Lawmakers in tight spot
By Kevin Dayton
Advertiser Capitol Bureau Chief
The strategy the House and Senate chose for the special session that begins tomorrow is politically perilous, and legislators may soon regret it, some contend.
Advertiser library photo
With bankruptcies and unemployment jarring the state economy, fear is settling on workers and business owners. They want someone to do something, and they want it now. Lawmakers know this.
Gov. Ben Cayetano is seeking $1 billion to nurse the state economy.
The centerpiece of Gov. Ben Cayetano's plan to nurse the economy back to health was a proposal to borrow and spend $1 billion for state construction projects. The idea was to boost consumer confidence and keep the building industry greased for years to come.
"We need a real sharp kind of blast, we can't be fooling around," Cayetano said last week. "We need a big push with this."
Despite Cayetano's pitch and public pressure for a quick fix, the Legislature apparently plans to give Cayetano permission to spend only $150 million, perhaps less.
Lawmakers are quick to note they will agree this week to support more than a dozen other Cayetano proposals, and said they have sound reasons for rejecting the $1 billion construction program. But that may be lost on the public.
"A lot of (people) are coming up and saying, 'Why is the Legislature and the governor fighting? Why can't we in the community come together and implement things that will help bring the economy back around?' " said Sen. Avery Chumbley, D-6th (E. Maui, N. Kaua'i).
"This is the first time, at this extent, I've seen that kind of feedback," Chumbley said. "Now you're hearing people say, 'Put the politics aside, let's get something done, we need to act quickly. There's no time for this (politicking) now.' "
Political landscape changed
Demonized for much of the year, Cayetano has placed himself at center stage since the Sept. 11 attacks, traveling to Japan as a goodwill ambassador to calm jittery tourists, leading meetings of business and community leaders to discuss economic strategy, even dropping into Hana to show he isn't afraid of mosquitoes carrying dengue fever.
Most important, an apprehensive public is suddenly putting a lot of faith in leaders from President Bush to Cayetano to get them through this crisis, and won't tolerate the kind of partisan bickering that previously marked sessions of Congress and the Hawai'i Legislature.
House and Senate leaders are trying to downplay their disagreements with the governor, and instead play up areas where they are ready to agree to Cayetano's proposals.
Cayetano's plans to extend unemployment benefits by 13 weeks, provide low-cost limited health coverage to laid-off workers and to spend millions to upgrade airport and harbor security are expected to win easy approval.
Legislators also predict quick passage of Cayetano's plan to spend an extra $10 million on tourism promotion efforts, and are comfortable with the governor's proposals to allow many small businesses to delay some state tax payments. They also are willing to grant tax breaks that Cayetano has requested for transportation companies.
But lawmakers are most troubled by Cayetano's biggest idea, spending $1 billion on new construction projects. Most don't believe the state can afford it.
This situation has led to some awkward moments.
Last week, House Speaker Calvin Say said he was worried about borrowing too much, and expressed doubts that lawmakers would approve the $1 billion. A day later, Say, D-18th (Palolo, St. Louis, Kaimuki), appeared to reverse himself, announcing he was "optimistic" the state could afford it.
Then the next day, Say explained what he meant was the House is willing to approve $520 million in new construction. When combined with $480 million that lawmakers approved earlier this year, that would amount to $1 billion, he said.
It also would amount to about half of what Cayetano is asking for, but lawmakers were clearly uncomfortable saying so publicly. Since then, Say has said he will limit the borrowing that must be repaid from the general treasury — the type that Cayetano asked for — to $150 million or less.
Say is also resisting the governor's efforts to transfer $213 million in reserves from the Hawai'i Hurricane Relief Fund into the state's budget reserve fund, also known as the "rainy day fund."
Cayetano asked for the transfer so the money could be held there to reassure the bond markets that Hawai'i will be a good credit risk as the state contemplates a $1 billion borrowing binge.
Other options
Senate Ways and Means Chairman Brian Taniguchi said House members don't want to move the money into the rainy day fund because it would then require a two-thirds vote by the House and Senate to spend it.
That would require the cooperation of some of the 19 Republican House members, prompting the Democrats to worry the money might not be available when they need it.
Cayetano conceded late last week that he won't get permission to borrow as much as he wants, but said the House and Senate instead agreed to offer tax credits for homeowners as an incentive to encourage people to build or renovate homes.
"If we give those kind of tax breaks, than it's harder for them to give me the amount of (construction money) that I wanted," Cayetano said.
Lawmakers say Cayetano already has authority to spend hundreds of millions of dollars on planned construction, and he should move ahead with more of those projects.
According to figures provided by the state Department of Budget & Finance, the administration has $252 million in work under way, and lawmakers have given Cayetano authority to borrow and spend another $865 million immediately. They also authorized another $182 million in additional construction after July 1.
Cayetano contends much of that money won't be spent "because there's a lot of rubbish on the books. ... Some of it is not well-thought-out projects, some of it is just for show, some of it is not important. But the kind of stuff that is important, we're talking maybe $300-something million, we can get that out."
Lawmakers also point out the administration wouldn't suddenly borrow and spend another $1 billion even if the Legislature authorized it. Cayetano's plan to spend the $1 billion calls for the borrowing to be done in phases over several years.
That raises questions about how urgently the administration needs the $1 billion. Rep. Roy Takumi, D-36th (Pearl City, Waipahu), suggested Cayetano wants the money in large part for its psychological value.
"What that says to me is that the governor — and I'm not going to fault the governor for believing this — but the governor feels by proposing $1 billion construction budget for the state ... it will send a message to the community that the economy is going to come around, that there will be jobs in the future, that we are going to rebound from this tragedy," Takumi said.
Capitol bureau reporter Lynda Arakawa contributed to this report. Reach Kevin Dayton at 525-8070 or kdayton@honoluluadvertiser.com.
