Hawaii's Economic Future
Price of Paradise · Hawaii Public Radio · aired 1997-10-26
Guests: Thomas C. Leppert (Vice Chairman, Bank of Hawaii; Economic Revitalization Task Force); Patricia Loui (President, Omnitrak Group; Economic Revitalization Task Force); Tom Okamura (State Representative; Economic Revitalization Task Force); John Griffin (freelance writer; former editorial page editor, The Honolulu Advertiser)
Duration: 1:04:56

[00:00:02] Randall Roth: Aloha. This is Randy Roth, host of the Price of Paradise show. We're broadcast live Sunday mornings on KHPR and KKUA, and then rebroadcast Sunday evenings beginning at 8 o'clock on KIFO. Everyone who works to bring this program to you is a volunteer who believes in the importance of lively and informed public dialogue. We believe the brightness of any community's future is directly related to the level of activity in its marketplace of ideas. Our show this morning has to do with the economic revitalization task force, specifically the set of recommendations for revitalizing Hawaii's economy that was issued just in the last few days. With me in the studio to describe these recommendations and answer callers' questions about them are Tom Leppert, Patricia Louie, and Tom Okamura.
[00:00:48] Randall Roth: We've got a couple of other people with us by phone, and I'll tell you about them in just a minute. First though, Tom Leppert currently is vice chairman of the holding company for Bank of Hawaii, but beginning next year he'll be a trustee of the estate of James Campbell. Tom's first position in Hawaii was as president of Castle & Cooke. Tom served as the coordinator or facilitator, or one of the coordinator facilitators for the task force. Patricia Louie and I've got to grab my notes here. Patricia Louie is a small businesswoman born and raised in Hawaii. She's president of OmniTrack Group, Inc., a marketing and research company. She previously served as vice president of marketing for Bank of Hawaii and as director of communications planning for the United Nations development program Asia-Pacific region.
[00:01:34] Randall Roth: She's a graduate of Northwestern University and the University of Hawaii where she was on an East-West center grant. We also have Tom Okamura, who is a state representative from District 33, which encompasses the communities of Red Hill, Halawa, Aiea, and Pearl Ridge. He also is the majority leader for the State House of Representatives. Tom was not on the task force, but he was directly involved in the structuring of its processes and activities. Well, with us by phone, we have Larry Fuller, who is the publisher of the Honolulu Advertiser. Larry, can you hear me?
[00:02:08] Larry Fuller: Let's see. Larry, are you there? I certainly am.
[00:02:11] Randall Roth: All right. Well before we get to our guests in the studio, I wanted to ask you to to sum up for our audience the the article that was on page B1 of this morning's advertiser, where you talk a little bit about the the mood of the group, how it started out, according to the headline, it started out a little bit skeptical, but ended up with this euphoria. Could you tell us a bit about that?
[00:02:32] Larry Fuller: Sure, I I think the one of the more interesting dynamics of that is is that the skepticism was based initially on the concern that there had been a lot of task force, a lot of people meeting, a lot of ideas percolating around and whether you could pull together people from business and labor and government and and come up with ideas that truly made a difference. And once you came up with them, would they be listened to? The second piece of that skepticism I think was also whether a state driven task force that was appointed by the governor and the Speaker of the House and the President of the Senate be able to develop the freedom to come up with ideas that that might require or would require certainly the state to change. It was a it was a fascinating opportunity to watch some really interesting group dynamics and I think that one thing that that was possibly the most interesting of all is that the people got together in that room and they didn't posture. That they there were no speeches by the labor folks in terms of saying you've got to remember that that the state government employees have got to be saved and there were no speeches by the business community saying that that you you've got to take into consideration our interest that people really were concerned about Hawaii and and finding a way to to move it forward [unintelligible — audio glitch] we enter the seventh year of economic decline. And that there was a sense that we more and more as as the task force went on that we could make a difference. And I think that's kind of the spirit of of moving from from skepticism to to a sense that we you could we can control our future. And and I guess what overall dominated it, and I think that the recommendations that came up are ones that are actionable. Some of them are things that have been discussed before. Some of them are new. But as a package, I think we can make a difference and and I would guess this is the first time maybe in any state that folks have come together in this way.
[00:04:43] Randall Roth: Okay. Anything you'd like to add to that real quickly before we move on?
[00:04:48] Larry Fuller: I I guess that there's some of the concerns that have been raised have been uh particularly over whether or not uh the low income people are adequately protected. And and I guess part of the answer for that is that in almost all of the discussions on on taxes, that [unintelligible — audio glitch] most of the time was spent on making certain that we had a program and ideas that that particularly helped people under the $20,000 level. And if there's a concern that as it goes through the process, that this is not adequate. Uh, what we put together was was an an idea and a concept, and I think there are probably ways that could be improved upon. But that that seems to be one of the areas of concern and and I I-
[00:05:35] Randall Roth: I'm sure we're going to be hearing uh from some callers this morning about that.
