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The Honolulu Advertiser
Posted on: Tuesday, September 25, 2001

The September 11th attack
Governor seeks $1 billion building boost for economy

 •  State could lose up to 24,000 jobs, economists say
 •  Business leaders preparing tourism marketing plan
 •  Classic Vacation cutting 220 jobs

By Kevin Dayton
Advertiser Capitol Bureau Chief

Gov. Ben Cayetano will seek authority next month to spend an extra $1 billion on construction to shore up the weakening Hawai'i economy and will ask legislators to relax the procurement law so the state can award contracts more quickly.

The requests are among several Cayetano said he will make of legislators when they meet in a special session Oct. 15 to consider how to help Hawai'i weather the economic storm brought on by the Sept. 11 terrorist attacks in New York and Washington.

State economists estimate that depending on the severity of the downturn through December, Hawai'i could lose anywhere from 5 percent to 10 percent of its total visitor arrivals for 2001, from $492 million to $1.3 billion in gross state product, and up to 24,000 jobs.

In a meeting with Advertiser editors and reporters yesterday, Cayetano said the economic crisis once again dramatizes the need to diversify Hawai'i's economy.

He said he will again ask lawmakers to finance a new medical school and biotechnology research center, designed to form the "foundation" for state efforts to diversify by becoming a center for medicine and health care for the Pacific. Lawmakers cut money for that facility earlier this year.

Cayetano said Hawai'i's governors have long made a case for diversification, but the Legislature didn't seem interested, and it was "never, I think, in the past taken very seriously by too many people in government."

"In our unique location in the middle of the Pacific, us being isolated, this set of circumstances has really demonstrated our fragility and our vulnerability," Cayetano said. He said his proposals "are not really new, but I think there's going to be a greater receptivity there."

Moving ahead with an ambitious public construction program would require the sale of bonds and add to the state's indebtedness, a prospect expected to trouble some legislators.

Cayetano said he also is considering proposals to allow businesses to defer excise tax payments to help keep them afloat during the downturn, and measures to extend unemployment benefits and expand eligibility for the state's QUEST program to provide health coverage for laid-off workers.

The extra construction spending will be used first to speed up repair and maintenance in the schools, and to move ahead with construction of the medical school, Cayetano said.

A leading Republican, Senate Minority Leader Sam Slom, said Cayetano appears to be resurrecting proposals that haven't passed before and is using the crisis as a way to propel them through the Legislature now.

Slom also said he was worried that proposals such as new construction spending mean the state will borrow more money when the state indebtedness already ranks among the highest in the nation. And he said he doesn't see much in Cayetano's proposals that would mitigate the drop in business or reduce businesses' expenses.

"I don't think you can spend your way to prosperity, and I don't see the restrictions on government (in Cayetano's plan)," Slom said.

On the issue of procurement, Cayetano said he wants to temporarily reduce the length of time the state must advertise for bids before awarding contracts. He said the existing requirements consume months, and new technology allows the state and the bidders to move more quickly.

Cayetano also said he wants to tighten up on bid specifications to require that engineering and design work be completed more rapidly, which would speed projects. Procurement laws generally are designed to ensure that bidders are capable of doing the jobs they bid for and that no one receives favored treatment from the state.

"We need to get out of the way the kind of things that hold us back," Cayetano said. He called the existing law "one of the most draconian procurement laws you can find anywhere."

"Procurement is really important because projects have been delayed months if not years because of the crazy things that we need to do in procurement," he said.

Reach Kevin Dayton at kdayton@honoluluadvertiser.com or 525-8070.