The $1.8 billion question

A morning of festivities, food and laughter today masked a darker reality that became clear by mid-
afternoon – the economy is in a world of hurt, and state government is grappling to find a solution.

Even the festivities at the opening day of the 25th Legislature were on the cheap – student performers from area elementary, middle and high schools replaced the professionals that have entertained on the House floor in previous years. After all the hoopla, a joint House-Senate money committee grilled administration budget chiefs on how the state can work itself out of an anticipated $1.8 billion hole by 2011.

Speeches by House and Senate officers and majority and minority leaders stressed bipartisan cooperation. House Speaker Calvin Say called the $1.8 billion shortfall over three years the worst budget crisis he’s seen in his 32 years in the Legislature.

“We must make up this shortfall, and this will be our major challenge,” Say, D-St. Louis Heights, Palolo Valley, said. “Everybody has to be part of the solution.”

Senate President Colleen Hanabusa, D-Nanakuli, Makaha, hit many of the same notes in her speech.

“These are the times when we must say what we can do and what we will do,” Hanabusa said. “These are the times when we can no longer afford partisanship or politics as usual. Times when our obligation is to bring the service, vision, and leadership we were elected to provide. Times when we stop looking for political points and start looking for the solutions.”

The Republican minority pushed for togetherness as well. It was the Republican leader of House, not the Democratic one, who drew applause by congratulating Hawaii-born President Barack Obama on his inauguration the day before. House Minority Leader Lynn Finnegan, R-Lower Pearlridge,

Aiea, Halawa, went on to liken cooperation in government to the plantation creation of saimen, made when Chinese, Japanese, Filipinos and Portuguese workers threw their contributions into a massive stewpot to make enough food for a crowd.

“People of Hawaii, the future is now,” Finnegan said. “Tough times are here, but if we are committed to working together, we will forge a better tomorrow.”

Finnegan’s food analogy was carried into her office, where, like the other legislators, she threw the doors open to serve food to constituents. In Finnegan’s case, saimen was on the menu.

It's a good week to be a florist

HONOLULU -- The economy might be in the toilet, but at least it’s a good week for florists.

The halls of the state Capitol are awash in bright colors and sweet scents today, as cartfuls of floral arrangements, potted plants, Kona coffee, cookies and gift baskets began arriving for lawmakers, who hold the opening day of the 25th Legislative Session tomorrow.

It’s a 60-day session in Hawaii, but with breaks and mandatory recesses, it stretches from the third Wednesday in January – Jan. 21 this year -- until May 7.

Family, friends and fans of the 72 elected lawmakers like to say it with flowers, but many add sweet treats to the mix. It's not unusual to see the more popular -- read powerful -- lawmakers receive a dozen or more arrangements, but they're allowed to choose only two to put on their desks in the chambers, so as not to look untoward.

Not counting the stacks of lei that will be brought in tomorrow, floral arrangements and such will easily exceed four figures and probably move into serious money. Lobbyists, for example, report spending about $5 million a year to influence legislation.

Not that any lawmaker would accept a gift if he or she thought it was given to influence legislation. That’s just against the law.

According to and the state Code of Ethics:

“No legislator or employee shall solicit, accept, or receive, directly or indirectly, any gift, whether in the form of money, service, loan, travel, entertainment, hospitality, thing, or promise, or in any other form, under circumstances in which it can reasonably be inferred that the gift is intended to influence the legislator or employee in the performance of the legislator's or employee's official duties or is intended as a reward for any official action on the legislator's or employee's part.”

The code goes on to explain the forms used to report gifts. Hawaii law allows legislators to accept an unlimited number of gifts, as long as they report each gift alone or ijn the aggregate from a single source valued at more than $200.

Lingle held in effigy as Hawaiians converge

WAIKIKI – They have their differences among themselves, but all were united in their anger toward Hawaii Gov. Linda Lingle.