[00:05:38] Larry Fuller: I hope that you know, [unintelligible — audio glitch] I watch the process that that single area probably dominated the discussion on taxes more than any other.
[00:05:48] Randall Roth: Okay. Larry, I really appreciate uh you sharing that with us this morning.
[00:05:52] Larry Fuller: Thank you.
[00:05:53] Randall Roth: Uh, we go to Tom Leppert. Tom, you were um coordinator/facilitator. Uh real briefly, you and and Peter Adler served that function. Uh could you tell us just generally what that involved and then share your initial thoughts uh initial as far as this conversation is concerned, about the work of the task force?
[00:06:12] Thomas C. Leppert: Yeah. I think more than anything else, it was to make sure that we had a process that drew on a lot of ideas that had been serviced by the working groups, that had been serviced by the task force, to make sure as we got into the meetings of those three days that those ideas were fairly put forward and fairly discussed and also pushing the the group to come to a to a resolution. We all felt as we walked in there was very important to come to a resolution. A lot of resources had gone into it and we owed that to the community. The other piece of it was just to work with the process, the the focus is over the last three days, but I think it's important to realize that it was very compressed, but it still extended over about a three-month period of working with the task force, working with approximately 150 to 170 people in the community that participated on the work groups to identify options and ideas that the task force considered these last few days. That also drew on about 828 separate comments, suggestions, ideas that were offered by the public in a variety of settings. It also meant coordinating and facilitating over 30 public meetings that took place with the working groups and then when the working groups passed the ideas on to the task force. So, although we'll focus on the last couple of days, I think it's important to realize that there was a long process that was focused on gaining input from very widely in the community so that we could come to this point.
[00:07:30] Randall Roth: A lot of input and and I think too, it's important to set the right tone. Something that Larry Fuller talked about in his article this morning and uh I've attended sessions that you or Peter Adler have put on where we did this and it's terribly effective, having each of the members tell each other about why they came to Hawaii or why their ancestors came to Hawaii, it really does bring a group together, doesn't it?
[00:08:11] Thomas C. Leppert: Very much so. And and as Larry mentions in his article, that was really the focus on the first day. The first day we really didn't get to evaluating options, discussing particular ideas, those sorts of things. It was really for an opportunity for the 26 members to understand that there was a lot more in common than there were differences between them.
[00:08:11] Randall Roth: Okay. Uh and we're going to come back to each of our guests multiple times during the hour, but let's hear from Patricia Louie. Uh Pat, you were one of three women on the task force. You didn't feel outnumbered, did you?
[00:08:22] Patricia Loui: No, I think, you know, whether whether the participants were men or or women or small business people or big business people from the private sector or from the public sector, uh there was one overriding goal and that was really to try to establish a strong economic future for our children and and our children's children. And all of the other differences uh were were secondary to that.
[00:09:10] Randall Roth: At least initially when the task force was formed, uh the criticism seemed to focus on there wasn't enough of this or enough of that or what have you. But the impression I get is the people who went through that process felt like they were part of one group that it wasn't the lot of different constituencies that were represented. They all felt like they had a stake in in the outcome.
[00:09:10] Patricia Loui: I think that's very true. Um also if we look at the hundreds of participants uh both in the working groups uh as well as in [unintelligible — audio glitch] email suggestions and the facts suggestions, there was an enormous amount of consensus across the board and this is what we tried to focus on.
[00:09:28] Randall Roth: Okay. Tom Okamura, you're in the legislature and I guess this uh hot potato is going to be tossed your way fairly soon. Um the members of the task force have emphasized that uh that this is a package, this set of recommendations, and that if you start picking it apart and just criticizing this, that, or the other piece, that probably the whole thing is going to collapse. Um do you see it as a package, and if so, is there is it conceivable that the legislature could adopt this as a package?
[00:09:56] Tom Okamura: Yeah, I I think that is the intention and I think one of the local papers clearly indicated that these were bold, in fact stunning initiatives, and and it clearly addresses, you know, the economy and trying to revitalize and kickstart the economy in Hawaii. So, yes, I agree. It has to be taken as a holistic uh package.
[00:10:13] Randall Roth: Now some people fairly or not say that the legislature isn't likely to do something that's bold. Isn't likely to do something that that doesn't reflect a lot of politics and politics involves trade-offs, compromising, and yet you think maybe the whole package could go through.
[00:10:29] Tom Okamura: Well, there's something very historical about this task force. This is the first time in Hawaii's history that you have the governor, the Speaker, the Senate President actually serving as members of the task force. And that took a lot of risk on their part. It [unintelligible — audio glitch] requires that they going to have to take a lot of responsibility for this. We also set it up where from the initial beginnings of this, we said only those three elected officials would sit [unintelligible — audio glitch] task force. And so yes, um [unintelligible — audio glitch] are going to take this very seriously.
[00:11:00] Randall Roth: Okay, Tom Leppert.
