2003 LEGISLATURE
Gov. Lingle's State of the State address
State of the State
An Outline of the Governor's Agenda
Jan. 21, 2003
Mr. President,
Mr. Speaker,
Members of the Legislature,
Lt. Gov. Aiona,
Congressmen Abercrombie and Case
Mayor Harris, Mayor Kim and Mayor Arakawa
Gov. Ariyoshi, Gov. Waihee
Members of the Consular Corps,
Distinguished guests,
And to all the people of Hawai'i,
Aloha.
As I stand before all of you assembled here today, as well as those watching on television and the Internet, and listening on the radio, it is hard to believe that this is only my 50th day in office. The time has passed quickly ... but much has been done, including the selection of my Cabinet.
Before introducing our new directors, I want to thank the 150 volunteers who served on our 13 search committees. These citizens studied thick stacks of resumes, conducted extensive interviews and narrowed each search to a short list of candidates.
As a result of their efforts, I have been able to assemble a Cabinet filled with people of integrity, ability, accomplishment and vision. Please hold your applause as I name my new directors and their respective positions.
Georgina Kawamura, director, Department of Budget & Finance.
Mark Bennett, attorney general.
Russ Saito, comptroller, Department of Accounting & General Services.
Sandra Kunimoto, chair, Board of Agriculture.
Ted Liu, director, Department of Business, Economic Development & Tourism.
Mark Recktenwald, director, Department of Commerce & Consumer Affairs.
Gen. Bob Lee, adjutant general, Department of Defense.
Micah Kane, chairman, Hawaiian Homes Commission.
Dr. Chiyome Fukino, director, Department of Health.
Kathy Watanabe, director, Department of Human Resources Development.
Lillian Kohler, director, Department of Human Services.
Nelson Befitel, director, Department of Labor & Industrial Relations.
Peter Young, chairman, Board of Land & Natural Resources
Rod Haraga, director, Department of Transportation.
And also interim Director Jim Propotnick, Department of Public Safety; and Deputy Director of Taxation Kurt Kawafuchi.
Ladies and Gentlemen, I present to you the most talented group of individuals I have ever had the pleasure to lead.
It has been the tradition for legislators and others to applaud from time to time during the Governor's State of the State address as you so graciously just did. My request this morning, however, is that you hold such applause to a minimum. Otherwise we might end up still being here live at 6:30 tonight after all.
I am honored and very humbled to come before you today for this, my first State of the State address as governor of our great state of Hawai'i.
Mr. President, Mr. Speaker, I want to thank both of you for your promises of openness and cooperation last week during opening-day ceremonies. Please know that I pledge the very same to you.
We agree that the people of Hawai'i have spoken loudly and clearly. They have stated in no uncertain terms that the status quo is no longer acceptable. They want a new beginning and that is exactly what we must give them.
The people of Hawai'i want better schools, with real alternatives for children who have not been able to thrive in a one-size-fits-all statewide system. They want a system that puts the interests of the children above those of anyone else, including unions and politicians. They want schools that prepare their children for a better life.
The people of Hawai'i also want a government they can trust to deal with people openly, honestly and fairly.
They want an honest budget built on a solid foundation of fiscal discipline, a budget that is understandable and that reflects their priorities. And they want all of us to be held accountable for what we deliver or what we fail to deliver.
Good schools, good jobs, good government. These are not unreasonable demands. But sadly, some of our people have already lost heart and have left Hawai'i to go look for these things elsewhere.
We cannot allow this to continue. The people of Hawai'i want a new beginning that starts now and includes them, their children and their children's children. So let us begin.
First, let me state the obvious – our journey will be neither short nor easy.
Let's talk about the numbers. As you know, the prior administration submitted a financial plan that used the Hurricane Relief Fund to balance the budget in the upcoming biennium. This is something we must not do.
Without exception, experts tell us, the question isn't whether there will be another Iniki, but when. They also say it isn't a question of whether our most populated areas will be hit, but when.
