10 hot-button issues facing Hawai'i in 2003
Hawai'i enters 2003 with new leaders in government and business and a full agenda of familiar challenges: not enough money, fears of war and national recession, an unpredictable economy that is robust in some areas, faltering in others.
But unlike New Year's Day 2002, when we were still reeling from Sept. 11, for many people there is a sense of optimism and purpose: We prevailed over the worst of times and are moving ahead.
The Advertiser staff came up with the following list of 10 important issues that will affect Hawai'i in 2003 and talked to people about what we might expect. The list is not meant to be exhaustive, but to provide a rough guide to what lies ahead.
PUBLIC MONEY
Tough choices ahead
Advertiser library photo • Dec. 2, 2002
It seems like every year the state and counties say they're facing the worst budget crunch in memory. But there is broad agreement among state and municipal leaders that 2003 will be an extraordinarily difficult year, with tax revenue expected to be flat or up only slightly, and expenses — such as pension contributions and debt service — expected to increase significantly.
Gov. Linda Lingle, who was sworn in as the first Republican governor in 40 years, will be the guiding force behind several initiatives to boost the economy, control crime and improve public education.
Outgoing Gov. Ben Cayetano submitted a balanced, $7.5 billion biennial general fund budget before he left office, but Gov. Linda Lingle already is disassembling it.
Lingle wants Budget Director Georgina Kawamura to return $175 million that Cayetano shifted from the Hurricane Relief Fund. She also wants to keep her campaign promises to re-institute the food tax credit, eliminate or reduce the general excise tax on medical and health services and not lay off employees, while not increasing taxes or fees.
The Cayetano budget, further, anticipates no increases in pay for the state's 57,000 employees although contracts for all 13 of the state's bargaining units expire at the end of the fiscal year on June 30.
Like private business, government is having a tough time planning for 2003 because of the mixed signals from the local and national economies. One recent report shows that the state could be short about $162 million going into the new fiscal year unless revenue growth improves.
"That's why Jan. 10 will be such an important date for us," Kawamura said, referring to the date that the Council on Revenues will release the report on which the final state budget will be based.
The new administration made its first moves toward recovering the shortfall on New Year's Eve, when it announced a 5 percent, across-the-board cut on all nonessential costs for all agencies and a freeze on the hiring of nonessential workers. The two measures were expected to save $40 million.
At the county offices, the picture is just as dim, and there is already talk about raising taxes and fees.
Honolulu, which could face a shortfall of as much as $159 million, is also facing the prospect of paying an additional $20 million into the Employee Retirement System. Debt service is also increasing.
"I don't know how we can hold the line," incoming City Council Chairman Gary Okino said when asked if the city will need to increase property taxes.
— Gordon Y.K. Pang
BUSINESS CLIMATE
'It may take some time'
The new governor's boast that Hawai'i is "open for business" is largely symbolic, and most people in business believe it will be years before any significant change in the state's tax structure and regulatory environment will change the state's reputation as a place where it is tough to do business. But they view 2003 as an important starting point.
How much Lingle can change the state's business climate for the better depends on her success in working with a Democrat-controlled Legislature and powerful factions such as Hawai'i's labor unions, which are again asserting themselves after years of what they see as givebacks and concessions.
"I'm optimistic, in talking both with the administration and with the Legislature," said Jim Tollefson, president and chief executive of the Chamber of Commerce of Hawai'i. "I think there's a need for change and a more positive business climate."
During her campaign, Lingle laid out a broad economic development agenda that included tax breaks for hotel construction and a pledge to remove business barriers by cutting regulatory red tape and instilling in state workers a can-do attitude. Lingle also wants to increase spending on university research with an emphasis on developing commercially viable technology.
Although strengthening the state's $10 billion tourism industry remains the priority, many of Lingle's efforts focus on making the state less dependent on the highly volatile visitor industry.
So far, she has discussed restructuring the state Department of Business, Economic Development and Tourism and streamlining the permitting procedures faced by businesses. However, any significant effects from these moves could be years in coming.
"It may take some time," Tollefson said. But, "if we can cut (red tape) and speed up the process, that will help businesses. The stronger the business climate, the more jobs that are available. The tax base grows, and it improves everybody's life."
