Posted tagged ‘economy’

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Governor must answer, ‘Where’s the beef?’

August 17, 2011

In his speech today updating constituents on the status of his “New Day” program, Gov. Neil Abercrombie once again did an excellent job of describing the major challenges that Hawai‘i faces.

But he still hasn’t gotten to the hardest part — prescribing specific remedies that a critical mass of Hawai‘i residents will support despite the sacrifices they will certainly entail.

The governor basically declared that he has state finances in the black and the wheels of government aligned more to his liking and is now ready to focus on a “gathering storm” that threatens Hawai‘i’s  future.

He identified the five elements of the threat as the massive debt we face with some $22 billion in unfunded pension and medical benefits owed public workers, soaring healthcare costs, our over-reliance on outside energy and food, inadequate support for education and social services, and the potential for huge federal funding cuts.

His solution, as always, was his “New Day” plan to create jobs around a sustainable economy, invest in our children and make state government more efficient.

Abercrombie encouraged everybody to join in the sacrifices and took aim at Hawai‘i’s status quo that he was long seen as part of.

“The status quo insists that we conform to the way things have always been,” he said. “It is obsessed with illusory short-term gain at the expense of long-term stability. It favors the few. It outflanks the middle class, and it marginalizes those who need help the most. It questions and casts doubt upon new ideas. It stifles creativity and limits opportunity.”

It’s hard to argue with his logic, but the devil will be in the details — of which he offered few.

Abercrombie’s biggest problem is that he’s burned much of the political goodwill he had after landslide victories over Mufi Hannemann and James “Duke” Aiona.

Part of it was unavoidable, such as his necessarily tough stand in union negotiations that angered some of the noisiest labor and “progressive” elements of the Democratic Party.

Demanding that his political base make the same sacrifices as everybody else should have won him points with moderates and progressives who have always been suspicious of him.

But Abercrombie unnecessarily antagonized them with missteps such as his pointless tizzy fit on the Pro Bowl, his decision to shroud judicial appointments in secrecy for no good reason and a perceived arrogance exemplified by his infamous “I’m not your pal” remark.

He needs to smooth over some of the self-inflicted ill feelings and regain political capital so that next year he can face a Legislature that disregarded many of his ideas this year from a position of greater strength.

If he’s seen as weak and lacking public confidence, it’ll be everyone for themselves and he’ll get little cooperation on the shared sacrifices he seeks.

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Politics straight out of Toon Town

August 9, 2011

I’m reluctant to wade into the finger-pointing over who’s to blame for S&P’s downgrade of the U.S. credit rating, but one thing President Barack Obama said rang true to me.

The president said S&P’s move was “not so much because they doubt our ability to pay our debt … but because after witnessing a month of wrangling over raising the debt ceiling, they doubted our political system’s ability to act.”

The sad fact is that after standing as a beacon of stability in the world for most of our history, we’re becoming a politically unstable nation, unable to handle the most basic functions of government in an orderly and effective manner.

Our political system is a complex array of checks and balances that depends on compromise to get things done. It’s virtually impossible for anybody to have everything their own way, and when the parties refuse to compromise, the system breaks down.

We’ve come to play it as a game of sticking the other guy with the blame, but the collapse of the stock market in the wake of the debt crisis shows that this “game” has very real consequences — not only for the high-rollers on Wall Street, but for ordinary folks within pensions and 401k’s whose retirement depends on stable markets.

Of most concern is that the major players don’t seem to have learned anything from the trauma they’ve caused us.

Political money and passion these days flow to the extremes, where compromise is reviled, and the two sides are already revving up a 2012 national political campaign likely to take cartoonish demonization to a new level.

With so many voters disgusted and disengaged, I’m not seeing a path back to political stability anytime soon.

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The chicken and egg of tourism promotion

June 28, 2011

Gov. Neil Abercrombie raised hackles in the local visitor industry when he proposed to cut $10 million from the Hawai‘i Tourism’s Authority’s $81 million allocation to help balance the state budget, and again when he specifically criticized the $4 million HTA spends to bring the Pro Bowl to Honolulu.

The Legislature got in on the act by claiming a bigger portion of the hotel room tax for the state general fund by capping HTA’s share at $69 million.

Washington state has taken that strategy of budget balancing to the extreme by ending all state funding for tourism promotion by the end of the fiscal year, leaving the function of marketing to visitors entirely to the industry.

According to an AP story, the state’s Senate Republican Leader Mike Hewitt made some of the same points Abercrombie did in criticizing the Pro Bowl, saying, “When you’re taking kids off health care and raising tuition, you have to make some tough decisions.”

There are limits in comparing the two states, as tourism isn’t as central to Washington’s economy as it is to Hawai‘i’s and that state was spending only $2 million on promotion before funds were cut.