Thousands of Hawaiians and “Hawaiians at heart” marched in the streets of Waikiki today and converged in Kapiolani Park to commemorate the 116th anniversary of the overthrow of the Kingdom of Hawaii.

Even though a century has passed since U.S. forces came to the aid of a Hawaii provisional government and forced Queen Liliuokalani to abdicate her throne – and 50 years has passed since statehood – disputes between the Native Hawaiians and the state government are, if anything, becoming even more inflamed.

At most immediate issue is the Lingle administration’s appeal to the U.S. Supreme Court of a Hawaii Supreme Court opinion that placed a moratorium on the state selling ceded lands until an agreement could be worked out between the state and the Native Hawaiian people. That case is scheduled to be heard in Washington D.C. on Feb. 25.

Ceded lands are lands once owned by the Hawaiian monarchy but ceded to the state to be held in trust for Hawaiians. Ceded lands comprise 1.2 million acres of land on all Hawaiian islands - about 29 percent of the total land mass of the state.

Protesters carried a huge effigy of Lingle, along with signs saying “Lingle thou shalt not steal,” “Return stolen ceded lands” and “America get your ass out of Hawaii.”

Lingle could not be reached for comment today, a Saturday, but she has defended her administration’s actions in the past.

“Anyone who characterizes our taking this case to the United States Supreme Court as somehow being against Hawaiian rights is simply misrepresenting our position on the situation,” Lingle said in a Nov. 24 news conference defending the state’s stance. “The issue involving the ceded lands is an important one for the state because it affects all the people, the Native Hawaiians and non Native Hawaiians.”

Library of inauguration speeches now online

In anticipation of the inaug-uration Tuesday of Hawaii-born President-elect Barack Obama, hulu has put up clips of inaugural speeches from McKinley forward.

Mayors want more

HONOLULU – Hawaii’s four mayors knew better than to pass the hat around the Capitol this year, but they still had plenty of other requests during a joint session today of the House Finance Committee and Senate Ways and Means Committee.

The money committees also heard more details about the dismal economic forecast from members of the Hawaii Council on Revenues,. The council last week settled on a prediction of a 3-percent drop in revenues for the 2009 fiscal year ending June 30 and a one-percent increase for FY10, starting July 1. That’s about $125 million less to spend in 2009 and about the same the following year over the past spending pattern.

The numerous charts were bright, but their message certainly wasn’t.

Instead of a lot of money, the mayors of Hawaii, Kauai, Maui and the City and County of Honolulu are seeking changes to current statutes to allow them to do their jobs easier. The mayors several years ago formed the Hawaii Council of Mayors to present more of a unified message to the Legislature.

This year, the Council of Mayors endorsed seven priorities:

• Making permanent the government liability laws enacted in 2007 – the “Sacred Falls law,” to keep public lands open by lowering the risk of lawsuits.

• Representation on the boards of the Employer-Union Health Benefits Trust Fund and the Employees’ Retirement System.

• Exclusion of teachers from the counties' contributions to the ERS.
  

• Clarifying when a county will provide legal representation to a police officer

• Help preventing homelessness

• Protecting and encouraging farming.

• Stimulating the economy

The Hawaii State Association of Counties, a nonprofit group formed by the county councils of the four counties, identified four priorities:

• Extending the 45-day window for a legislative body to approve, approve with modification, or disapprove an affordable housing project to 90 days.

• Exempting local governments from state procurement laws and give local governments discretion to use cooperative contracts.

• Allowing counties to conduct criminal background checks on taxi drivers and applicants for taxi driver’s certificates.

• Requiring the state to transfer a portion of the fines and forfeitures collected for uncontested traffic infractions to the county in which the violations occurred.

Substitute teachers seek pay parity

More than five years after suing the state to get better pay for substitute teachers, attorneys will press their case for back pay, this time to the Intermediate Court of Appeals.

Three judges of the court -- Corrine Watanabe, Daniel Foley and Katherine Leonard -- will hear oral arguments at 9 a.m. Wednesday at the Supreme Court courtroom in Aliiolani Hale.

