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Seeking the Business Vote

Top candidates for governor explain how they would make it easier for businesses to succeed

(page 1 of 3)

Those in Hawaii struggling to maintain a business or start a new one can rest easy on one thing: Our next governor has no plans to increase taxes that impact business – at least not in the immediate future.

All three major candidates – Democrats Neil Abercrombie and Mufi Hannemann, and Republican James “Duke” Aiona – uniformly promise to improve Hawaii’s convoluted, complex and time-consuming regulatory process. And they all say their key focus will be jobs.

That’s what Hawaii Business learned from a survey of the three candidates and a study of the campaign for governor. Some themes are clear:

• Aiona focuses his remarks around the achievements of the Linda Lingle-Aiona administration of the past eight years and, if elected, promises to take those initiatives further and faster.

• Hannemann casts his ideas for the governorship as a reflection of what he did as mayor of Honolulu, talking about such things as infrastructure, transportation and regulatory reform.

• Abercrombie talks about getting the state administration in better tune with the people – including the business community – so that it reflects rather than thwarts their interests.

The “business” planks of the three candidates are remarkably similar, with few hard specifics, but at least one issue suggests a divergence in policy: What to do with the state Land Use Commission?

The LUC is of intense interest to landowners and developers, who say it largely duplicates county regulators and want it reformed, and to environmentalists and some planners, who see the LUC as an imperfect but necessary bulwark against over-development.

To the question of whether the LUC should be abolished, maintained or changed, Aiona gave no immediate response to Hawaii Business. However, in January, the Lingle-Aiona administration proposed a bill to “simplify” commission processes by creating a “legislative-like” process in place of the contested case system used today. The bill did not pass.

Abercrombie contends his goal is to restore public confidence in the commission so it can ensure sustainability of the Islands. That reads as: Keep it, but make some tweaks if enough people want them.

Hannemann had the most specific response to our LUC question, saying that many of its land-use regulatory duties could be shifted to the counties. He also said there is no need for an environmental assessment “at this level” and he called for a quasi-legislative process in place of today’s time-consuming, contested-case hearing process.

Here are some of the questions we asked and an abridged version of the candidates’ responses:

What is your top initiative for improving the Hawaii business climate?

Abercrombie: Streamline the permitting and regulatory process; improve the education system so it produces workers ready for the 21st-century economy and reform procurement. “Politics has overwhelmed the process of bidding for and performing work for the government. We must have a government procurement system that is fair, based on merit and free from political pressuring.”

Aiona: Reduce regulatory barriers that delay permits and approvals. “The vast majority of complaints I hear from businesses, large and small, are how long it takes to go through the process of applying for and obtaining permits and approvals.” The lieutenant governor also focuses on strengthening the Island workforce through education reform with a focus on science, technology, engineering and math; reducing the cost of business by lifting government mandates; and placing more of the state’s reporting and permitting requirements online.

     Photo: Mark Arbeit

Hannemann: Place greater emphasis on sports, the film industry and marketing Hawaii as a place to meet and do business. Speed up infrastructure improvements and continue pushing for an Oahu rail system. Gridlock acts as a de facto “tax” on business, he says. Attack waste and inefficiency and streamline the permitting process. Conduct an early audit of state government, similar to the audit he ordered when he became mayor.

Do you propose eliminating or reducing any tax?

Abercrombie: The key is tax stability so businesses can plan. “At the moment, I have no plans to change the tax code. However, I am open to working with the business community on subjects like the general excise tax and employment taxes, especially with regard to how they impact small business.”

Aiona: “Hawaii businesses suffer from one of the highest overall tax rates in the nation. … I believe there are taxes (where) marginal rates can be reduced. However, rates can be reduced only after we have a fair and transparent tax system.” Fair, he says, means everyone pays their fair share and tax evaders are pursued. Transparent means, among other things, understanding and rationalizing the myriad of exemptions that have been built into the system over the years.

Hannemann: While there is room to look for unfair tax preferences and loopholes right away, “Given the condition of the state treasury, and before we can consider eliminating or reducing any tax, we have to grow the economy.” Once the economy stabilizes, he would be willing to work with business on reassessing the corporate income tax, use tax, conveyance tax and so forth.

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