We know from experience that insurance companies cannot be depended upon to write new policies in the aftermath. Too much is at stake for us not to be ready to enter the reinsurance market when the next hurricane hits and to care for our people during the massive recovery that will surely follow. That is why I will not raid this fund under any circumstances.
So right off the bat there is a shortfall of $175 million in the budget, as originally submitted.
And now we know that the state has an unfunded liability in its retirement system exceeds $3 billion. The state does not have to contribute this entire amount immediately, but it will eventually. Besides the obvious legal obligation, it would be morally wrong to push this debt onto the shoulders of the next generation.
You can see that the road to restoring fiscal discipline and integrity will be long and occasionally bumpy.
Even so, we must begin this journey now. Accordingly, my legislative package does not propose a host of new, expensive programs, across-the-board pay raises for state workers or substantial tax cuts.
I would like to do all of these things, but that would be fiscally irresponsible under the present circumstances.
Major new initiatives and substantial tax cuts must wait until fiscal discipline has been restored to state government and the economy has expanded.
Instead, I am proposing modest but significant common-sense proposals that include changes to our tax system that will help those earning the least; tax credits to stimulate the economy in an area of chronically high unemployment; fairness in our financial relationship with the counties; help for families dealing with the high cost of long-term care; and continued support for the use of alternative energy sources.
In addition, I will offer proposals that encourage greater competition in the marketplace in order to improve the business climate and create new jobs.
I plan to reinvigorate the public's willingness to help, and I will motivate our state workers to perform at a higher level where their ideas and contributions are given proper recognition.
We must put our house back in order – step by careful step – working together to create long-term, fundamental, structural change. This will not just get us through the tough times, but also allow us to prosper when the times are better.
By working together, we can re-create state government so that it is more trusted and efficient. We can revitalize our economy so Hawai'i's families can stay together and provide a good life for the generation that comes next.
Together we can also fulfill our obligation to provide a good, solid education to every child in every community all across this state.
I cannot do these things alone ... and neither can you. We need each other, and we need each other to put aside any notion of partisanship.
Let's face it, one-party rule, whether it was Republicans 40 years ago or Democrats in recent times, has not served the people well.
Hawai'i is an island state, thousands of miles from anywhere. And this fact should affect the way we do things.
It's as if we are in a boat, caught in treacherous waters. We need to set sail for a better place. If I were to chart a course north, but you insisted on going south, then we would go nowhere. We would stay stuck exactly where we started.
Like it or not, we are in this together, and the rest of the state is watching. The people expect us to settle on a course and then work together to get there.
From this day forward, let us agree that the principle by which we will judge proposals for new policies, programs and laws will be whether or not they serve the best interests of all the people of Hawai'i.
It is by this standard that I am honored to present now my vision and concrete proposals for Hawai'i's future.
RESTORE TRUST AND INTEGRITY
Before a community can prosper, the people must believe in their leaders. They must know that at the core of every decision is careful planning, hard work and unbending integrity rather than partisanship or self-gain. They must trust that the awesome power of government is not being abused.
To begin the process of earning back the people's confidence in public servants, I will be asking you to send a loud and clear message that any public official who abuses the public's trust can expect harsh and certain consequences, including a mandatory prison sentence.
And those who seek to influence public officials, they will be well advised to limit their efforts to persuasive argument. Large gifts to public officials, including exclusive golf outings and lavish entertainment, will be presumed attempts to bribe and will be treated as such.
Whether such gratuities actually influence decisions is not the issue. Public trust is at stake, and we must do whatever it takes to earn back that trust.
I also will be taking steps to get politics out of government. Among other things, this means that no state worker should ever be required or pressured to attend a political fund-raiser or to hold a sign on the side of the road.
Any state worker who ever feels pressured to engage in any kind of political activity should report it to my office immediately. In my administration, there will be zero tolerance for any such behavior.
