ISLAND VOICES
It's the economy, governor

By Galen Fox
State representative for Waikiki/Ala Moana

Democrats and Republicans can agree: It's the economy.

Bill Clinton, the only Democratic president re-elected since Franklin Roosevelt, won because he had the economy humming.

Hawai'i Republicans believe that job creation — the economy — is the real issue facing our state today. But local Democrats are attempting to negate the economy as a key issue by asserting, in the words of The Advertiser's Jerry Burris (discussing government's size within the economy), "there is very little agreement on the facts" and "everyone has his own study or statistics" (Advertiser, June 16).

These words echoed the governor a week earlier when he said, "Tired of studies? Me too." Who can blame the governor? Nobody would like to have his record scorched in his final year by several national studies.

But despite the governor's discomfort, three outside studies agree on the facts. The Corporation for Enterprise Development study gave Hawai'i a "D" for economic performance, an "F" for business vitality and an "F" for development capacity. No other state finished lower.

The governor tried to deflect attention from Hawai'i's failing record by saying Texas "flunked out," but Texas' average grade was "C," while Hawai'i's was "F."

The Progressive Policy Institute ranked Hawai'i a dismal 35th on its New Economy Index (not 26th, as claimed by the governor). Our New Economy ranking would have been even lower except that our dubious benefit of having lots of hotel jobs at foreign-owned properties meant Hawai'i ranked first of all 50 states for share of employees working for foreign companies.

The governor couldn't even mention, much less publicize, a third study done by Harvard Business School. His silence on the HBS report is noteworthy since the study's cover page says, "Prepared for Governor Benjamin Cayetano." HBS pointed out that Hawai'i was last in the country in job growth, 48th in the amount of yearly growth in local paychecks and dead last in nurturing fast-growth, high-tech firms.

Instead of citing the HBS study, the governor refers to studies by the conservative Cato Institute and American Legislative Exchange Council. These studies give Hawai'i credit for lowering taxes and for growing government slowly. State-supplied misinformation, however, led to errors in both studies:

• Lowering taxes. The governor keeps saying he cut taxes $2 billion over seven years. But his total wrongly counts tax cuts that don't exist, including $755 million of phantom income tax reductions for 2003-05.
• Growing government slowly. The state reports of budget growth only mentioned the general fund. Yet the general fund is part of a larger operating budget. By reporting only general fund expenditures, the state, in an Enron-like move, hid most budget growth "off line" in special funds.

In truth, the state operating budget over 1990-2000 rose an amazing 91 percent, far faster than our supporting economy, which gained only 35 percent (8 percent after inflation).

The facts are clear. Hawai'i has a slow-growth economy that drives our children to seek jobs on the Mainland and hurts the many who remain behind, raising our poverty rate faster than any other state. Helping create jobs here is the best way for all of us — Republicans, Democrats and Independents — to "put people first."

Instead of debating whether we are doing poorly (we are), let's debate how best to create jobs.