Photo: Olivier Koning

Talk Story with David Ige

Governor, State of Hawaii

June, 2015

David Ige surprised political observers last year by upsetting incumbent Neil Abercrombie in the Democratic primary, then beating Duke Aiona and Mufi Hannemann in the general election to become governor. Senior writer Dennis Hollier asked Ige about successes and controversies from his first five months in office.

What has been your biggest success so far?
I believe our leadership team is a big success. We stopped counting, but I think Cabinet members have given up more than a million dollars in pay to commit to public service. I was looking for leaders, most importantly, because I think it’s about changing the culture in state government. People expect us to do more for less and the only way we can do that is by getting the right leaders.

What about legislative successes?
I think the Hawaii Health Systems – the hospitals – was a big success. I chaired the Senate Health Committee for four years, and then was chair of Ways and Means for four, so, I’ve been working on the hospitals issue for eight years. I was involved with passing the first legislation that authorized public/ private partnerships, but, at that time, we really had no idea what that partnership would look like. Now, we have the House, Senate and Executive agreeing on getting a framework and legislation for a public/private partnership.

Why do we need a public/private partnership?
The state subsidy for the hospitals has grown from about $70 million to $170 million over about four years. That drives this conversation about a public/ private partnership. There are lots of challenges with the state administering and running a hospital. A lot has to do with the changes with insurance, in Medicare and Medicaid, and with the way the public employee contracts are structured and the work rules that drive hospital staffing. I tried in the negotiating process – especially with the nurses – to accommodate changes for the employees at the hospitals that would allow more efficiency, but it’s hard to negotiate those changes while managing what the expected pay raises are. The Legislature and executive branch came to the same conclusion: We need to try this public/private partnership.

The Turtle Bay legislation seems like another success. How did that happen?
Last year, the governor announced a deal and dumped it on the Legislature three days before the end of the session and we scrambled to find some way to pay for it. Problems arose when they tried to execute the deal as defined. So, this session we had to create a new deal. The Legislature had concerns about paying so much for an easement the state would not own. The previous deal was not in the best interests of the state. So, essentially, we went back to square one and began new negotiations.

Now, we have an improved deal for Hawaii. We reduced the state’s investment from $40 million to $35 million. And part of this new deal includes 55 acres in fee simple along Kawela Bay, which is the most valuable parcel in the whole easement. We lease it back to the hotel because we want them to pay for improvements and maintenance, but we preserve forever the open space and prevent development on those parcels. Also, the developer agreed to increase the shoreline setback from 100 feet to 150 feet, so we preserved more areas they wanted to develop. We also get improved public access; they’ve doubled the parking from 40 parking stalls to 80. And the City and County made a bigger contribution, with its share going from $5 million to $7.5 million.

What about challenges? You cancelled the RFP that was supposed to modernize the government’s antiquated IT systems.
The state, in my opinion, relied too much on consultants. The state would hire a consultant to develop the RFP, and interview and define what the government needs. Typically, the consultant tries to define the most expensive system they can and state employees don’t have the expertise to tell them, “No, we don’t really need those functions.” Then, we hire consultants to track those consultants. And then we contract out the job. So, I canceled the RFP for the ERP system because the specifications had gotten so big that the responses we got were three to 15 times the amount of funds we had appropriated. … The RFP was trying to replace all functions across state government in one giant contract.

What’s the solution?
I’ll give you an example we’ve already implemented. After looking at available personnel systems, we purchased the PeopleSoft personnel management system. Later, we can upgrade and do more. In fact, we did that: We just purchased the latest upgrade, and that gives us the ability to do better payroll planning and cost planning.

When you look for a big, fully integrated system, there aren’t that many. But, if you’re looking at a payroll system, or you’re looking at a financial management system, there are a lot of options. When I was head of Ways and Means, Sonny Baghowalia and others said the ERP system would cost $120 million and it would do financial management, budgets, payroll, time and attendance, and all that. I said, “I can get off-the-shelf Quicken, with personnel and budget and accounting software, for about $2 million. So, what does the other $118 million in customized software buy for us? Do we get $118 million of value by going to one integrated system, or do we get better value looking at smaller systems?”