It is critically important that government conduct its elections and tally results in a nonpartisan, nonpolitical way so that the people can trust the outcome of the election when it's announced. I find it almost unbelievable that Hawai'i law requires all precinct chairs to be members of the same political party as the governor. It has been this way for many years. And although my party and I would benefit if the law remains the same, it is wrong, and must be changed to allow citizens, regardless of party, to participate at all levels of the election process.
I am also calling for mandatory posting of election results at each precinct, and mandatory recounts in especially close elections.
The public also is rightly concerned about the large amounts of money contributed to political campaigns by businesses that then get millions of dollars in nonbid contracts. Accordingly, I ask that you enact a law prohibiting political contributions by anyone benefiting from nonbid contracts.
This effectively will prevent many businesses from financially supporting the candidates of their choice, and that's unfortunate. But the people have made clear their desire for this kind of campaign finance reform.
Trust and integrity in government will be restored only when people know that their government is honest and fair. For them to make this judgment, government also must be open.
I have already initiated a number of changes intended to make government more transparent. As I mentioned earlier, almost all of my directors were selected from short lists provided by volunteer selection committees.
In putting together the committees, I did not ask anyone about their own politics and I specifically instructed the committees not to ask any candidate what party they belonged to, if any, or how they voted in the last election. Each committee was instructed simply to provide a short list of the very best candidates in this state.
The majority of people now serving in my Cabinet are people that I met for the first time during the interview for the position.
I believe with my whole heart that this is the way government has to operate if we are to regain the public's trust. The old days of "who you know" being more important than "what you know" are pau.
I am proposing an omnibus procurement bill that will bring much-needed transparency into government contracting. The process will be honest, fair and totally merit-based. This bill is the result of recommendations made by a volunteer committee composed of government, industry and academic experts in the procurement field.
The bill also includes a novel form of electronic bidding that we call a reverse version of e-Bay. Companies wanting a particular contract will be able to bid the job via their computer terminal. The qualifying company with the lowest bid gets the work.
The state employee who proposed this concept, Aaron Fujioka, has shared other ideas that we think have a lot of potential. My directors and I will work hard to establish the kind of trust and respect for state employees that will motivate and reward them for continuing to find ways to save money and improve services.
Also in the spirit of making government more open, I have instructed my budget director to conduct a comprehensive audit of the state's finances, and then to produce an understandable report that will explain where state revenues come from and how they are being spent. In the future, the report will include evaluations of each department.
And finally, restoring trust in government means keeping government's promises and commitments to Native Hawaiians.
Next month my senior staff and various members of the Hawaiian community will accompany me to Washington, D.C., where I will meet with members of the Bush administration and testify before Congress on the reasons why federal recognition of Native Hawaiians is so critically important to all the people of Hawai'i.
And here at home, I will continue to work with you and with the Hawaiian community to resolve the ceded lands issue once and for all.
Our joint decision to make the $10.3 million payment is a good first step, but that is all it is. Like so many other issues we currently face, the ceded lands issue is one that did not occur overnight, and it will not be resolved overnight. It is as complicated as it is emotionally charged. But until we get it resolved, our community can never really come together as one.
And make no mistake, my vision is that of one Hawai'i.
While working hard for a just resolution to the ceded lands issue, we must make absolutely sure that we do not inadvertently drive a wedge between Hawaiian and non-Hawaiian communities.
IMPROVE PUBLIC EDUCATION
Let's turn our attention now to public education.
The public knows and we should not be afraid to say this: Hawai'i's public school system is broken. The people closest to the situation, the teachers and the administrators themselves, reportedly send their own children to private schools at a rate dramatically higher than that of the general public. I suspect that the same could be said of business leaders and of politicians.
There is nothing wrong with a parent's decision to send his or her children to the school where they are most likely to thrive. What is wrong is that not every parent has this option.
As currently structured, the public school system offers virtually no choice to parents. It's a one-size-fits-all structure than has long outlived its value.
It is like no other system in America, and it's not working.
When it comes to public education, the old way of thinking was that decisions were best made by a small group of well-intentioned people sitting in an office building in downtown Honolulu. Current thinking is that as many decisions as possible should be made by people directly affected by those decisions.
