Gov’s vetoes killed
campaign reform,
business tax breaks


Governor Cayetano refuses to use public money for private construction tax waivers.

GOVERNOR Cayetano displayed his disdain for government assistance to private development in vetoing a specific tax waiver for a proposed resort at Ko Olina and smaller credits for all commercial construction. Taxpayers, he suggested, should not be asked to shoulder the burden for tax credits aimed at stimulating the economy. While these vetoes were well-directed, his general premise is arguable.

Ko Olina developers were given an opportunity to make their case before Cayetano but failed to convince him that their project would be worthy of the $75 million, 10-year tax waiver. The project featured a world-class aquarium and marine research center and was supposed to lure other hoteliers to build alongside them.

Cayetano has nothing against aquariums. He was enthusiastic several years ago about the state building an aquarium in Kakaako but legislators rejected what Republicans called "the governor's fish tank." However, he was not convinced that the Ko Olina proposal, while "innovative and bold," would rise or fall on the basis of the tax credit.

"When the people who bought Ko Olina bought it," he said, "they had some plans in mind to develop it. The question is, are we going to provide tax credits for work that is going to happen anyway."

Ko Olina developer Jeff Stone and his partners contended during the legislative session that the aquarium, which would have been turned over to the state after about 25 years, would save Hawaii's economy. They said investors would not buy into the resort unless the aquarium were built.

However, Hawaii's economy seems to be recovering from the 1990s doldrums and the Sept. 11 terrorism attack on America. The argument that an aquarium is vital may become even more difficult to make next year before a new Legislature and governor.

Cayetano also did not believe a 4 percent tax credit for commercial construction over the next three years was needed for economic stimulus. He vetoed that bill, too, correctly criticizing it as being too broad.

The governor delivered a promised and well-deserved veto of a clumsy measure that would have authorized an expenditure of $8 million to buy the land under the financially troubled Japanese Cultural Center in Moiliili. The proposal was quietly tacked onto a budget bill by Sen. Brian Taniguchi, to the embarrassment of Hawaii's Japanese-American community, which is considering other ways to deal with the center's money problems. "I believe it is imprudent for state taxpayers to shoulder the burden of private organizations' capital projects," Cayetano said in executing a line-item veto.

Unfortunately, Cayetano used his veto power to kill what would have been the most important campaign finance reform in years, with the objection that legislators exempted themselves from the restrictions. The bill would have banned contributions by government contractors to candidates for governor, lieutenant governor and mayor.

Cayetano said he favored an early version of the bill that mirrored federal law, which prohibits government contractors from contributing to any federal candidate. However, the state bill's exemption of legislative candidates would have had little if any effect; legislators are not in a position to award government contracts, so the corrupt practice of awarding contracts in return for political contributions is not present.

Robert Watada, executive director of the state Campaign Spending Commission, was a strong proponent of the legislation, even in its final form, but was unable to persuade Cayetano to sign it into law. Next year's Legislature should pass the bill again, and this time include themselves. While legislators had nothing to gain by exempting themselves from the provisions of this year's bill, they will have nothing to lose by removing the exemption.


Published by Oahu Publications Inc., a subsidiary of Black Press.

Don Kendall, Publisher

Frank Bridgewater, Editor 529-4791;
Michael Rovner,
Assistant Editor 529-4768;
Lucy Young-Oda, Assistant Editor 529-4762;

Mary Poole, Editorial Page Editor, 529-4790;
John Flanagan, Contributing Editor 294-3533;

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