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The Honolulu Advertiser
Posted on: Thursday, January 13, 2005

Lingle targets workers' comp

By Catherine E. Toth
Advertiser Staff Writer

To Bill Green, the business climate in Hawai'i has changed dramatically in the past two years since Gov. Linda Lingle took office.

Six initiatives for Legislature

Gov. Linda Lingle yesterday announced her plans to fuel a business-friendly climate in Hawai'i while helping both employers and consumers. Here are the six initiatives that she plans to introduce to the Legislature, which convenes on Wednesday.

• Reducing business fees: The state Department of Commerce and Consumer Affairs expects to save Hawai'i businesses more than $10 million through June 2005. Lingle wants to seek additional flexibility for the department to reduce fees that the state charges to businesses for services such as registration, licenses, permits and certificates.

• Workers' comp reform: The Lingle administration will again propose a comprehensive — and most likely amended — package that includes lowering costs by reducing fraud by both employers and workers. The proposal also will call for an increase in penalties for those who cheat the system.

• Returning unclaimed property to owners: The state currently holds $104 million in unclaimed property, excluding stocks, bonds or other valuables. Lingle wants to repeal a law that allows unclaimed property held by the state for two to six years to revert to the state. Unclaimed property information is posted on the Department of Budget and Finance's Web site (www.hawaii.gov/budget/uncprop). The state is planning to set up property claims locations at shopping centers, parks and other public locations where residents can find out if they have money due to them.

• Rebates to cable TV subscribers: Cable television operators currently pay the state an annual fee, which the companies can pass on to cable subscribers. Over the years the state has accumulated more in fees than it requires to cover the costs of administering cable TV regulations. Lingle is seeking the authority to grant a one-time rebate from the surplus funds to subscribers, which may amount to less than $3 per household.

• Rebates to healthcare insurance policyholders: Healthcare providers are allowed to hold 50 percent of their annual expenses in reserve to cover unanticipated claims or other expenses. Lingle will propose reducing the cap on reserves to 30 percent of annual expenses, with the excess reserves to be rebated to policyholders.

• Guarding against identity theft: Lingle will propose a bill to allow identity-theft victims to place a security freeze on their credit reports, stopping a credit report agency from releasing any information to unauthorized parties without the their consent. Similar legislation has been recently enacted in California, Texas, Vermont and Louisiana.

The atmosphere, he said, has become much more small-businessifriendly — down to the state's streamlining the process of starting new businesses, with a program called Hawai'i Business Express online.

But the owner of Kahala Shell Rapid Lube & Car Wash said there's one pressing issue that still needs to be dealt with:

Workers' compensation reform.

"It's a problem that desperately needs to be reviewed," said Green, whose station employs nearly 40 people.

And that problem is high on the governor's to-do list for this upcoming legislative session, which convenes Wednesday.

"Our employers pay among the highest workers' compensation premiums in the nation and last year we were only one of eight states who have a grade of F for the operation of the workers' compensation system," Lingle said to about 300 business people who attended the 29th annual Small Business Hawai'i Conference yesterday.

"We basically want to increase penalties for those who cheat the program. We want to institute cost-control reforms to lower your insurance premiums. We owe this to businesses and their employees who need insurance when they're injured."

Workers' comp costs are one of the biggest complaints of Hawai'i employers, who paid more to replace injured workers' lost wages than for medical care in 2002 compared to the previous year, reported the National Academy of Social Insurance.

The report, released in August 2004, found that workers' comp payments in Hawai'i rose to $268 million in 2002, a 6.3 percent increase over the previous year. Cash payments for lost wages to workers rose 8.8 percent to $162 million in 2002, compared to spending on medical care, which rose 2.5 percent to $106 million during the same period.

Lingle was unsuccessful last year in pushing through changes to the workers' comp system intended to ease the burden on small-business owners faced with rising insurance costs.

The current workers' comp system in Hawai'i is an "economic headache," said Rep. Barbara Marumoto, R-19th (Kaimuki, Kahala, Wai'alae Iki). In addition, high business taxes, price control on gasoline and the state's new bottle deposit law also need systematic reform, she said.

"Too many taxes, fees, laws, rules and regulations are hampering a healthy economy," Marumoto said.

Hawai'i's robust economy may also fuel the change that Honolulu Mayor Mufi Hannemann plans to bring to City Hall.

One of his initiatives is to follow through with plans to help Kapolei grow as O'ahu's Second City, which would stimulate jobs and reduce traffic congestion on the highways.

"I'm very convinced that this is one of the best short-term measures that we can do to help our traffic congestion," Hannemann said at the conference yesterday. "We can reverse the traffic flow if we have more people live and work on that side of the island."

He called Kapolei Hale, where he took the oath of office on Jan. 2, "woefully underutilized," vowing to work out of Kapolei at least once a week and hold Cabinet meetings there.

The plan for Kapolei 15 years ago was to help the community grow to become O'ahu's second urban center. So far, only about 1,500 government jobs are located there, despite the thousands of homes built in the area.

"This was going to be the Second City, the new city, and we need to make sure we're doing our part to make that a livable community," Hannemann said.

He also outlined his plans to upgrade the city's sewage system — which is about $1.5 billion behind in repairs — and to better maintain city parks, improve bulky item pickup to reduce illegal dumping, and implement audits to ensure accountability at Honolulu Hale.

The conference, attended by more than 300 people representing small businesses, was a way for entrepreneurs and other industry players to meet with lawmakers, mingle and discuss ways to improve the business climate in Hawai'i.

And for many small-business owners, these conferences are sometimes the only way they can voice their concerns.

"We all talk about (getting together), but the problem with small businesses is that we're so busy with our own businesses, we can't get outside," said Green, who earned the SBH Small Business Person of the Year 2004 award. "This enables us to affect legislature, to articulate our positions, and to try and express some of our viewpoints. It's the only way we can get this across."

Reach Catherine E. Toth at 535-8103 or ctoth@honoluluadvertiser.com.