In theory, Hawai'i's public school system has embraced this new thinking of local decision-making. SCBM "school/community-based management" it has been touted as a means by which parents, teachers and administrators can chart the destiny of their own schools. Unfortunately, it simply has not worked out that way. Let me give you just one example.
Lahainaluna High School wants to change by exactly one week the date of this year's graduation exercises. This manini change is supported by students, parents, teachers, administrators and the school's SCBM council. They all want it. Everyone's in agreement.
But believe it or not, they have no control over the matter. The decision to change the date of any one school's commencement can be made only by DOE administrators in Honolulu.
When this same issue came up several years ago, the DOE denied the same school's request for the date change. That began a massive letter-writing campaign to the Board of Education and eventually the board stepped in and reversed the DOE decision.
Despite all the talk about SCBM, the concept of local community control is foreign in Hawai'i.
The time has come to move resources and decision-making away from the DOE's central office in Honolulu and to empower local communities to think and to act in their own best interest.
I believe this can best be done by replacing our current statewide system with seven locally elected school boards.
No other state, other than Hawai'i, has a statewide school system. None. Not even one. The reason is because it doesn't work.
Once local school districts are established, fair and equal funding would continue to be determined on a statewide basis, and certain basic standards would continue to be set and monitored by both the state and federal government. But the hiring and evaluating of principals would be done at the local level as would decisions – huge decisions – such as when to hold a graduation ceremony.
I am convinced that the people of Hawai'i want local school boards that are accountable to their own communities.
That's why today I am proposing that you let the people decide this important issue via a statewide ballot referendum. Let's ask the people of Hawai'i if they want to amend their own Constitution to allow local school boards.
The key to reforming public education in Hawai'i is to give parents meaningful choices so they can find the right spot for their own child.
Many children simply do not fit into the present one-size-fits-all system. And miserable themselves, they often become disruptive. Currently, there is no real alternative for these children within the DOE.
I am determined to increase dramatically the number of choices available within the DOE.
We can do this by encouraging and supporting schools within a school, magnet schools, e-schooling and home schooling as meaningful choices.
For example, if parents decide that home schooling is best for their child, that child should not be prevented from taking advantage of extracurricular activities available to other public school students, as is done now.
The current practice of denying home-schooled kids an opportunity to participate in sports or band, is mindless and it unfairly punishes the child. This is wrong and it must stop now. All children must have access to our schools.
The best way to provide meaningful choice within the DOE is allowing more charter schools, and then nurturing them. The current DOE attitude toward charter schools is benign neglect at best and antagonistic at worst.
The federal Department of Education's top charter school expert has described our current charter school system in Hawai'i as having been designed to fail, functioning now only because of the passion of its proponents.
With his help, and that of local educational experts, including Superintendent Pat Hamamoto, whom I have tremendous confidence in, I am proposing changes that will redesign charter schools for success.
First, the funding must change. Right now, the funding assumes that the value of services provided to the charter schools by the DOE is nearly as much as all the money going into salaries of the teachers and principal, rent and other costs of operation. This is absurd.
My proposal is to give the charter schools the full cost of educating a child and then let the principal of each charter school decide if what the DOE has to offer is worth paying for.
Fair funding is just the beginning. Under my plan, charter schools would be free to make their own hiring decisions. The UPW would not have a lock on any jobs, nor would the HGEA or the HSTA. Once hired, teachers, secretaries and janitors would be free to form or join a union, but that would be their choice. Unlike the present arrangement, they would not be forced to belong and pay dues to any particular union.
The role of a principal in any school – private, charter or traditional public school – is different from that of teachers and other school workers. Just about every study of individual school effectiveness has stressed the critical role played by the school principal.
Hawai'i is the only state in America in which principals belong to a union.
Principals are a part of management. They have no place in a union. Sure, union leaders and many existing principals like it the way it is, but it has proven to be disastrous for the children.