— Sean Hao
SCHOOLS
More federal pressure
The federal education law known as No Child Left Behind will continue to bear down on public schools in Hawai'i and across the country this year.
Later this month, the state Department of Education will release last year's standardized test scores, which will be the baseline from which to improve. When students take the tests again in March and April, schools will face new pressure to improve performance.
The DOE has asked for about $32 million more for its operating budget. The schools also want at least $90 million each year to address repair and maintenance problems that have languished for decades. A six-year plan to reduce the repair and maintenance backlog would reach 228 of the state's 263 regular public schools, and more than 10,000 classrooms, if the money is appropriated.
At the same time, the 13,000 teachers that make up the Hawai'i State Teachers Association have a contract that ends June 30. They want improved working conditions, raises and a contract in place before the end of the legislative session. But early indications are that the DOE and its teachers might be asking for money that won't materialize as long as the state's economy remains shaky.
Also, expect more talk about a decentralized school board, which was a key element of Lingle's education plan. It came close to passing the Legislature last year, and there may be more political momentum now to put the question before voters.
Some welcome news for public schools in 2003 could be that federal court oversight of the special education system could end or be significantly scaled back. Also, an increased number of Hawai'i teachers are going for national certification, meaning that more educators are becoming masters at their work.
— Jennifer Hiller
REAL ESTATE
Can it get too hot?
For Herb Conley, sometimes it's not what to look for but what to listen for in deciphering where Hawai'i home sales are headed this year.
"I'm not hearing people say at cocktail parties, 'That's a crazy price,' " said Conley, co-managing director of the state's largest residential real estate firm, Coldwell Banker Pacific Properties. "That's a good sign."
The absence of perceptions that prices are unrealistic, Conley said, suggests that gradually rising prices and the higher number of sales should continue at sustainable levels, unlike the superheated "bubble" market that developed in the late 1980s, only to burst in the early '90s.
Industry observers said the inventory of existing homes should stay relatively low, which will keep upward pressure on prices and could price some people out of the market. Rental prices also are expected to continue to rise, putting the crunch on young people and lower-income families. Mortgage rates, now at their lowest level in nearly 40 years, are expected to remain stable, encouraging buyers of residential and vacation property.
Modest price appreciation, which occurred mostly in Windward and East O'ahu during the past few years, should broaden to Leeward and Central O'ahu, experts said.
Vacation homes, especially on the Neighbor Islands, are expected to be one of the main drivers of continued market expansion, after accounting for an estimated $1.2 billion in 2002 sales.
"Three to four years ago (Mainland investors) invested in the stock market. Now they're investing over here in real estate," said Emory Bush, president of Hawaiiana Property Management. "I think it's going to be another great year, I really do."
— Andrew Gomes
CRIME
Back on the agenda
Public safety, drugs and crime have been back-burner issues since the late 1990s, when a combination of tougher laws, longer sentences and smarter policing helped push the crime rate in Hawai'i and the United States to its lowest levels in years. In 2003, drug-related crime has put public safety back in the spotlight.
Lingle stressed public safety programs in her campaign, pledging to build two privately financed 500-bed substance abuse treatment facilities to begin chipping away at the number of prison inmates who need treatment, but aren't getting it.
Lt. Gov. James "Duke" Aiona, a tough-talking former drug court judge who is leading the administration's efforts in this area, said he is also focusing on new preventive programs ranging from athletics, arts and sciences for youngsters to intervention for at-risk families in which the adults are using drugs. The idea is to prevent the next generation from following their elders into addiction.
The Lingle administration will find public opinion and political momentum on its side.
The federal government has designated Hawai'i as one of the epicenters of crystal methamphetamine addiction, and prison officials estimate that 85 percent to 90 percent of the people sent to prison need some sort of drug treatment. Until now, the public generally treated drug abuse as a problem for the police and courts, but that seems to be changing.
State Rep. Marcus Oshiro, the former House majority leader, said virtually every family in Hawai'i has been touched by the drug problem, and it is clear that voters don't believe merely locking up drug addicts is solving the problem.
"We're at a point right now that there probably is overwhelming sentiment that unless you go and address the problem of addiction, then you really do not address the revolving door effect where people leave after serving their time untreated," said Oshiro, D-39th (Wahiawa).