[00:11:01] Thomas C. Leppert: Well, as as Tom said, this is a plan that's bold and it's aggressive and it's straightforward. But I think it's also important to look at the context of why that's the case and why the legislature needs to view it in a different light, the same way the task force view it in a different light. And that is that the world's change significantly. The problems that we have here in Hawaii are significant. We've lost jobs in the last four of the last five years, so about 20,000 in total and that affects every single one of us. I'm sure one of the things that we'll talk about today is the fact that these just aren't economic issues, they're people issues. It gets at the basis of our ability to provide for the needs of those in our community that aren't as fortunate. It goes to our ability to provide for charitable causes, it goes to our need to provide infrastructure in the community. These are people issues, they're not just economic issues.
[00:11:48] Randall Roth: Pat Louie, I'm just shocked by the fact that these recommendations are being described as having been unanimously adopted, that there was total consensus. And I know there's a lot of difference of opinion getting to those recommendations, but, but the public at least is, is given the feel of agreement in the headline this this morning, unanimity. Um, is that accurate?
[00:12:13] Patricia Loui: Absolutely. Uh, in fact, uh our facilitators with Tom being one of them, had [unintelligible — audio glitch] rating system for for difficult issues and one was enthusiastic support. Uh at the end of the day, the package was was held up [unintelligible — audio glitch] we were asked whether, you know, what the degree of support was. And when uh when we were asked how many are number one, virtually all of the hands uh shot up. There was one individual who paused for a moment and then his hand immediately went up. I think it was just the thinking process, you know, he needed another minute or so, but it was. It was and it was enthusiastic. There were smiles and a real feeling that we had made a step uh towards Hawaii's future.
[00:12:55] Randall Roth: I get the feeling that when the individuals left the room, they they left feeling like they were all friends. That there was something that had brought them together and that there was a bond that would be there forever.
[00:13:05] Patricia Loui: [unintelligible — audio glitch] think that we came as with diverse interests, uh with the diverse backgrounds, uh with the concern for [unintelligible — audio glitch] economy [unintelligible — audio glitch] for the people of Hawaii, and we left feeling that as difficult as the decisions were, we had made at least a a step uh towards solving some of the these very severe economic problems that we have here.
[00:13:28] Randall Roth: Well, folks, as as you know, we generally have different sides of an issue present here in the studio, a pro-con sort of of format. And this morning, we don't. The voices that you've been hearing are voices that are very much in supportive of these recommendations, but we're going to count on the callers to provide the other side [unintelligible — audio glitch] this discussion. And to kickstart that, we're going to go to Dennis Arakaki who is a representative in the state House of Representatives. Dennis, are you there?
[00:13:54] Dennis Arakaki: Good morning, Randy.
[00:13:57] Randall Roth: Dennis, I know from from chatting with you briefly on the phone the other day and from reading some of your quotes in the newspaper, that while you you perhaps aren't opposed to these recommendations, you've got some real concerns.
[00:14:10] Dennis Arakaki: Uh, I do. And I I want to preface my remark by saying that, um, you know, I I do believe in the process that the task force went through. I think they're going to provide the synergy that's needed to move us out of this economic malaise. And I agree with representative Okamura that, you know, there's some pretty bold initiatives. But again, uh it has to go through the legislative process. And we as policy makers, I think, want to look at how we can address some of the concerns or fine tune some of the proposals. Um, That doesn't mean picking it apart. That just means trying to improve each of the each of the pieces, or or maybe rearrange them or do something uh to improve them.
[00:15:20] Dennis Arakaki: And the other concern I have is in terms of um, fairness. And uh, some of the proposals sound a bit familiar in that it depends a lot on the I guess the trickle-down economics of the Reagan area era. And basically, we know that it only resulted in the rich getting richer and uh you know the the poor becoming greater in numbers. Um, I I think it's also unfair to the hotel industry because uh the tax the increase in tax falls mainly on the hotel industry when a lot of uh uh visitor industry businesses will be reaping the benefits uh of the increase in tax and the um promotional budget. Okay. Uh Finally, uh you know, I think it was mentioned before. I think the um proposals will also have a greater impact on the poor and the young and especially the the elderly uh who are on fixed income. And uh although there is a tax credit, I think we need to realize that you know, these people spend a greater proportion of their incomes on food, uh shelter and clothing. And we also need to realize that a lot of them do not file taxes and will not be uh receiving the credits. So, and finally, uh it it's a double whammy in effect where you know, not only will they be able to purchase less with their dollars, uh it it may result in fewer services because the revenues to the state will be decreased. So it's sort of hitting them um you know, with a left-right combination.
[00:19:00] Randall Roth: And I just hope it doesn't floor them. Okay. Dennis, are you going to be able to stay on the line for a bit or do you have to run this morning?
[00:19:06] Dennis Arakaki: Well, um I can just stay on for a few minutes.