Ladies and gentlemen, if you do only three things to improve public education during this legislative session, you should allow the people of Hawai'i to decide if they want local school boards, get principals out of the union and fairly fund the charter schools.
I am also proposing new initiatives to empower teachers and principals to remove disruptive students from the classroom. Again, with so much at stake, we cannot continue to allow a relative few to deny a good learning environment to the many.
Too often, teachers have been given every incentive not to crack down on disruptive students. Those few teachers who take action often regret it because they feel and receive no support. That must change.
These kinds of changes will provide real accountability. Teachers will be free to teach, principals to manage and local school boards to lead. Parents, teachers and taxpayers will know who to hold accountable, and for what.
Until last week, I had not considered the issue of drug testing in our schools. But when Sen. Bunda suggested that it might be time to consider drug testing as a constructive tool to help students and their families, it struck a chord with me and with Lt. Gov. Aiona as well.
I have asked the lieutenant governor to convene a gathering of all interested parties to outline a plan to implement a voluntary drug testing program in our schools that will provide help to those students involved with drugs.
If a student voluntarily tests positive for drugs, he or she will not be arrested, expelled or even suspended. Nothing will be publicized. Instead, that student and their parents will be required to meet with a professional counselor and others who know and care about that student, and to plot out a strategy to effectively address the problem.
Sure there are lots of issues to resolve with such a program, but the lives of our children are at stake, as well as the safety of our communities. Lt. Gov. Aiona is a former family court judge who is used to working with others to resolve difficult issues, and I have complete confidence that he will see this idea through.
I want to thank Sen. Bunda for this idea and invite him both to help in this effort and rightfully claim credit for the good that will surely come of it.
One final issue involving young people that I'd like to talk about is the age of consent. Prior to 2001, the age of consent in Hawai'i was 14 years old – the lowest in the nation and an embarrassment to all. You did the right thing by raising the age of consent to 16, but you included a sunset provision. I call upon you to finish your work and to make the current age of consent permanent.
EXPAND THE ECONOMY
My friends, we know that we must expand and diversify our economy. We must do so in order for businesses to succeed and create new jobs. We must expand our economy in order to generate the public and private resources to provide for those in need.
We need a strong economy in order to have the revenue to maintain our state park system. And, we must expand the economy in order to increase salaries of professors, teachers and other state workers who often are underpaid for the work we demand of them.
The list of what we want to do for the people of Hawai'i is long, but we might as well throw that list away if the economy remains as it is.
While some will point out that there are economic factors beyond our control, and that's true, there are many factors within our control. And those are the ones we need to focus on.
With clear principles, careful planning and flawless execution we can make a significant difference in our state's financial condition, but again, only if we work together.
Hawai'i has one of the highest tax burdens of all 50 states, and there are some aspects of it that simply aren't fair. People should not be taxed for being sick or when they are simply feeding their families. And when the economy improves, I will ask you to repeal the tax on food and medical services.
But given the fiscal reality we face, the only tax relief I am asking for in this budget is to reduce the income taxes of those who earn the least. We do this by increasing the standard deduction with a goal of raising it to 50 percent of the federal standard deduction within three years, and eventually to 100 percent.
Raising the standard deduction has several important benefits. First, it makes our tax system more progressive and equitable by providing tax relief directly to low-income taxpayers that as a group almost always rely on the standard deduction.
Second, it simplifies government, immediately reducing by 18,000 the number of taxpayers who have to file a state income tax return, and by 44,000 the number of residents who have to itemize their deductions.
A third and important benefit of raising the standard deduction is that it acknowledges the hard work of the many experts who have served on state tax review commissions over the past 18 years. Raising the standard deduction to a higher percentage of the federal level has been a primary recommendation of every single commission from the very first one in 1984 to the most recent, which just submitted its report last month.
Let me repeat that: Every state tax review commission has included this proposal on the list of what was needed to make the tax system simpler and fairer. Every single one.
Even though this first step is not as big as I would like, on principle alone this tax-fairness journey must begin now.
