ILLUSTRATION BY DAVID SWANN / DSWANN@STARBULLETIN.COM AND KIP AOKI / KAOKI@STARBULLETIN.COM

Missing in action

Hawaii businesses say
the 2005 Legislature did little
to address their concerns

After all was said and done at this year's Legislature, many local businesses say little was said about their concerns, and even less was done.

The perception from many in Hawaii's business community was that economic development took low priority this year and few industries benefited from 2005 legislation, said Ted Liu, director of the state Department of Business, Economic Development and Tourism.

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"There were very few things that I can think of that passed that were supportive of the business community," Liu said. "I think the legislators were a bit distracted by the public union negotiations and other priorities like the transit system."

Liu said he was disappointed legislators did not lower unemployment insurance premiums, reform workers' compensation or pass state-sanctioned film incentives or a private investment fund. State Insurance Commissioner J.P. Schmidt was critical that lawmakers failed to pass SB760, which would have required Hawaii Medical Service Association, the state's largest health insurer, to return part of its cash reserve to members.

Others criticized bills that did pass, including HB1309, which allows counties to raise the general excise tax to fund transportation projects, and SB1808, which attempts to block new workers' compensation rules for two years, said Beverly Harbin, executive director of the Employers Chamber of Commerce.

"This session would fit the movie title 'Dumb and Dumber,'" Harbin said. "They just shut the doors for business. We came away with worse than nothing."

Even legislators had little good to say about this year's session.

"Nothing jumps out at me -- I've got mixed feelings about what we did for business this year," said Rep. Bob Herkes (D, Puna), who chairs the House Committee on Economic Development and Business Concerns.

"Unless there is a firestorm it's hard to get us to act. There just wasn't a great urgency in some of these issues," Herkes said, adding that in the past the business community had been more apparent than they were this year.

However, Sen. Sam Slom (R, Hawaii Kai), said "the lack of pro-business legislation" was more a matter of lawmakers failing to listen to businesses.

"They bludgeoned us over the head again, it was all about the ugly, the ugly and the uglier," Slom said. "They don't listen to the businesspeople that take the time off to come here."

Slom said Hawaii's business community, mainly small business owners, will be harmed by state lawmakers' decision to hike the minimum wage and allow counties to raise the general excise tax. Economic development will also be impeded by lawmakers' failure to pass business tax credits and incentives or unemployment compensation tax relief.

The Chamber of Commerce of Hawaii was disappointed in the passage of SB294, which hikes the minimum wage by 50 cents to $6.75 an hour in 2006 and to $7.25 an hour in 2007.

While there are many who concur with a ho-hum assessment of the 2005 session, there were a few winners.

Those involved in industries that involve harbors and government procurement were pleased with two bills that made it through the session, said Jim Tollefson, president and chief executive officer of the chamber.

"We made progress on harbors and training for small businesses, but we didn't make any progress on workers' compensation, which is an issue that must be resolved in order to assist all businesses, especially the small businesses of Hawaii that make up over 90 percent of our businesses," Tollefson said.

HB0085, which removes Honolulu Harbor Piers 1 and 2 from the Kakaako Community Development District and grants jurisdiction to the state Department of Transportation, makes good economic sense, said Craig Kennedy, executive vice president of the stevedore company McCabe, Hamilton & Renny Co. Ltd.

"With Harbors (Division) controlling Pier 1 and Pier 2 we will be able to do some minor improvements which will increase the capacity," Kennedy said. "It will also allow Harbors to do some long-range planning."

SB1127 and SB1038 were touted as bills that will better equip small business to compete for government contracts. Vicki Gaynor, executive vice president of environmental consultants Environet, said lawmakers helped small businesses by providing funding for the Hawaii Procurement Institute.

"It will help small businesses get into the procurement business and make them more able to compete against the mainland companies that come here and compete for those contracts," Gaynor said.

Members of the Hawaii chapter of the National Association of Industrial and Office Properties were also pleased by the passage of SB1132, which increases the ability of developers to respond to office market demands, said Mitchell Imanaka, NAIOP board member.

"It expands the scope of the condominium act to more easily permit the (conversion to condominium ownership) of industrial and office properties, which with increasing rents has become a trend," Imanaka said.

New legislation has benefited members of Hawaii's visitor industry, said Murray Towill, president of the Hawaii Hotel & Lodging Association.

"SB1729, which returns a greater portion of hotel room tax collections to the Hawaii Tourism Authority and bumps up funding for the Hawaii Convention Center, will allow the HTA to better compete in a competitive environment and provides additional funds for them to carry out their mandate," Towill said.

But Sen. Will Espero (R, Downtown-Waikiki), who chairs the Senate Committee on Business and Economic Development, views the general excise tax hike as favorable to the business community because it will ultimately result in a rail system he says will reduce traffic.

"You don't want to have a city that is gridlocked in traffic," Espero said.