[00:19:09] Randall Roth: Okay. Well, um we really appreciate you sharing your thoughts with us this morning morning. That was Dennis Arakaki, who's with the uh State House of of Representatives. You're listening to the Price of Paradise Radio show. My name is Randy Roth. We're talking about the Economic Revitalization Task Force recommendations for improving the economy here in Hawaii. If you'd like to ask a question or make a comment, our number is 955-8821. If you're on a neighbor island, you can call us toll-free at 1800-955-8821. If you joined us late and would like to hear the show in its entirety, it'll be repeated tonight at 8:00 on KIFO, that's 1380 AM. Again, we're talking about the Economic Revitalization Task Force recommendations and the number to call is 955-8821.
[00:19:58] Randall Roth: Very, very briefly, I want to ask each of my guests in the studio to say something about what Dennis Arakaki just said. Um I want to try to avoid getting into the detail. We're going to do a show just on the tax recommendations and a show just on the education recommendations, etc. You have to get into details a little bit, but avoiding getting bogged down in those details, have each of you say something quickly about Dennis's concerns. Pat, why don't we start with you, Pat Louie?
[00:20:27] Pat Louie: Okay. Um I'd like to address some of the concerns that Dennis raised in terms of the poor [unintelligible — audio glitch] the the whether the this the proposal is equitable. Uh we like Dennis, the task force shared the concerns about the impact of the GET increase in particular on the poor. That's the exercise. Yes, that's the exercise tax, that's correct. Um, the, we we try to compensate for that in two ways. Uh, number one, there will be tax credits uh to those with less than 20,000 uh in income. And number two, the continue the food credits uh will continue uh and that will also uh benefit the lower income. But I think we need to look at the total tax package as a whole.
[00:21:17] Pat Louie: Our taxes are so high now that we do not attract uh businesses. We, the small businesses like myself find it very difficult to grow under the current tax structure. So, if we are to restructure our personal and corporate taxes, we need to compensate for that in same way, in some in some way. And uh from the experts that we heard from, uh one of the best mechanisms is a a low and broad tax system. And the the total tax package uh aims at doing that.
[00:21:51] Tom Okamura: Okay. Tom Okamura. I just want to address um Dennis's question about the vision that in in fact, this task force did go through a visioning process and came up with a statement, a vision statement. If I may read it, it's very short. It's um a Hawaii for our people today and our children tomorrow, marked by a vibrant, diversified, globally competitive economy that is supported by a well-educated and skilled workforce. This economy will provide the foundation for a society with a meaningful quality of life, respect for our cultures and environment, and equal opportunities for all our people. I also want to add, Randy, that um as far as the, you know, Dennis's comments about fine-tuning the the proposals, the legislature and the task force will be holding a series of town meetings and public hearings through through the next month, beginning with uh the 29th of October uh between 9:00 and 10:00 p.m. live town meeting on KHON. And so we encourage and we welcome the public's input into these proposals.
[00:22:53] Thomas C. Leppert: [unintelligible — audio glitch] guess the the I addressed two issues. One and and I think Dennis made it in in a couple of different areas. And I know it's a it's a major concern in our community as Pat said, it's a it was a concern all the task force. And that's the fairness issue, the impact on those in our community that are less fortunate. That's one [unintelligible — audio glitch] I think that we need to to address as a community very straightforward. And I think that this task force plan does it in a very straightforward fashion. As Pat mentioned, there's a number of components that go at tax credits, etc., that offset for the lower income uh levels in our community, the impact of the increased GET. There's another aspect, a third one to to what Pat said, and that's eliminating to a large extent the pyramiding. Now, that's a technical aspect and it's more difficult to understand, but what it does is it just adds a lot more cost when any of us buy products and services. By eliminating that, that's really an offset. So, in one sense, we're looking at the GET going from 4 to 5.35, but the truth of the matter is there's about 157 million dollars savings that would create to really moving that GET from about 4 to 4 and 3/4 somewhere in in that way.
[00:24:06] Thomas C. Leppert: But there clearly was a major effort on addressing the that [unintelligible — audio glitch] fairness side of it. And I think the most important way that we need to look at that is the status quo. We are losing jobs. Our educational system is not what any of us wants it to be, and in fact, since the since 1989, we have seen on a real basis our tax revenues go down by 170 million dollars with a number of short gaps that probably have increased that number uh by two-fold since that time. So, if you look at where we stand today, we're not producing jobs. We see that every day. We see acquaintances, we see relatives that are moving away, forced to to sell a house. We're starting to see it in terms of the educational system, not delivering the type of education that we need for all of us, lower income, everybody in the community.
[00:24:54] Thomas C. Leppert: And more and more we're starting to to see the fact that we just don't have a strong tax base. We can't do the things that we need to to serve our citizenry. The status quo is not where we want to be. This program I think deal deals with all the groups in a very fair fashion and in fact, the real winner is the state.
[00:31:15] Randall Roth: Thank you, that you're sharing this this morning. on KTC 5,000 people collecting pensions or retirement income in this state to a total of about a billion dollars. I know people that have retired and you do as well. Their names are in the news because they've gotten city, county, state, federal jobs that retired from the military or other high-level positions and they go on to now become employees taking a job that pays $50, 70, $80,000 and those people, if you can believe, are not paying a penny of that other income from their pensions. And then the argument says, well, they put into it. Oh baloney, people don't put into military pensions. They just work at the job. Let me finish off then I'll get out of the hair.
