Light at the end of Hawai'i's tunnel

The good news from Gov. Ben Cayetano's valedictory "state of the state" speech Tuesday is that he sees indications that the economic downturn following Sept. 11 will in no way be as deep or as long for Hawai'i as the one visited on us by the Gulf War in 1991.

There are two reasons for this newfound resiliency, Cayetano told lawmakers. One was a strong response by the community to the crisis, which we've come to expect, but which have had mixed results in the past.

The other, perhaps a surprise to some, is the "major economic reforms and restructuring that have taken place since 1995."

Perhaps in the last seven years we've dwelled overmuch on failure: the aquarium, the billion-dollar request for capital improvement projects that lawmakers ignored in last year's special session, and debilitating strikes by public- school teachers and university faculty.

Less noteworthy but ultimately perhaps more important, however, were 10 major legislative acts that lowered taxes for residents and businesses and provided incentives for new investment in technology, construction and renovations.

This adds up to $2 billion in tax savings and a 23 percent jump in high-tech jobs.

Cayetano's point, in short, is that, quietly and incrementally, "Hawai'i's economy is diversifying, reducing our dependence on tourism."

Why hasn't this diversification been more visible? Two reasons: contemporaneous recessions on the Mainland and in Japan and the bursting of the dot-com bubble. The survival of the fittest of the dot-coms, in Hawai'i and elsewhere, now positions them for the next major, if saner, wave of growth.

Perhaps our expectations for diversification have been unrealistic. We've watched for the arrival of a single entity that would quickly rival tourism as an engine of economic growth. Instead, we've had a flurry of small but promising start-ups, attracted by Cayetano's initiatives as well as the attributes of Hawai'i that have always attracted malihini.

Indeed, if there's to be major contribution to Hawai'i's new economy, it will come from the new $300 million medical school complex in Kaka'ako, which, with the contractor selection process already under way, seems almost a done deal. Kamehameha Schools and the Ward Estate already are planning a biotech park on the edges of the campus.

There's been talk around town about the meager legacy that Cayetano so far has built. But if he's right that the seeds of diversity are now in place and positioned to grow, and if they are properly nurtured, history is sure to warmly smile on him.