But tax policy alone would not expand the economy to the extent needed, even if the proposed tax cut could be much larger. We must also create an environment where existing businesses are able to grow and new investment is attracted to our state.
We need a level playing field with rules that protect consumers and our fragile environment while providing businesses with the stability and consistency that they need.
To that end, I have selected Cabinet directors who fully understand that business, not government, creates prosperity, and that we must work hard to change Hawai'i's anti-business reputation. From today forward, my entire Cabinet will be looking for ways to help existing businesses grow and to attract new businesses and investment to Hawai'i.
I am introducing a number of specific bills that will increase competition among businesses because we believe that it works to the consumers's advantage. Simply put, competition results in better service and lower prices.
I am proposing to level the playing field for private health insurance companies by eliminating the 4 percent general excise tax on their policies, thereby increasing dramatically the chances of new providers entering the market.
I am also proposing that HMSA and Kaiser Permanente be prohibited in the future from sitting on the board that recommends which insurance companies can enter the market in Hawai'i.
HMSA and Kaiser have been good corporate citizens, but the reason they dominate the market in Hawai'i has as much to do with structural flaws as it does with the price of their product or quality of their service. I believe with increased competition, these companies will do an even better job and at an even better price. That's the nature of competition.
As you may have read, physicians in various parts of the country have been complaining about the high cost of medical malpractice insurance. Rates in Hawai'i recently were increased substantially. Some of the increase is due to frivolous lawsuits filed by people who see our court system as one giant slot machine.
Don't misunderstand, doctors sometimes do make mistakes, and injured people should always be allowed to seek compensation for their injuries.
I am proposing legislation that only affects lawsuits that are found by a panel of independent doctors and lawyers to be without merit. It will reduce the cost of malpractice insurance and help to hold down the cost of healthcare.
Another proposal to improve our business image would allow employers to take personnel action against an employee who has done something wrong without fear of it leading to a worker's compensation claim.
Recently, a worker was fired for stealing. The Hawai'i Supreme Court ruled that he could receive compensation for the stress he felt from getting fired for stealing.
This is exactly the kind of nonsense that has caused so many businesses to steer clear of Hawai'i.
Again this year, I will be supporting the Ko Olina tax credit, but only with the binding agreement with the developer to fund meaningful training for residents on the Leeward Coast.
Viewed in the abstract, this credit can easily be criticized. But viewed in the context of our shameful, decades-long neglect of the Leeward community, it is a wonderful opportunity for all of us to really make a difference.
The Weinberg Foundation owns land at Ko Olina, and the foundation's trustees are enthused both about the resort's master plan and the potential for dramatically changing lives for the better.
Already Ritz Carlton has signed a letter of intent to have a major presence in the development. In short, this is a big deal for the state, the construction industry, one of the country's largest charitable institutions and especially a big deal for a community that has long been neglected. These are the reasons I support this tax credit and why I will be working hard to gain your support again this year.
HEALTH
There are several healthcare issues that we need to address in the current session. But first, let me address one that you attempted to deal with in last year's session.
As you know, I have been critical of last year's legislation relating to prescription drugs primarily because it offered nothing in the way of immediate help for people needing medication in order to maintain a decent quality of life. Even today, one year later, not one single person has been helped because of that legislation.
Depending on a number of things, it may be that the existing legislation eventually will provide some relief. But, that's a big maybe. And to get the relief, the legislation required an increase in the size of state government.
In order to bring immediate relief, I have put together a public-private partnership that will provide free prescription drugs to our most vulnerable citizens. This unique program is possible because the Hawai'i Medical Association has offered to mobilize the support of Hawai'i's physician community and fund a hotline so that help is readily available.
The Department of Health and the state hospital system will be working closely with them.
It is estimated that this program, which is already operating successfully at Maui Medical Center, will serve approximately 20,000 low-income individuals in its very first year. Local charities have expressed interest in funding this program. This is the kind of creative solution that is possible even in fiscally challenging times because