[00:34:31] Randall Roth: Tom Leopard, what I'm hearing from Bill is that there were a lot of things that could have been in the package and I know from this morning's newspaper, you actually discussed Bill's first point, the possibility of of taxing pensions here in Hawaii. Um, can you give us a quick response to what you're hearing from Bill and then we'll go back to him?
[00:35:25] Thomas C. Leppert: Sure. It it it did come up and Bill is exactly right when when he quoted me. Let me give you some numbers. So, let let's deal with some specifics that that came directly from uh our tax department here in the state. If you wanted to to uh tax all pensions, everything, across the board, you could raise about $80 million. But importantly, of that amount, most all of it is pensions that would fall between 0 and $10,000. We took on behalf of the task force a position that we wanted to eliminate taxes to the greatest part we could for all incomes under $20,000. If you move that number down and say, okay, we'll only tax pensions above $20,000, then the number falls drastically. It falls to $22 million. And if you say that you only want to tax pensions above $30,000, that number then is $11 million. So you're looking at $11 million versus expenditures or receipts in the general fund of approximately 3.2 billion and total statewide expenditures of about 6.1, 6.2 billion.
[00:38:00] Speaker 1: in the top tax rate for California state tax is 12%. Rich people pay their fair share in California.
[00:38:08] Randall Roth: Bill, we'll get a reaction again from Tom Leppert.
[00:38:10] Thomas C. Leppert: The key aspect of that is if you look at California, when they started going down in the recession, they increased their taxes. In the last couple of years, what they've done is decreased their taxes. They've ended up with a very strong economy.
[00:38:21] Randall Roth: Okay. Bye.
[00:38:22] Thomas C. Leppert: Thank you, Bill.
[00:38:23] Randall Roth: We uh and and folks, we really want to encourage exactly what Bill and and Jim have provided. Uh if nobody criticizes this package, then I I personally think it's doomed. Uh it you know, it either is going to to stand the fire or or it's doomed. So let's let's hear some more of it. Dave from Kailua, you're on the air.
[00:38:42] Dave: Yeah, thank you, Randy. Uh I have some concerns about the overall approach of the governor's economic task force, and it seemingly as it heads into the legislative session, is uh almost described as our vision for the future, and I think that it has done a lot to address some of the economic concerns but perhaps hasn't uh really assessed and uh integrated some of the deeper uh underlying structural concerns that are uh functioning out in the communities. The uh the basic uh concern I have is that you know, we have this uh sort of a uh structural problem between uh [unintelligible — audio glitch] democratic system and a system of capitalism which are functioning almost arm-in-arm. But we're dealing with the process as more of this task force is functioning and focusing on the capitalistic concerns. Uh the capitalistic concerns often evolve in the direction of elites and and that's my concern with the the nature and the structure of the task force and the recommend recommendations it's proposing.
[00:39:52] Dave: Which if they work their way through the le- legislature as a package, uh I think uh will really shift the focus of this community more in the direction of capitalism.
[00:40:03] Randall Roth: Dave, let me ask you a question. Is it is it possible that we as a state could somehow break off from the capitalistic system that, at least in the United States, uh we have?
[00:40:13] Dave: Well, I I think that's a possibility, but that's not the notion I'm really advancing. I would just like the public to understand that you know, there's two systems in functioning here. And as the capitalistic system addresses and tries to solve its own problems, you know, the democratic process drops to the wayside. You know, people as they watch these elites structure their future, become less and less engaged. So if folks are looking from the 35,000 ft level, and they really need to be looking at it from the ground level, they need to get back to the roots.
[00:40:47] Randall Roth: So you would agree with Tom Ocamura that people ought to participate in in town meetings and and gather- But not necessarily under the leadership and direction of the governor's task force. Oh uh and and so, let's find a way [unintelligible — audio glitch] I say this to you, I say it to me, I say it to everybody who's listening. Let's find a way to try to bring together those folks who don't like this package and put together a different package with a different vision and let's have some real competition in this marketplace of ideas and let's trust that the best approach is going to percolate to the top. What do you think?
[00:41:19] Dave: Well, I think that's a a great approach and some of that is happening. I know the advertiser is starting their their process this this coming week. Uh, you know, many people are skeptical of that approach, uh but I think ultimately, the community will evolve in a direction of trying to resolve its own particular needs, but [unintelligible — audio glitch] real problem is the driving force of a task force with this this um, the movers and the shakers, I think, with perhaps without recognizing it, may have lost their prerogative for leadership because these are the folks that have led us to where we are.
[00:41:57] Randall Roth: Dave, I'm going to I'm going to have to move on, but I think you're saying what I feel strongly in and that is everybody needs to get involved, or we're all in trouble.
[00:42:05] Dave: Yeah, I would say that, yeah.
