstairs," Cayetano told a gathering of Honolulu Star-Bulletin editors and reporters yesterday at a meeting in his office.

The governor reiterated his recent public complaints that instead of approving his proposed nearly $1 billion in state construction projects to stimulate the economy, the Legislature's efforts have been primarily focused on tax credits or incentives focused on the state's tourism industry.

The governor said such tax incentives should be on new areas of growth, such as biotechnology, high technology or health. He added that granting $100 million in tax credits to the proposed complex in Ko Olina -- which would include a world-class aquarium, mammal training center, sports facilities and hotels -- should not be approved unless there is further analysis of the plan pushed by Ko Olina developer Jeff Stone.

Even so, House Speaker Calvin Say (D, Palolo) said legislators like the idea because it would allow for the development of these facilities at no charge to the taxpayers while also stimulating the economy.

"In return for the tax credit, the state of Hawaii gets these facilities, except for the aquarium," Say said.

But the governor insists that the best way to stimulate the economy is by following California's lead, where state lawmakers have proposed a $25 billion capital improvement program to stimulate the post-Sept. 11 economy.

The Legislature, concerned about the impact the $1 billion in construction projects would have on the state's bond rating and the cost of construction projects, has proposed $340 million in construction projects in this second year of a biennium budget for 2001-2003.

The governor also said he is willing to approve legislation that ties the price of gasoline in Hawaii to mainland gas prices -- but only if it is fair to the oil companies as well as Hawaii motorists.

Cayetano said Hawaii's drivers have been unfairly gouged by the price of gas in the past, and even a 25-cent drop in gas prices would have a direct impact on the economy.

The governor was also receptive to proposals to build a second prison in Halawa Valley, calling it one of the best ideas in years for a new prison. The state has asked for bids from private companies that would build the facility and then lease it to the state.

"Its sounds like a good idea in terms of the location," Cayetano said.

"Whether the proposal is going to be something that is the best deal for the state remains to be seen."