We know we can get several bidders for financial management software. If we break it up and go after the different components separately, we can get more competition and get a better price. And I think we would get better value because we would be able to go with the best financial management system, for example, rather than the one that’s best integrated into all the functions of an ERP system.


Did you expect such pushback on your nomination of Carleton Ching to run DLNR?
I did expect some pushback. The challenge was finding leaders willing to commit to public service. During the election campaign, DLNR was the department that generated the most comments, complaints and calls for changes. People were not satisfied with how the department interacts with the community and makes decisions. I needed a strong leader because the scope of that department is huge. During Carleton’s confirmation, the focus was on conservation, but DLNR also runs the Bureau of Conveyances, the State Office of Historic Preservation and the Land Division, which manages all state public lands. It includes Aquatic Resources and the Commission on Water Resource Management, etc. No one person could have expertise in all those functions. Plus, we require a good leader, somebody willing to commit to community engagement.

My disappointment was people weren’t willing to look at Carleton’s character, leadership and expertise separate from positions taken by the organizations he was associated with. Those were not his personal positions, they were the positions of the organizations he was associated with that got people upset.

The other big controversy has been the protests over the Thirty Meter Telescope. Is the “timeout” a long-term solution?
The TMT was started more than seven years ago, and they’ve gone through the permitting processes and all those kinds of things. They had the approvals and permits needed and were preparing to start construction when the protests happened. The developers provided a “timeout” that gave me an opportunity to meet with the parties involved so I could better understand the situation. I met with protesters and developers, UH and other organizations like OHA. We’re working through all those issues and trying to facilitate things. I met with the TMT folks and they acknowledged the fact that they had done a lot of work in the community while the project and the permits were going through approval, but it’s probably been about two years since they had those kinds of community meetings. There have been lots of changes between when they got those approvals and now, so, they’ve re-engaged and are meeting and talking again with the community.


Is there a timeline for TMT to begin construction?
We’ll be working through some plan. We’re trying to separate that plan from the process that occurred in the past. They’ve already gone through that process. They completed the environmental impact statements and other assessments they needed, like cultural inspections. So, they have all the permits and approvals they need to proceed. There is a legal challenge in the Intermediate Court of Appeals. That will be the final question on whether they went through all the required processes.

I was up on Mauna Kea at sunset. I toured the telescope facilities and visited some of the sacred cultural sites. I agree that we are not doing a good job of managing the mountaintop. There were lots of visitors and tourists on the mountain and lots of commercial activity, and I can see how the cultural practitioners feel their culture and practices are not being respected. We’re trying to figure out what we can do to better manage the mountaintop to ensure the traditions of the practitioners are respected. We’ve got to do a better job of ensuring that science and the culture can be respected and co-exist on Mauna Kea.

What about the proposed Hawaiian Electric/NextEra merger?
I’m an electrical engineer and I used to work for a utility, so I kind of understand about takeovers and mergers – probably to a larger extent than others. My interest is making sure the regulatory process puts those issues most important to the state on the table. Two departments are intervening in the merger docket – the State Energy Office in the Department of Business, Economic Development and Tourism is intervening to ensure the merger does not significantly impact our goal to be 100 percent renewable, that the merger honors whatever requirements we place on them.

The other intervening department is the Office of State Planning. They take a broader perspective. What is the impact on corporate citizenship? What about giving to the community? What about community engagement? What happens to employees when functions are taken to the mainland headquarters? What decision-making will remain in Hawaii versus go to Florida? What jobs will remain here?

All of those issues are important and impact our community more than some community on the mainland. Because our grid is isolated, any efficiency means a loss of jobs. I’ve spoken with the attorney general and said, “Your job is to make sure these issues are injected into the conversation about the proposed merger.” Because I feel the merger has a more significant impact than other mergers across the country.

This interview has been edited for conciseness and clarity.

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Dennis Hollier