[00:42:06] Randall Roth: Thank you, Dave. Appreciate the call. In case you tuned in late, this the Price of Paradise Radio show. My name's Randy Roth. We're talking about the Economic Revitalization Task Force recommendations. Uh, with me in the studio is Tom Leppert, who was the coordinator facilitator for the task force. Currently, he's vice chairman of the holding company for Bank of Hawaii. Soon, he's going to be a trustee of the estate of James Campbell. Also, Patricia Lui, who's the president of OmniTrack, it's a marketing and research company here in Hawaii with offices in Taiwan, China, and Thailand, and Tom Ocamura, who is a member of the State House of Representatives. We've got some folks who have been waiting patiently on the line, but we do now have one line open if you'd like to call us, the number is 955-8821. We'd like to hear from you. Let's go to Dick from Ia. Good morning, Dick.
[00:43:01] Dick: Yes, I'd like to first say Hawaii is still the best place to live in the world, not only because of our weather, people, social and health programs, and I think our legislature is very good. And yesterday I sat through the Grassroots meeting, and there was strong uh negative feelings about the uh quote uh results of the task force. And there was mention the fact that so often our taxes are criticized, but we do have a high- we don't have property tax supporting the schools. It comes out of the state tax, so that does skew it to the right. The big point is they we had 27 issues, and most of them require revenue. And Tom Ocamura, who I think is outstanding, says $400 million will be lost in revenue, and how are we going to not keep cutting, cutting, cutting other programs that are very important? It makes me think of the trickle-down theory of reaganomics, cut taxes, especially for the rich, and maybe the people at the lower end will benefit, and look what will happen to our economy. Our debt increased many fold thanks to the reaganomics.
[00:44:02] Randall Roth: Dick, stay on the line. I'm going to give you the last word on on this particular exchange, but before Tom Leppert comments on that, I just want listeners to know that the what Dick is referring to is that very, very recently, about 350 so-called Grassroots Democrats came together, and and I say so-called, that's how it's been described in the newspaper. And what they came up with is, as Dick indicated, was um, a critical sense, if you will, in terms of these recommendations. And according to the newspaper report, they thought that we should be focusing on the needs of the poor and environmental protection, and that those were a couple of areas that maybe weren't uh uh protected in these recommendations the way they perhaps should have been protected. Tom Leppert, any comments about the report of the Grassroots Democrats meeting or Dick's comments?
[00:45:11] Thomas C. Leppert: Uh you may find it strange, but I I share Dick's view on this. Um I think that there's a number of things that we need to do in this community, and and as was said yesterday, and I quote it from the paper, what that means is we're probably going to have to spend more money on it. Now the challenge is how do we do that? Because a poor economy is not going to accomplish that. As I mentioned earlier, we have lost in real terms, in real terms from our tax revenue base because of a poor economy, $170 million, and it's probably double that when you look at some of the changes that have taken place. I agree with Dick, we need to put resources into a number of different areas, but a poor economy is absolutely the last way to do that. That's why the task force believes it's very important to have a strong economy so that we can get back to having a healthy, a vibrant tax base so that we can address the needs that we've got in our community.
[00:46:44] Randall Roth: Dick, back to you. You get the last word on this one.
[00:46:46] Dick: Yeah, I accept the necessity, we must do something to improve the economy. My only fear is uh you cut 400 million out and under the quote so-called Reaganomics, it did not come back. And that's the biggest negative I feel about this whole process. Yes, we got to do something, and I think a lot of the recommendations to improve government is definitely in order, and I think the legislature has a tough job ahead of it, but I'm glad we got a good legislature. Thank you.
[00:47:14] Randall Roth: Dick, you've got to stay on the line because I promise you the last word, but both of my Toms in the studio want to say something very quickly, Tom Ocamura.
[00:47:21] Tom Okamura: I also share your concerns, Dick, and I just wanted to also say though that the tax proposals that are being uh initiated will actually put more money back in people's pocketbooks and that in itself will help to stimulate the economy. As far as the state and city programs, you know, we looking at it this is over a period of 3 years and and that there are there's room for the state and city governments to be more efficient. And one of the proposals calls for the mayor and governor to collaborate and appoint people to to look at the duplicative efforts and to eliminate them. So we'll be looking at these these issues.
[00:47:56] Pat Lui: Also, the personal tax uh changes will dramatically affect uh the working person. The average family's a tax rate will fall 3 points uh from 9.5% to 6.6% in year one and to 5.7% uh in year three. So that cut is proportionate and and equal to the the tax cut for the top income bracket.
[00:48:21] Randall Roth: Uh Dick, last word.
[00:48:22] Dick: We're still the best place in the world to live, so let's hope we don't screw it up. Thank you very much. We- we would all agree with that.
[00:48:30] Randall Roth: All right. Thank you, Dick. We go to Wally from a Kiki. Good morning, Wally.
[00:48:33] Wally: Good morning uh Randy. I'd like to say that I agree not only with Dick uh but also with the two excellent letters in this morning's paper by Raymond Forester and Mark Young. And I particularly like Mark's use of the word kayotonomics for describing this new economic policy because like he says, it has a lot in common with Reaganomics. But unfortunately, uh it won't have the exact same effect out here, because this $400 million cut uh which they're expecting in state revenues, cannot be floated by going and getting an increased deficit out here because states cannot go into great deficit spending the way the federal government is allowed to.