As with nearly everything else, money is short. Lawmakers last year passed a measure to mandate drug treatment instead of prison for first-time offenders, but in the scramble to balance the budget they failed to finance enough treatment slots to help everyone who qualifies for drug treatment programs.
Lingle wants private companies to finance the proposed new drug treatment facilities, which may make it easier to build them. But Aiona acknowledged that the state probably won't be able to pay for new staff and programs.
"We've just got to be a little more creative," Aiona said.
— Kevin Dayton
HAWAIIANS
Fighting for recognition
Native Hawaiian groups are preparing for what their leaders see as a pivotal year in legal battles over what help they believe the state and federal governments owe them.
Driving the activity is the series of court decisions opening the Office of Hawaiian Affairs to voters and candidates of all ethnicities, and the pending court case that seeks to dismantle various Hawaiian-only programs.
OHA is moving ahead with initiatives in Congress seeking federal recognition for Hawaiians, specifically a resurrection of the Akaka Bill, which died last session. Recognition would make many of these court challenges moot, said OHA administrator Clyde Namuo.
OHA and a coalition of Hawaiian civic organizations are also moving forward on the establishment of a Hawaiian governmental entity, something the Bush administration wants before endorsing federal recognition. Namuo said a survey is due by March, asking Hawaiians what form the government should take and whether a constitutional convention or some other mechanism should be used to create it.
A major point of contention is the fate of revenues from ceded lands. The law enabling the state to pay OHA for the use of these lands was overturned by the state's high court more than a year ago, and legislation will be introduced this month to resurrect that law.
OHA trustees also may be considering whether the best solution to this problem may be some combination of money and land.
Haunani Apoliona, re-elected to chair OHA's board of trustees, is encouraged by the change in the state administration and called 2003 "an important year."
"There's a lot of positive energy in the Hawaiian community," she said.
— Vicki Viotti
ENVIRONMENT
Old pressures re-emerge
With rising real-estate prices comes demand for new development, which in turn aggravates the old tension between preserving the Islands' environment and providing homes and jobs for Hawai'i's people.
Balancing those interests has never been easy, and 2003 promises to ratchet up the pressure.
As real-estate values dropped in the 1990s, many development proposals were scrapped or shelved to wait for better times. But low interest rates and record real-estate sales have led to a tight housing inventory, reversing the trend.
Harry Saunders, president of the Land Use Research Foundation and president of Castle & Cooke Homes Hawai'i, said he expects more discussion in the coming year of development issues such as traffic, schools, water and trash as projects that advanced partially through the approval process years ago are dusted off and pushed through the final permitting stages.
At the same time, proposals by the U.S. Fish & Wildlife Service to designate hundreds of thousands of acres of lands in Hawai'i as critical habitat for endangered species are already generating controversy. Although those designations do not halt all development on those lands, they make it more complicated and expensive to obtain development approvals from state and county governments.
"That's really a discussion on home rule, should the federal government be imposing restrictions," Saunders said.
Fish & Wildlife has proposed designating 111,364 acres on 24 sites on O'ahu to preserve threatened and endangered plants; proposes designating 437,300 acres on the Big Island as critical habitat for 47 threatened and endangered species of plants there; and proposed designating nearly 4,000 acres around Kaua'i's Po'ipu resort area as critical habitat.
Lingle may move ahead this year with her proposal to abolish the state Land Use Commission, while environmentalists hope to enlist Lingle's help in getting the 1998 "automatic approval" law repealed. That law requires that permit applications be automatically deemed approved if the agencies considering them do not meet specific deadlines.
Jeff Mikulina, director of Sierra Club Hawai'i Chapter, said his organization will also be lobbying this year for what it calls the "Blue Water Bill," a measure that would impose new penalties for development that causes runoff that damages reefs and ocean ecosystems.
"Every year now there seems to be a runoff event that screws up the reef or fishing or fouls the water, and it's mostly new development," Mikulina said. "If you look at it, it keeps on happening. The penalties currently aren't a deterrent."
— Kevin Dayton
MILITARY
Ready for war
Advertiser library photo • Dec. 14, 2002
For months, the talk of a possible war against Iraq has permeated discussions on Hawai'i military bases, with many soldiers, sailors, airmen and Marines — and their families — believing it's just a matter of time before they're called to action.
