Veto won't divert DBEDT focus on diversification

By Sean Hao
Advertiser Staff Writer

Ted Liu, director of the Business, Economic Development and Tourism department, said the state should have a plan that cuts its reliance on the tourism industry. Advertiser library photo

Governor Linda Lingle last week vetoed legislation requiring DBEDT to develop a plan to diversify the economy and make such efforts its core mission. She said the directive was unnecessary and equated it to "legislative micromanage-ment."

The measure called on the department to integrate education, workforce development and economic development efforts into one diversification strategy.

The state does not have such a plan, acknowledged DBEDT Director Ted Liu.

But he said: "I think we'll have that, despite the fact that this bill does not pass into law."

Officials have long talked about the need for economic diversification in a state that depends heavily on the volatile tourism industry, although efforts to develop other major sectors have not been fully successful.

The plan could call for fostering growth of military and technology industries, and diversifying tourism by targeting visitors interested in education, the environment and health and wellness. It could also address the role of tax credits in economic development, Liu added.

"It (the plan) may not be a rabid advocacy of tax credits," he said.

Lingle's administration has taken a hard look at tax credits, such as those targeting the technology industry. Act 221, in particular, has been a source of controversy this year because of its cost, alleged abuses and debatable effect on economic growth.

On the other hand, Lingle strongly supported $75 million in tax credits to Ko Olina developer Jeff Stone.

Liu said he hopes to have portions of the plan available for discussion during a state economic summit planned for this fall.

Rep. Brian Schatz, D-25th (Makiki, Tantalus), who introduced the economic diversification bill, was disappointed by the veto but encouraged by Liu's remarks.

Schatz, chairman of the committee on economic and business concerns, said he introduced the bill to push for diversification and encourage better coordination among state agencies that deal with the economy.

"Philosophies change depending on the whim of an administration," he said. "This would have been a permanent change in the way DBEDT operates."

Reach Sean Hao at shao@honoluluadvertiser.com or 525-8093.