Posted on: Monday, May 19, 2003
ISLAND VOICES
Governor is using Act 221 as a scapegoat
By Rep. Brian Schatz
On Oct. 25, 2002, gubernatorial candidate Linda Lingle promised no changes to the landmark technology legislation commonly known as Act 221.
Broad-based support for keeping these incentives in place came from every economic development organization in the state and most entrepreneurs; most political leaders agreed that such action was central to a comprehensive economic diversification strategy. Even in her inaugural address, the governor stated emphatically that economic diversification was one of her three top priorities.
To everyone's surprise, this session has been defined by a strong disagreement over Act 221. That is apparently what the governor wants. She and her public relations strategists have intentionally characterized Act 221 as THE problem in our state budget, implying that it was to blame for a lack of school repairs, a $100 million budget shortfall, and just about any other issue of contention in state government.
Why is the administration singling out the relatively small technology industry? Simply put, it does not represent a particularly powerful constituency.
The Department of Taxation privately admits that other tax credits, such as the home renovation tax credit, the hotel remodeling tax credit and the capital goods excise tax credit, cost more than Act 221. But would it concede that publicly? No way. Would it provide data on the costs of these credits? No. Because the facts directly contradict its claim that Act 221 is the cause of our budget woes.
There is another tax credit that is pending approval on the governor's desk. It provides $75 million to a private, multinational corporation for the construction of an aquarium. If the government is experiencing a budget crunch that is forcing undesirable cuts, shouldn't this be the first thing that gets eliminated?
There is positive news: Never before have the economic development boards on all of the islands, all technology associations, the Chamber of Commerce, Enterprise Honolulu and the Business Roundtable come together on an issue related to economic diversification. This business community is now galvanized. From a potentially disastrous session, we have emerged stronger, more determined, and more together than ever.
Brian Schatz, D-25th, represents Makiki and Tantalus in the state House.
