Ko Olina
tax bill vetoed

The governor says the proposed
relief would have done little
to help economic growth

What's passing
Reform bill vetoed

By Pat Omandam

Gov. Ben Cayetano vetoed a controversial bill that would have provided a $75 million, 10-year tax waiver for construction of a new Ko Olina resort featuring a world-class aquarium and marine research center.

The governor also exercised his line-item veto authority yesterday to reject using $8 million in state general obligation bonds to buy the Japanese Cultural Center.

"Funding to purchase the Japanese Cultural Center was intended to provide financial relief to a private cultural organization," Cayetano said. "I believe it is imprudent for state taxpayers to shoulder the burden of private organizations' capital projects."

Overall, Cayetano cut out $31.7 million in capital improvement projects over the next two years, as well as $46.6 million in operating programs.

The governor had until midnight last night to veto measures approved this spring by the state Legislature. All bills now before him become law with or without his signature.

In his veto of the Ko Olina tax incentives, Cayetano said that when tax credits are given to stimulate the economy, other taxpayers are being asked to sacrifice and shoulder the tax burden.

He said this bill does not achieve its stated purpose, does little to ensure that additional economic growth would be created and is difficult to administer, with vague language that leaves it open to interpretation.

"On its face, the Ko Olina proposal embodied in the bill seems innovative and bold. There are, however, too many unanswered questions and too many ambiguities to justify approval," Cayetano said.

Ko Olina developer Jeff Stone and his partners had lobbied hard for the $7.5 million-per-year tax credit, saying it would permit the construction of the aquarium without state funds.

In return, they said, developers would get a tourist attraction that would justify the cost of the new resort complex. They had said would-be investors would not buy into the new resort unless the aquarium was built.

In a written statement last night, John Toner, vice president of Ko Olina Resort Association, said the group is deeply disappointed, saying another "magnificent opportunity has slipped away from the state."

Toner said with the next 12 to 18 months expected to be a period of slow growth for Hawaii's economy, the state risks further economic peril because of the $715 million in lost economic stimulus that would have come from the project.

"Unfortunately, we believe that with the governor's veto, our state has lost a unique opportunity," Toner said.

Meanwhile, the governor vetoed another bill that would have continued rent relief for airport concessionaires who suffered financially after Sept. 11.

State Transportation Director Brian Minaai had opposed the plan because it did not give the state enough flexibility to determine which businesses should be covered. There were also concerns about violating FAA rules and jeopardizing millions of dollars in federal airport funding.

"It makes rent relief a virtual entitlement to the concessionaires, whether or not that relief would jeopardize the financial integrity of the state's airport system and it does not fully address concerns raised by the Federal Aviation Administration," the governor said.

Cayetano also rejected an economic stimulus bill that granted a 4 percent tax credit for commercial construction over the next three years.

And he killed a major campaign finance reform bill that state campaign spending officials had said was flawed because it would make limits on corporate contributions moot.

The governor has vetoed 52 bills this year. It is unlikely the state Legislature would call a special session to override any of them, including the Ko Olina bill. House Speaker Calvin Say said that decision will ultimately be up to the majority of the 51-member House, which so far has not shown any signs of organizing for a special session.

"I think everyone is just gearing up for their campaign," Say (D, Palolo Valley-Kaimuki) said yesterday.

Cayetano also exercised his line-item veto on a number of measures in the state budget bill, including:

>> $5 million for the Hawaii Tourism Authority, trimming the state agency's budget to $56 million.

>> $1 million for the Honolulu Zoo Society.

>> $6 million for the upcountry Maui watershed project.

>> $5 million for the Waikiki Health Center.

>> $2.95 million for the Hawaii Island Veterans Memorial in Hilo.

>> $1.5 million for Kauai County for a swimming pool complex.

Meanwhile, Cayetano plans to sign the so-called bottle bill at a ceremony today.

Under the pending law, consumers would pay a nonrefundable 1-cent handling fee and a 5-cent deposit on each beverage container -- plastic and glass bottles or aluminum cans -- at the time of purchase. The deposit would be returned when the container is redeemed at a recycling center. The deposit program would be fully implemented by Jan. 1, 2005.

About 800 million beverage containers are used here each year, but only about 20 percent are recycled, said Jeff Mikulina, director of the Sierra Club, Hawaii chapter.

"It is truly landmark legislation that will change Hawaii's landscape," Mikulina said.

The governor also is expected to sign bills strongly favored and long-sought by the Office of Hawaiian Affairs. One allows OHA to award grants and appropriates funds after a state attorney general's opinion questioned OHA's legal authority to do so. The other new law allows trustees to receive the same benefits as other state elected officials.

The Associated Press contributed to this story.