Paul Alston, an attorney representing the substitute teachers seeking more than $25 million in back pay, is fighting for retroactive raises after Circuit Judge Karen Ahn ruled in 2006 that the state Department of Education failed to comply with a 1996 law requiring it to pay substitutes the same daily rate as fulltime teachers.

The Legislature last year passed, and Gov. Linda Lingle signed, a bill that requires the DOE to give substitute teachers the same across-the-board raises that regular teachers, under collective bargaining, get each year. Now it’s just the back pay that’s at issue.

Among other things, the Circuit Court ruled that the state is liable to the substitute teachers for some but not all of the back pay sought by the teachers but doesn’t have to pay interest. The state is liable for contract claims, but is immune from direct claims under sovereign immunity, according to the court.

But the Circuit Court also refused to expand the rights to part-time employees, sparking an appeal. Attorneys for the substitute teachers also appealed rulings on statutes of limitations, tolling, sovereign immunity, pre-judgment interest, class certification and intervention. The state challenges the circuit court's orders allowing a third amended complaint, finding a waiver of sovereign immunity.

State budget down $125 million

The Hawaii Council on Revenues today confirmed some lawmakers’ worst fears – there’s about $125 million less to spend than they thought for the budget year that's already halfway over.

The $125 million must be cut from the FY 2009 budget that ends June 30. Forecasters hope the economy will turn around in time for a 1-percent increase in the FY 2010 budget, but they aren't making any promises.

The projected 3-percent decrease in state revenues for the current FY09 budget is a drastic drop from the 0.5-percent decrease forecast just a few months ago. A percentage point equals about $35 million in revenues.

The cuts are going to be painful, hitting those who need help most. Education and entitlement programs such as those administered by the Department of Health and Department of Human Services account for a whopping 78.4 percent of the state operating budget.

Council on Revenues Chairman Paul Brewbaker will brief legislative money committees on the details of the budget downturn at 2 p.m. Tuesday in the Capitol auditorium. The Council reports its latest revenue forecast to the governor and the Legislature on June 1, Sept. 10, Jan. 10, and March 15 of each year.

Governor Linda Lingle wasn't surprised by the news.

"The Council on Revenues’ decision to lower projections is not unexpected given national and global economic conditions, as well as other external factors beyond our control that are impacting Hawaii," Lingle said in a statement. "The lower revenue projections reflect the challenges we will face as a state in the next couple of years, and underscore the need for all of us to work together. "

Hawaii is certainly not alone, according to the National Conference of State Legislatures, which says only 12 states aren’t expecting budget shortfalls.

“These budget gaps are approaching those seen in the last recession, which were the worst since World War II, and show every sign of growing larger,” NCSL Executive Director William T. Pound said in a statement. "While the data we collected from state legislative fiscal officers are pretty sobering, our discussions with legislative leaders tell us that they expect the problem to only get worse.”

(This article was edited 1/13/09 for clarification following new information).

Time to comment on the Superferry

The clock has started ticking on public comments about the environ-
mental impact of the Superferry. The state Department of Transportation today issued its Environmental Impact Statement, which found some negative impacts, but also suggested ways to mitigate them.

Comment period ends Feb. 23. Written comments should be snail-mailed or faxed to:

Katherine Kealoha, Director,
Office of Environmental Quality Control,
235 S. Beretania St., Suite 702,
Honolulu , HI 96813,
fax 808-586-4186;

and

Michael D. Formby, Deputy Director,
Department of Transportation Harbors Division,
79 S. Nimitz Highway, Honolulu, HI 96813,
fax 808-587-3652.

A Superferry spokesman said in a statement this afternoon that the company will continue to work to make its ship safe.

"The draft EIS combined with the data from over nine months of reliable service and 708 voyages provides a clear picture of our commitment to responsible operations and Environmental awareness. We remain committed to working with the state to address impacts raised by the draft EIS," the statement says.