[00:49:15] Randall Roth: Wally, is it it is- is it fair to say that that you and a couple of other callers this morning would say that that you've got [unintelligible — audio glitch] certain size and I'll call it pie, and to the extent that some pieces are taken out, there's there's just less there, whereas the the guests in the studio, speaking on behalf of the task force, I think would say you've got to take some out in order for that pie to grow. You're calling that trickle down or other people have called that trickle down. Is that kind of where we've got a a basic disagreement here?
[00:49:47] Wally: Yeah, I don't see this trickle down helping by giving the rich people more money. They're going to take that and invest it where they're investing it today, which is on the mainland. The same thing the Bishop estate is doing, they're taking the 11 billion dollars they're sitting on and sending a lot of it now to the mainland. Now this doesn't help anybody here. It's not going to generate any jobs here. It's not going to improve education here. In fact, it's going to all these things are going to be hurt by taking this $400 million out of the state budget. There'll be jobs cut. I don't see jobs being created. I suggested instead that they give a specific tax credit for each new job to be created.
[00:50:39] Thomas C. Leppert: Tom Leppert, what what I'm hearing from Wally and from everybody in the studio, out of the studio this morning is that we all want the same destination and we've got different opinions as to how to get there. Um is it possible that this can be resolved or are we going to have people on one side always feeling the way it does and people on the other side always feeling the way they do and ultimately, it's going to be a matter of of the majority controlling and when I say majority, it's a majority of people in the legislature which doesn't necessarily reflect the majority of people outside the legislature. Is there a possibility for compromise or a possibility for coming together on this?
[00:51:14] Thomas C. Leppert: The the disagreement is one of the great aspects of a democratic society, and it's the thing that you wouldn't trade at any cost. Uh I think a lot of this though, uh becomes a an educational component. Uh the if you look at it from the uh two different perspectives that were raised just a moment ago, I guess it was Richard Okay was Richard raised. He really raised two things. One is, gosh, it looks like this tax cut is going for people outside the state. Not true. If you take and and most of our people fall into the medium category, say about a $40,000 income category. This proposal cuts their tax bill by 10%. And when I say that, I'm including both the income tax cut and the increase in the GET. Taken together, it's about a $340 uh savings to them. Their average tax bill is about $3,900. Once it goes into the third year, that it comes to about 20%. So that's a stimulus to our people today and directly goes at an issue that I hear time and time again, and that is it is just too expensive to live and do business [unintelligible — audio glitch] Hawaii. The second aspect is trying to attract business in. The truth of the matter and I think we need it is absolutely important that we convey this to to the community is especially as you look at a technology job or things like that, marginal tax rates of 10% are not going to encourage and are not even going to permit those sorts of businesses which we ought to- we ought to have because we're 2,500 miles technology comes to us. We ought- ought to have both of those.
[00:52:46] Randall Roth: Okay. Well, we've got four people who have been on the line for a long time, and we're getting down close to the last 10 minutes, so I'm going to try to move a little bit more quickly. We go to Ruth in Kailua. Good morning, Ruth.
[00:53:02] Ruth: Good morning, Randy. You're on the air. I would like to commend the task force for the work that they have done. But they haven't really been out and worked in the trenches, so to speak, with the people that are really hurting. I and then, since I've been waiting online, I've been hearing this the poor economy, well, the poor economy, we were in poor economy when in the 30s which I live through, when um Roosevelt came up with a lot of what our so-called welfare programs that everyone feels are not good for us. The federal government just came through with a lot of tax breaks for the so-called upper income because that will affect those people with capital to gains, etc. Um, and some of our middle income people will um be ahead from the um that tax credit for children, which is fine. However, I do get sick and tired and I've been here for 45 years, always hearing that the hotel industry is going to be hurt by this. How can the hotel industry be hurt by adding a tax of only 1% which gets passed on to a tourist? Every time I travel anywhere, mainland, around the world, or whatever, I pay much higher room taxes. They can then there are also at many levels, you, they even go down to township levels in some little codunk town for a motel room. That and that should be considered here so that the counties don't get put out when when we're doing a a room tax. The room tax could even just be on so-called luxury rooms.
[00:55:06] Randall Roth: Okay. Well, and The recommendations that the task force came up with include increasing that tax and you're saying uh increase it even more, yeah. increase it even more. I mean you pay 11, 12, 14, 15 and 16% in Boston and New York City. Okay. And maybe that's the kind of fine-tuning that uh Dennis Arakaki was talking about the legislature uh engaging in. Um, appreciate your call, Ruth. And the tax credit for the for the poor, does there it we must do food and and drugs because and because that's their money goes out and they don't even file income taxes, they're their income is so low. Okay. Mahaloh. Thank you. We go to Rene from Punch Bowl. Good morning, Rene.