Gov. Cayetano is to sign
these bills into law today:

>> HB 1256, HD 2, SD 2, CD 1: Is the so-called bottle bill. Establishes a beverage container deposit program. Imposes a 5-cent deposit, starting in 2005, on each beverage container that a consumer can reclaim by returning the container to the store or independent redemption center.

>> SB 3063, SD 2, HD 2, CD 1: Authorizes the Department of Land and Natural Resources to develop or contract with private entities to produce environmentally themed products, such as collectible stamps, coins and credit cards, to be commercially sold to the public to increase revenues in the Endangered Species Trust Fund. This bill takes effect July 1, 2002.

>> SB 2477, SD 2, HD 2: This bill allows the Office of Hawaiian Affairs to award grants, and appropriates funds as interim revenues to the Office of Hawaiian Affairs. This bill takes effect upon approval.

>> SB 2478 HD 1, CD 1: This bill allows trustees of OHA to participate in and receive the same retirement benefits as other state elected officials. This bill is effective upon arrival.

>> SB 2242, SD 1, HD 1: Requires that the length of any state lease extension resulting from economic hardship shall not exceed five years, and authorizes the Board of Land and Natural Resources to extend or modify a lease affected by eminent domain-related proceedings, provided it determines that the lessee will not be adequately compensated pursuant to the lease provisions. This bill is effective upon arrival.

>> SB 2702, SD 2, HD 2, CD 1: Transfers the responsibility for redeveloping the lands at Barbers Point, Oahu, from the Barbers Point Naval Air Station Redevelopment Commission to the Hawaii Community Development Authority. This bill takes effect on July 1, 2002.

>> SB 2331, SD 2, HD 2, CD 1: Appropriates $20,000 for the 50th Anniversary Commemoration of the Korean War Commission to allow it to continue its work of gathering information regarding the identity of Korean War veterans and their families, and to make recommendations to the Department of Defense as to how to recognize, thank and honor those veterans and prisoners of war. The commission is planning a number of events to commemorate the anniversary of the Korean War in 2003. This bill is effective upon approval.


Gov. Cayetano vetoes
measure for state
campaign finance reform

By Rick Daysog

Nearly two months after he praised it as a landmark measure that will help raise public confidence in Hawaii's political system, Gov. Ben Cayetano vetoed the state Legislature's campaign finance reform package.

In rejecting the bill yesterday, Cayetano criticized lawmakers for exempting themselves from the legislation, which would ban all direct political contributions from government contractors, unions and corporations to county and state elected officials who issue contracts.

Cayetano's veto came in spite of support for the bill by the state Campaign Spending Commission and the Attorney General's office.

Cayetano said he supported a previous version of the bill, which mirrored the federal law that bans government contractors from giving money to all candidates for federal office.

But in the final version, the Senate conference committee inserted language that narrowed the ban in a way that the Campaign Spending Commission "deemed to be discriminatory and possibly unconstitutional," Cayetano said.

"To approve this bill would be to give the public the impression that meaningful campaign spending reform has occurred. It has not," the governor said in a written statement.

State Rep. Brian Schatz (D, Makiki), one of the bill's co-sponsors, disagreed, saying that Cayetano had a chance to sign a bill that would reform Hawaii's political process.

"This was his chance to sign major campaign finance reform on his way out of office and he missed the opportunity," said Schatz. "The bottom line is that this was the biggest campaign finance bill to come out of the Legislature in 20 years."

Bob Watada, executive director of the Campaign Spending Commission, said the measure would have gone a long way toward restoring the public's confidence in Hawaii government, which has been tarnished by recent headlines about excessive campaign contributions.

Since January, the Campaign Spending Commission has fined a number of local architecture and engineering firms for giving hundreds of thousands of dollars in over-the-limit political donations to the campaigns of Cayetano, Honolulu Mayor Jeremy Harris and Maui Mayor James "Kimo" Apana.

Watada conceded that the bill was weakened at the end of the session but he said that it was still the most significant piece of campaign finance reform that lawmakers have passed in recent years. He noted that lawmakers could have come back in next year's session to tighten any loopholes.

Watada noted that the bill did not receive any testimony in opposition during Legislative hearings this year. But he said it was the subject of an intense-behind-the-scenes lobbying effort by special interests.

In April, the Star-Bulletin reported that a group of architects and engineering firms conducted a stealth campaign in the Legislature to overturn the measure.

State Rep. Ed Case, who is running for governor as a Democrat, said the past several months, as well as the upcoming election season, have underscored the need for reform.

"A number of us have worked very hard over the years to break the link between campaign contributions and doing business with the state and city," said Case (D, Manoa). "It's no secret that those that benefit from that system in the Legislature fought that bill and bottled it up for years and we succeeded this year in producing a bill that took care of a major part of the problem."

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