Meanwhile the Hawaii Supreme Court is expected to rule soon on whether the EIS is enough: See a previous allhawaii.news report.

Putting a price tag on the Akaka Bill

Passage of the Akaka Bill could cost the state of Hawaii as much as $689.7 million annually in lost revenues, according to a study being released Thursday by the Grassroot Institute, which opposes the measure.

The Native Hawaiian Government Reorganization Act of 2007 (S.310 and H.R.505) in the 110th Congress, also known as the Akaka Bill after sponsor Sen. Daniel Akaka, D-Hawaii, proposes to create a sovereign Native Hawaiian Governing Entity within the state of Hawaii. The bill stands its greatest chance yet of passage thanks to a Democratic majority in Congress and President-elect Barack Obama’s support.

A Grassroots Institute spokesman said this is the first study on the economic impacts of the proposed bill, which is expected to be re-introduced in the new session of Congress. It was co-authored by the Beacon Hill Institute.

"The Economic Impact of the Akaka Bill: Unintended Consequences for Hawaii is a straightforward look at how passage of the bill would hurt Hawaii business while pitting neighbor against neighbor," said Grassroot Institute President Jamie Story in a statement. "Regardless of one’s feelings about the Akaka Bill and its benefits or shortcomings, it is vital to examine the economic impact of the bill on Hawaii’s people. This study demonstrates the irreversible economic damage the Akaka Bill would do to Hawaii, and we hope Washington DC officials will take this into consideration.”

The group plans a news conference at 10:30 a.m. Thursday in front of the Queen Liliuokalani statue near the Capitol.

Lost revenues could come from the transfer of land to a Native Hawaiian governing group, taking land out of the state’s tax base, as well as the loss of excise and income taxes and land lease revenues, according to the study

Questions about the fiscal impact of the Akaka Bill surfaced Tuesday in a joint meeting of the state House Finance Committee and Senate Ways and Means Committee. The money committees were being briefed on the proposed $40 million operating budget of the Office of Hawaiian Affairs when Rep. Gene Ward, R-Hawaii Kai, asked about the fiscal impact if the bill passes.

OHA Administrator Clyde Namuo said a cost can’t be affixed to the bill, because the bill allows for many different scenarios.

The highest cost would come about if Native Hawaiians decided to set up reservations as a method of self-governance, where they would have their own government, including criminal and civil laws and the infrastructure to deal with it.

“It’s permitted in the bill, but if you ask me, do I think the Hawaiian people would want that, that is not my sense,” Namuo told the committees. “A system similar to Native Indian reservations is possible … I don’t think people would want that … but the bill allows that discussion to occur.”

Everything old is new again

HONOLULU -- The Nature Conservancy of Hawaii rang in the New Year with a new state-of-the-art photovoltaic system that allows the nonprofit to generate clean energy and reduce its carbon emissions.

The powerful 12.6 kilowatt PV system was just installed atop the rooftop of the Conservancy’s downtown Honolulu office. Hawaii Energy Connection engineered and supervised the project in collaboration with Siu’s

Electric, the firm’s commercial installation partner.

“We are thrilled that these panels are helping us to reduce our use of petroleum-based fuel,” Suzanne Case, the Conservancy’s Hawaii executive director, said in a statement. “With our conservation mission, it’s imperative that we do our part and walk the talk.”

The Conservancy’s high-performance photovoltaic system is typically valued at more than $100,000. In a Power Purchase Agreement structured by Hawaii Energy Connection, the cost of the system was capitalized up front by a private investor and will be paid over time by the Conservancy as the user. The group will buy the power generated by the renewable energy system at a reduced rate below current utility pricing. The agreement structures the tax incentive provided by the state and federal governments to encourage users to install photovoltaic systems, to enable the investor to take the tax credit and thereby reduce the cost to the non-profit which otherwise could not use the tax credit.