The U.S. military in Hawai'i awaits possible war against Iraq. Marine Corps Base Hawai'i reports its Marines are "ready and standing by."
The Pentagon on Monday ordered the Army's entire 3rd Infantry Division to the Persian Gulf, while two carrier battle groups have been told to be ready to sail to the region in 96 hours. The USS Abraham Lincoln, in Perth, Australia, with three Pearl Harbor-based ships — destroyers Fletcher and Paul Hamilton and frigate Reuben James — could be one of the carriers tapped.
At Marine Corps Base Hawai'i, spokeswoman 2nd Lt. Amy Mueller said that, to her knowledge, there have been no deployment orders for Kane'ohe Bay Marines.
"Pretty much, everybody is ready and standing by," Mueller said. "They say, 'Everyone be ready, everyone have their shots.' I wouldn't say there is anything heightened (in terms of possible deployment), but I think it's something folks talk about."
Michael Pavkovic, director of the diplomacy and military studies program at Hawai'i Pacific University, said Hawai'i-based forces, including Marines and Schofield Barracks soldiers, almost certainly would be deployed.
"(Military planners) are going to have to draw pretty much from everywhere," Pavkovic said.
During Operation Desert Storm, about 7,600 Kane'ohe Marines and 500 Schofield Barracks soldiers and reservists were deployed to the Gulf.
North Korea's resumed nuclear program, meanwhile, also is keeping the lights burning late at Camp Smith, headquarters of the Pacific Command.
Spokesman Capt. John Singley said the Pacific Command "is paying very close attention" to any changes in North Korea's posture.
Singley said events in North Korea and the region are "something that we take very seriously. The stakes are quite high given the fact we don't have an armistice."
—William Cole
DEMOGRAPHICS
Getting old, going it alone
The data still being crunched from the 2000 Census confirms a lot that we already know — Hawai'i is the most racially diverse state, with the lines between the races blurring more each year. More than half of the marriages in Hawai'i each year are between people of different racial backgrounds.
What is less clear is how another demographic trend will play out this year: the fast growth in the number of Hawai'i residents 65 and older. The population above the age of 85 is growing at an even faster rate.
Expect more discussion this year about such issues as affordable housing for the elderly, the rising cost of prescription drugs and even the issue of assisted suicide for the terminally ill.
Other trends:
- More people working for themselves than ever. The number of self-employed people in Hawai'i rose by nearly 20 percent between 1990 and 2000, and the growing influence of entrepreneurs and small-business owners is likely to be seen at the Capitol in efforts to cut regulation and exempt businesses with only a handful of employees from some requirements.
- More people in poverty. Rising housing costs and a tight job market for unskilled workers will likely create even more work for social service agencies and nonprofits, especially on the Neighbor Islands.
Among the other highlights of 2003: the 100th anniversary of Korean migration to Hawai'i on Jan. 13. Today, Koreans represent the sixth-largest ethnic group in Hawai'i, with 23,537 residents.
— Mike Leidemann
COMMUTING
BRT or bust?
The daily commuting hassle remains one of the biggest quality-of-life issues for O'ahu, and 2003 will be the year that Honolulu either moves forward with its ambitious and controversial Bus Rapid Transit program or moves back to the drawing board.
After five years and $41 million of planning, the city hopes to sign the first construction contract for the BRT program this year.
The project envisions buses running mostly along specially designated lanes every two to four minutes in peak hours in Honolulu, whisking people from Iwilei to Waikiki in less than 15 minutes. Later, the system would be extended to Kapolei, cutting some Leeward commuting times in half.
Opponents say the buses will make traffic even worse by clogging up lanes on the freeway and on city streets and that it's useless to think people will ever give up their cars. They suggest city officials spend the BRT money instead on new and improved roads, or start planning for even more ambitious mass transit plans, like light rail or a monorail.
Mayor Jeremy Harris remains committed to BRT, and the project has found support in the federal government to the tune of hundreds of millions of dollars in available subsidies.
Lingle said she has serious reservations about the plan; because many of the bus routes run on state roads, her cooperation could be crucial. Several members of the new City Council also oppose the entire plan or crucial pieces of it. If a majority remains opposed, they could cut off all future money, pushing Honolulu's mass transit planning back to ground zero.
— Mike Leidemann
