Stating your business

With the Legislature set
to open this week, special
interests are getting ready

Workers' comp | Housing | Tech | Lending | Tourism

art
PHOTO ILLUSTRATION BY KIP AOKI

KAOKI@STARBULLETIN.COM

Some of the business community's key concerns are likely to take center stage during the 2005 legislative session that opens Wednesday, but political differences and the sheer complexity of some issues make the prospect of meaningful legislation uncertain at best. Issues including spiraling workers' compensation and housing costs have become too big for either party to ignore, and both the majority Democrats and Gov. Linda Lingle plan to submit methods for attacking the factors underlying them.

But the Lingle administration gave an indication of the level of bipartisanship that lies ahead when it announced earlier this month it would pursue its goal of reforming Hawaii's worker's compensation system through administrative rule changes -- pulling an end-around on the Legislature.

Though the administration still intends to present a bill this session, it will be the same one it submitted last year -- a no-hope move given that the bill was sliced and diced by Democrats, whose final revision was vetoed by Lingle.

Yet hope springs eternal in the business community.

Growing recognition of the toll being taken on business by rising health care and workers' comp. costs, cumbersome red tape and the difficulties in raising funding for technology companies are putting increasing pressure on politicians to find some middle ground and get things done.

"There's much more of a focus on seeking areas of common ground and reaching agreement to move something forward," said Jim Tollefson, president of the Chamber of Commerce of Hawaii. "This will be an ongoing story."

Workers’ compensation

Compromise may be tough to reach this year

Hawaii's workers' compensation costs are among the nation's highest and growing, costing $3.73 per $100 of payroll in 2004, and there should be no shortage of legislative proposals aimed at abuse and inefficiency in the system.

Kirk Caldwell (D, Manoa-University), who chairs the House committee on Labor and Public Employment said bringing these ideas together will be among his top priorities in the session, but he acknowledges that will be difficult.

"If we can reach a compromise this year, great. But we don't want to ramrod something through. All the stakeholders -- business, unions, the Legislature and the governor need to be on board for it to work," he said, adding that it may take until the 2006 session before common ground is found.

Lingle's bill last year was criticized by Democrats as too heavily weighted in favor of business.

This session, the Legislature faces getting sidetracked by the administration's bid to reform the system through rule changes, including adjusted treatment guidelines, requiring employer input in vocational rehabilitation plans, streamlining the hearings process for disputes and other cost factors.

But Caldwell already plans to look into whether that strategy is legally sound. "I'm for separation of the powers and I'm concerned that that infringes on the Legislature."

Affordable housing

Solutions complicated by hot market

Lingle has made Hawaii's affordable housing shortage a priority and is expected to submit legislation to entice developers to build more of it.

But suggested changes by her Affordable Housing Task Force and other parties to solve the problem are fraught with difficulty.

State Sen. Lorraine Inouye (D, N. Hilo-Hamakua-S. Kohala) said freeing up state-owned land for affordable housing is likely to prove politically sensitive, and the state will be hard-pressed to come up with sufficient incentives to private developers and landowners to build affordable homes in a hot housing market.

Finding the land isn't the only problem, said Marvin Awaya, head of Pacific Housing Assistance Corp. and a member of the task force. There's also the issue of the high cost of infrastructure development and the lengthy land-use entitlement process.

"There's no one silver bullet. You need to take a look at the entire process," Awaya said.

Inouye said, however, there is enough momentum behind the issue that something positive should come out of the session, possibly a reduction of the state's share of the land-use entitlement burden.

Even that, though, will require some will power, she said.

"We're pleased the (Lingle) administration is taking an interest in this but it's hard to say what will happen," she said.

Technology

State pushed to OK investment funds

Hawaii's high-tech sector will be pushing this year for full implementation of the State Private Investment Fund.

With the fund, the state would offer tax credits for private lenders that contribute to the fund, which in turn would provide second- and third-stage venture capital to Hawaii technology firms.

It was included in last year's Act 215, which extended the state's high-tech tax credits another five years. However, legislators wary of how the fund would work required annual reauthorization of the program.

That requirement could hamstring the fund, and needs to be removed, said David Watumull, chairman of the Hawaii Technology Trade Association and president of Hawaii Biotech.

He said later-stage financing is just as critical as the tax credits, and venture capital firms may balk if the Legislature is not seen as fully committed to the fund.

"It could dramatically reduce the amount of investment," he said. "What we're looking for is a longer-term approach that shows an understanding of how capital is allocated in the high-tech and biotech industries."

However, the state Constitution requires that ongoing appropriations gain legislative approval, says Rep. Brian Schatz (D, Tantalus-Makiki).

Schatz says he's confident that initial appropriations this year, if any, will "send the message that we are committed."

Mortgage lending

Predatory lending in regulators' sights

The state's Division of Financial Institutions hopes to have a bill submitted that would curb predatory mortgage lending by raising broker standards and tightening oversight.

Previous bills have foundered because they included restrictions on certain mortgage products, which raised fears that mortgage companies would be discouraged from lending, ultimately hurting consumers.

The division is taking a different tack this year.

"It's sort of the idea that guns don't kill people, people do," said Griffin. "We want to regulate the people selling the products, not the products themselves."

Under legislation still being drafted by the division, it would assume oversight of mortgage brokers. That currently falls to the state's Professional and Vocational Licensing unit, which registers brokers but lacks the financial expertise to adequately police the industry, said Financial Institutions Commissioner Nick Griffin.

Predatory lending refers to the practice of selling loans to unsuspecting homeowners who are unable to pay off the loan, and may end up losing their homes.

"(The bill) will probably cause some hassles for us because we're on our own right now, but we're supportive of the idea," said Claude Phillips, president of the Hawaii Association of Mortgage Brokers.

Tourism

Tourism authority just wants the money

The visitor industry's legislative wish list is brief -- more money.

In 2002, the Hawaii Tourism Authority's share of the hotel room tax was reduced to 32.6 percent, from 37.9 percent and the authority wants to turn back the clock.

"That's the biggie for us. No question. Nothing else compares," said Rex Johnson, the authority's executive director.

The Legislature cut the authority's share of the revenue over concerns about inefficiency and accountability at the agency. But with tourism booming, restoration of the authority's original share could mean close to $10 million in additional funding.

Johnson said the money is needed for environmental preservation efforts, upkeep at state parks, tourist safety measures and tourism-related events.

The authority will have to prove the money is really needed, said Sen. Donna Mercado Kim, chairwoman of the Senate Tourism Committee.

But with visitor industry already booming, that might be a hard sell.