The Conservancy purchased the Wing Wo Tai Building with its graceful gray stone facade on Nuuanu Avenue in 2005 to house its Honolulu office. Originally built in 1877 and rebuilt in 1916, the wood and stone structure survived the Great Fire of Honolulu in 1900 and now demonstrates how even historic buildings can be adapted to meet 21st century needs.

By late 2009, the Conservancy’s Molokai office will be outfitted with a similar system that will fully power the building — taking it totally off the grid.

“We are just doing what we can to tackle the global climate problem on a local level,” Case said. “By taking steps to shrink our own carbon footprint, we can be part of the solution.”

Grim budget news, times 10

Gov. Linda Lingle has proposed a budget that assumes the economy will dip only half a percentage point during the fiscal year that ends June 30. But lawmakers said Monday they’re expecting revenue losses to be 10 times that.

The House Finance and Senate Ways and Means committees held a combined informational session where the Republican governor’s budget director, Georgina Kawamura, briefed them on the Administration’s 2009-2011 spending plan. Briefings on specific departments continue through the week.

But the Council on Revenues, when it meets Friday, could render the current spending plans obsolete. Tax collections have been down 2.6 percent during the first five months of the fiscal year, and the year could end up down 5 percent over the previous year.

That would be $225 million less on a roughly $11 billion budget, compared with the $22.5 million the governor was working with.

If so, an administration spending plan that already cuts 14 percent of discretionary spending could be forced to slice deeper – much deeper.

Democratic majority lawmakers, as expected, had plenty of questions.

But several of them focused on Lingle’s restructuring of the state’s bonds to push about $300 million in annual debt payments eight years into the future, when she will no longer be in office.

“To me, it’s somewhat misleading,” said Senate Majority Leader Gary Hooser, D-Kauii, Niihau. “We’re just extending our debt.”

“We’re deferring it; we’re not saving it,” said Senate Ways and Means Committee Chairwoman Donna Mercado Kim. “We’re leaving it to the future to pay it … So it’s not a true savings.”

The Administration will do whatever is necessary to balance the budget, said Kawamura. It’s an ongoing process, she said.

“We cannot do it by cuts alone,” Kawamura said. “It is agony for us in regards to what we have to do every day to get a balanced fiscal plan.”

Lawmakers sharpening budget pencils

It’s never quite as simple as choosing between education, roads


or their own raises, but Hawaii lawmakers this year face one of those “can’t win for losing” types of legislative sessions.

Someone’s belt is going to pinch during these tough economic times, and budget shortfalls are bound to make for some testy sessions, especially with the prospect of lawmakers' own 36-percent raises looming.

The Hawaii Legislature kicks off the New Year with two weeks of budget briefings starting Monday. Gov. Linda Lingle has already presented her own slimmed-down budget that she says represents a 14-percent reduction in discretionary funding over the two-year period. Any early budgets, however, are sure to be further reduced when the state Council on Revenues meets Jan. 9.

Hawaii is certainly not alone, according to the National Conference of State Legislatures, which says only 12 states aren’t expecting budget shortfalls.

“These budget gaps are approaching those seen in the last recession, which were the worst since World War II, and show every sign of growing larger,” NCSL Executive Director William T. Pound said in a statement. "While the data we collected from state legislative fiscal officers are pretty sobering, our discussions with legislative leaders tell us that they expect the problem to only get worse.”

Hawaii officials, however, seem optimistic that public works projects can help keep the state’s economy afloat. Hawaii is one of a half-dozen states that are actually planning on increasing public works projects, according to stateline.org, while another half-dozen states are paring down their capital improvement projects because of financing problems or diminishing bond ratings.

President-elect Barack Obama’s proposed stimulus plan could send money to states to help keep state economies rolling. That makes the American Association of State Highway and Transportation Officials happy.

“President-elect Barrack Obama is pledging to put millions of Americans to work by building and repairing the nation's highways and bridges and a new survey of state ‘ready-to-go’ transportation projects is the road map he needs to make it happen," said Executive Director John Horsley in a statement.