‘A New Day?’ State of the State is State of Disrepair

BY SAM SLOM – New Governor Neil Abercrombie delivered his first State of the State address to a joint session of the 26^th Hawaii State Legislature January 24.

He spent a great deal of time during the 50 minute speech in nostalgia mode remembering the good old days with the good old boys andt proclaiming, as was his campaign mantra, “it’s a new day.”

(Not to be confused with the last 8 years of the Lingle Administration’s, “ a new beginning.”)

The Governor pledged to give an honest account of the state government and to tell the truth. He used the metaphor of a Hawaiian canoe, representing the state, and said it was turning over and could capsize. He was honest in describing the current fiscal situation as dour. He estimated an $844 million deficit over the next two fiscal years, PLUS an additional operating deficit. (I have been using the figure of $1 billion-plus as the correct deficit since the beginning of the year.)

The Governor said this is a crisis we all must face and that we need to take swift, unified action. Then the details got murky.

Despite the constant cheering from the nearly all Democrat audience (it looked like something out of an old USSR politburo speech), there wasn’t much to cheer about as the Governor revealed his “Four Part Recovery Plan.”

At one point early in the speech he said to not rely on vanishing federal funds, but later on suggested that somehow Lt. Governor Brian Schatz, head of the new, “Hawaii Fair Share Initiative,” would get some federal funds for Hawaii’s military and veterans.

Governor Abercrombie outlined the seriousness of the under funded State Employees Retirement System (ERS) and Employees Union Trust Fund (the health care fund) and said ERS would have to be modernized and certain subsidized benefit payments, notably Medicaid B amounts, would be eliminated.

He then outlined some specific revenue proposals.

They included:

• repeal the tax deduction for state taxes paid

• tax pensions of retirees

• increase the tax on alcoholic beverages

• add a new tax on soda to combat obesity

• tax time share impact fees same as the hotel room tax

• redistribute and redirect part of the TAT used for visitor industry marketing for operating expenses and the environment.

See a common thread here?

The Governor did say that collective bargaining for public employees should reflect a 5% reduction, in exchange for furlough days, but that is subject to union negotiation. He also called for “scale back in social services that are unfunded.”

His discussion of, “New Day Work Projects,” focused on more public jobs, not improving the private sector business climate. He did not predict a good future for Aloha Stadium, and said that current vacant government buildings should be restored, green-fitted, and used by government.

My solution? Sell the government buildings and let the private sector use their own development money. Finally, he extolled rail and called for fast tracking to ease requirements for Transit Oriented Development (TOD) to make Oahu even more densely populated.

Small business, the backbone of Hawaii’s economy, was given short shrift; the permit process would be eased. Technology increased. How many decades now have we heard that promise? But nothing about easing the tax, regulatory and employer mandate burden on small business.

There wasn’t a word about seriously cutting back on government growth, right sizing, or keeping expenditures in line with the taxpayers’ ability to pay.

Governor Abercrombie then told us, “the challenge is not to balance the budget…” and, “the time for political debate is over.” Really? My belief is that this is exactly the time for debate over the reasonableness of these proposals.

Our problem in Hawaii continues to be excessive government, crippling taxation and hostile business regulations. More taxes on alcoholic beverages may be easy to accomplish – it is after all a “sin” tax – but what does it have to do with responsive government?

A new tax on soda, on top of the existing Beverage Deposit Tax, to fight obesity?  Shouldn’t that be the responsibility of parents? Will we tax everything that some in government find objectionable? Hopefully not.

And a tax on pensions of the elderly and fixed income residents? Is that fair? The Governor said he wouldn’t ask for something that he wasn’t willing to do himself. But he didn’t say which of his three triple-dipped government pensions, City & County, State or Federal (20 years in Congress), he would want to be taxed. I oppose this.

As for shifting and the taking of visitor industry generated funds, some say it is a  way to get back at his rival, former Mayor Mufi Hannemann, now an executive with the Hawaii Lodging Association. The Governor also said some in the industry had threatened him after the proposal. Not likely. Whatever the reason, taking marketing money away from the one well performing Hawaii industry at this time is not rational.

It will be a long legislative session (until May 5) and lots will happen as long as political and fiscal debate continues. As a Senator, that is my responsibility. We all want a new and better day, and for the canoe of state to sail through our waters (without any medical waste) but we will have to help the new governor navigate a new course.

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