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From Our Leader

How does Gov. Benjamin Cayetano plan to boost the economy? An exclusive interview.

Q&A :

Gov. Benjamin Cayetano

Q.Your $1 billion request for Capital Improvement Project spending met great resistance during special session. Some say you were handed peanuts in comparison to the feast you were looking for. How many more construction dollars are you seeking next session, and what will you and your advisors be doing to assure those bills are passed?

A. The $1 billion construction proposal was to shore up construction, where we at least are still viable. The idea is to keep those areas, in which we are viable, strong while we try to recover tourism. So we’re going to be going back again, but I don’t know how much we’re going to be asking for. Actually, I should be asking for more than $1 billion, but we kept it to $1 billion because we felt that first there’s about $500 million or $600 million in backlog for repair and maintenance for the schools and the entire state system. Then, there’s money that’s needed, for example, at Maui Memorial Hospital … they needed about $38 million to improve things. So what we did is we added up all those kind of things that we gave priority to and that’s how we came up with the billion. I think that the Legislature really needs to come to grips with the fact that we must do something to keep the economy going. The measures that were passed in special session were really quite temporary and simply not sufficient. I think the problem is they didn’t quite grasp the urgency of the situation that we face.


Q. Earlier this year, Governing magazine reported Hawaii has the highest debt levels in the country, with 13 percent of our general fund resources consumed by debt service. Is it really a good idea to tap into our cash reserves, thereby increasing debt levels, on the philosophy that it’s okay to eat chicken today, even if it means eating feathers tomorrow?

A. Using our cash reserves is one of the avenues that we have. But I think that when they say that, they don’t take into account the fact that Hawaii’s government is a very centralized government. Unlike the mainland, where debt service may be spread among the county levels, here the state virtually does everything. So I don’t know if this particular study took that into account.


Q. Your adversaries have argued that more government spending will not only burden the next generation of legislators with more debt but will also do little to assuage the industries most immediately affected by the reeling economy: tourism and small businesses. How do you respond to them?

A. I try not to listen too much to what my adversaries have to say. But I notice that they don’t have an alternative. And as a matter of fact, since I’ve taken over in 1994, we’ve actually made government smaller. Virtually every department has gotten smaller except the Department of Education where we are forced to hire people.


Q. The Council on Revenues predicted a devastating $150 million loss in state taxes. Exactly how do you propose the state government balance its budget?

A. We’re going to have to do a couple of things. One, is to see whether we can get some revenue from sources that we ordinarily would not use, whether it’s the rainy day fund or the Hurricane Relief Fund. In addition we need to try to streamline the government a little bit more. One of the difficulties that we have is that for the past six years or so, we’ve been streamlining and cutting — either by attrition or not adding positions — the budgets of almost every department except for the Department of Education.


Q. They’ve always been the sacred cow, but with $150 million in losses, will they be seeing cuts as well?

A. The Department of Education accounts for 38 percent of the general fund budget. So this time around if we’re going to make cuts, it’s going to be difficult to spare that department. They’ve been the sacred cow, although if you listen to some of the educators you wouldn’t think that they were. So now the question is, do we impose these huge cuts on education, or do we try to weather the storm by using some of the funds that we have to tide us over at least for another year or so when we expect the economy to come back?

A. How do you prioritize budget cuts and payroll deductions?

A. All of it will have to be determined by need. In the previous years, we gave the Department of Education a ride compared to some of the other departments, and as a result some of the social services suffered and these are programs, which service people who are disadvantaged, whether it’s alcohol abuse or domestic abuse or that kind of thing. So we can’t do that anymore because those people have been hit and hit, and we need to spread the burden around.


Q. Are gambling and privatization among the alternative measures the government may look at this session to offset the significant loss in revenues?

A. Privatization is already on the table. This is another avenue that we’re looking at. Gambling is not even being considered.

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Hawaii Business,January