Posted on: Sunday, September 12, 2004

Small business rules review panel short-handed

By Sean Hao
Advertiser Staff Writer

A board created to prevent small business from becoming entangled in the red tape of state government is operating short-handed because Gov. Linda Lingle has been slow to appoint new members.

The Small Business Regulatory Review Board is considered by many as an important step in countering Hawai'i's reputation for being unfriendly to business. And while Lingle has made progress in cutting certain business fees and in pushing through tax credits for technology companies and the Ko Olina Resort and Marina, some say greater attention needs to be focused on bolstering the review board.

The 11-member board is short three members, which does not include one person whose term is up but who has decided to remain on to ensure that monthly meetings have a quorum of six members. However, unless new members are appointed soon, the board may not be able to assemble enough people to hold a meeting Oct. 12.

"We need them," said board member Brian Zinn. "Next month we could have a big problem with quorum (because two members will be traveling). That means nobody else can get a cold, a flat tire or anything."

Appointing members to the board is now a priority issue, said Ted Liu, director of the Department of Business, Economic Development and Tourism, which provides the board with administrative support.

The governor has not appointed a new member to the board since late last year, despite the creation of four openings. Any delay was a result of the need to have a diverse geographic and business sector membership, Liu said last week.

"I, too, am concerned about the quorum issue," he said.

The board comprises volunteer business leaders who serve as a court of last resort before businesses take legal action against agency rules they feel are burdensome. However, during much of its existence since it was established six years ago the board has been largely ineffective because it lacked cooperation from state agencies.

Lingle said that would change when she took office about two years ago. Although many board members agree that the board is getting more respect from state government, the lack of appointments and the board's confrontation with the Department of Land and Natural Resources on a Big Island issue has led to at least one open position.

Big Island member Denise Walker said she resigned in June because of the board's inability to make meaningful changes.

"I finally just threw in the towel," Walker said. "It's just a lot of work without recognition of the board. It's a helluva battle all of the time."

Part of the problem is that some agencies still fail to file required rules and regulations with the board in a complete and timely manner, members said. Liu said building an acceptance of the regulatory review board among state agencies takes time.

"I don't think there's any doubt that there is a lot of strong and very high-level support for the Small Business Regulatory Review Board in this administration," he said. "I also think there's still going to be internal tension — that's kind of the board's job (keeping state agencies in line.)

"We have to constantly remind agencies ... that they just have to factor in the Small Business Regulatory Review Board in everything they do."

Other board openings were created in recent months by the early resignation of Big Island member Al Inoue for family and business reasons and the expiration of Big Island board member David Rietow's term. In addition, Honolulu member Robert Speers' term expired in June, but he has opted to stay on until a replacement is appointed.

Board members have sent about a dozen nominations for prospective replacements to the governor's office since last year, according to Dori Palcovich, DBEDT's small-business advocate. About two-thirds of those nominees were chosen from a list of candidates provided by the governor's office, she said.

Then in July, board chairwoman Lynne Woods met with Lingle's senior policy adviser, Linda Smith, warning that the lack of board members could make it difficult for the board to reach a quorum each month. Still, no new members have been appointed by Lingle since late last year.

State Sen. Sam Slom, R-8th (Kahala, Hawai'i Kai), said open positions on the regulatory review board need to be filled as soon as possible. The board will never fulfill its promise unless it's fully staffed and adequately funded, he said.

"It's had a difficult time and yet because other states have picked it up it's become a model and they've run with it," said Slom, who is also president of Small Business Hawai'i. "The key difference is those states have adequately funded and staffed their review boards."

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