But it points up the fundamental question on tourism promotion in recessionary times: Do you cut marketing along with other state spending to help balance the budget, or are you better off doubling down on promotion to bring in more visitor spending and tax revenues that help dig out of the recession?

According to the AP story, the country is divided between the two approaches, with states such as New York and Arizona cutting back sharply while others like Michigan are stepping up spending on marketing.

In Hawai‘i, there’s little question that the expected devastating blow to local tourism from the Japan earthquake and tsunami has been softened by increasing promotion in other markets.

This isn’t a good argument to keep having every time a recession rolls around.

The smart move would be to have an objective and cool-headed discussion as the economy rebounds so we have a clear strategy in place one way or the other the next time we face a recession.

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Is Hawai‘i’s economic break finally coming?

June 1, 2011

I spent a couple of hours cruising around Waikiki Sunday after my grandson’s touch football game at Kapiolani Park and it was good to see the place thick with visitors for the Memorial Day weekend.

The latest visitor count confirms what my eyeballs observed — that we’re not taking nearly as big a hit as projected from the Sendai earthquake and tsunami in Japan.

Japanese visitors are down, but only by about half as much as initially projected and those who come are spending more than they did last year.

The drop in the Japanese count is being more than made up for by an increase in visitors from the U.S. mainland and other emerging markets, who are also spending more than they did last year.

Could it be we’re finally starting to catch a break after all the years of economic morass?

If so, the state budget should start getting a lot easier to balance. Actually, tax revenues were already showing signs of recovery this year except for having to repay the income tax refunds that former Gov. Linda Lingle deferred from last year.

Gov. Neil Abercrombie probably could have gotten away with deferring the refunds another year to ease this year’s budget drama, but he made a gutsy call to take the medicine now so we’ll get the full benefit of the recovery when it comes.

If the visitor numbers hold, he could be rewarded next year with a few bucks to start funding his “new day” initiatives.

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Poker bill bets on a flop

March 28, 2011

A bill to make Hawai‘i a mecca for live and online poker tournaments seems to be the last gasp of gambling advocates in the Legislature after the apparent failure of of casinos in Waikiki, shipboard gambling, bingo on Hawaiian Homes lands and other gaming measures.

SB 755, which originally passed the Senate as a measure to help kids buy school supplies before being gutted by two House committees, is probably a non-starter in terms of attracting significant poker business to Hawai‘i.

Trying to pass off poker as a game of skill rather than gambling is dubious, the vigorish for the state that legislators are demanding from poker promoters appears exorbitant and the interstate commerce issues are tricky.

But if the bill passes, it’ll no longer be said that Hawai‘i is one of only two states without gambling, which will provide a foot in the door that gives more hope to promoters of other forms of gambling.

Gaming advocates are seizing on the panic that the crisis in Japan will drive the Hawai‘i economy back into deep recession and further deplete state revenues.

But the fact is that any gambling operation would take years to start generating significant revenue and would contribute absolutely nothing to solving our current woes.

Not to mention that gambling is a poor economic hedge against recession. Nevada, which depends more on gambling than any other state, has been one of the hardest hit. Do legislators seriously think that Japanese who are staying home as their country recovers from a devastating blow, would come if we had slot machines?

Gambling would change the fabric of our local society and reshape our visitor industry in ways we don’t fully understand.

If we go there, it should be after careful consideration in calmer times — not as an opportunistic quick hit by those lacking real ideas for digging out of our economic sinkhole.

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Big box office at the Capitol

February 15, 2011

Here’s hoping the starry eyes of our state legislators won’t prevent them from taking a hard look at the numbers before giving their blessing to a proposal for fat tax breaks to attract movie studios to Hawaii.

Relativity Media and partner Shangri-La have promised to build film studios on O‘ahu and Maui if they get tax incentives that would cost the state an estimated $46.3 million a year. Promoters say it could result in 20 movies a year being filmed in Hawaii.

To sell the idea, they enlisted written testimony from former President Bill Clinton as well as in-person appearances by prominent film stars, and threw a private Valentine’s Day party for lawmakers at a posh hotel.

It’s difficult to evaluate whether it’s a good idea or not based on the information we have, but it’s of concern that the proposal came in late and is sketchy in its details as to the economic benefits Hawai‘i would receive in exchange for the tax credits.

Relativity CEO Ryan Kavanaugh says it’s cost-prohibitive to film in Hawai‘i under the existing tax structure, but we have two TV series currently filming here and a bunch of recent movies.

Legislators in both houses were wise to delay decision-making until they get more information on how much new economic activity we can expect, how many jobs will be created and whether they’ll be quality permanent jobs for local residents or temporary positions that involve a lot of people flying in from the mainland.

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