[00:56:09] Rene: Good morning, Randy. One very fast question since time is counting down. Uh, your guest, Tom Leppert, is the coordinator of the Economic Revitalization Task Force here, the governor's task force. I understand that Mr. Leppert was also part of Reagan's team, and I'd like to know what was his role on the Reagan team? Thank you.
[00:56:27] Thomas C. Leppert: Uh that's that's not accurate. I was selected in 1984 as a White House fellow. That is a program that was established by Lyndon Johnson and it's a non-partisan program.
[00:56:36] Randall Roth: Well, and and your fellow facilitator coordinator was Peter Adler, who's a a raging Democrat in case you are Republican. I don't know who And and Luffy Hanamon was a White House Fellow the year before I was there. Okay. So anyway, there was there was some balance. The people, Pat Lui, the people who served on the task force, did you feel that it was uh, weighted one way or the other so far as political um, affiliation is concerned?
[00:57:07] Pat Lui: No, I think in a way, we were somewhat like [unintelligible — audio glitch] mini-United Nations or a mini uh, really a cross segment of of Hawaii. There were there were large business certainly, but there were people like myself and uh a small business, we have less than then than 20 people in our company. Stephanie Sofos, who was a sole proprietorship, but like in a consultant. Uh, we had uh labor unions uh represented, representing government workers, uh representing uh blue collar workers, um, uh representing uh, you know, [unintelligible — audio glitch] other professional areas uh within government. Uh, we had elected officials, there were three of them. And I think that, you know, they came from many backgrounds as well. There were county representatives, uh Berry Tiny Gucci from the Big Island, Don Malcolm from from Maui and, and, and uh obviously many from uh from uh Oahu as well.
[00:58:17] Randall Roth: It's interesting to me when I talk to people who are on the task force, they they have the feel that it was a good group. And there are a lot of critics. There are a lot of people saying, well, you didn't have this, that, or whatever, but the people who are on the task force without exception so far, told me they felt after they had gone through all of this, they felt like it was a very balanced group.
[00:58:55] Tom Okamura: Yeah, we've got to keep in mind also that there were over 130 people that were on the work groups also. And the work groups included dozens of small business people. We had people from Common Cause, League of Women Voters, uh, local Calapa from the tax foundation. There was a real, well-represented group.
[00:59:20] Randall Roth: Okay. Well, we're going to try and get our callers who've been waiting. Uh, Richard in Kailua, you're on the air.
[00:59:26] Richard: Yes, thank you, Randy. Uh and good morning, ladies and gentlemen. Uh one of the things that concerns me about the uh the recommendations of the task force is that uh you know, our number one problem in Hawaii is the creation of uh new jobs. We're sitting at uh six plus percent unemployment and have been stuck there for perhaps five years. And uh it seems to me that the answer to that is capital formation. And yet I've heard absolutely nothing in the task force recommendations with regard to capital formation and uh easing the restrictions on capital formation in a state which if anybody is familiar with them are must realize they're quite onerous. I'm going to hang up and listen to the response.
[00:57:10] Randall Roth: Okay, thank you, Richard. Um let's have a a quick response from Tom Leopard.
[00:57:15] Thomas C. Leppert: Uh, [unintelligible — audio glitch] think the task force addresses that in a number of ways. Um, the the regulatory climate improvements, I think is going to encourage capital formation here. Everybody that uh we visited with, as well as most importantly the small business people in this state would raise that as a major issue. I actually think the UH is going to be very important in that because if we can generate more ideas, more marketable ideas that come out of the research of UH and some very specific areas, that's going to help. And then the third we spend a lot of time on it, but I think it needs to be mentioned again, and that is the taxes. If we have a tax climate that is more positive that encourages more more formation, we're going to accomplish exactly what [unintelligible — audio glitch] caller talked about.
[00:57:57] Randall Roth: So if you're at the crop duster level, you might have talked about a loan program for entrepreneurs, but at the 30,000 ft level, you're talking about a better educational system and that sort of thing.
[00:58:07] Thomas C. Leppert: We need to get the fundamentals in line. Our problems aren't that we're one program or we're a subsidy away from it. We need to get the fundamentals in line so then that we are in a better position to attract capital programmatically. But if you talk to people, it doesn't matter if you talk to uh a gentleman who was a Deputy Prime Minister from New Zealand that came in or if you talk to someone that was responsible for the largest business relocation firm or if you talk to somebody that worked in California and is at UCLA, they will tell you you've got to get the fundamentals in line and your fundamentals for attracting investment are not good. That's what this task force force plan does.
[00:58:44] Randall Roth: Okay. Well, we're we're down to the last few minutes, but Keith from Kahalu has been on the line for so long. Keith, I'm going to give you just 30 seconds to make a comment um and then we've got to to close the show. Go ahead.
[00:58:55] Keith: Hey, thanks, Randy. Yeah, the idea of a tax cut as a stimulant uh to the economy uh is not something that is historically verifiable. When Reagan made the tax cut back in 1981, uh it didn't stimulate job growth or savings. But one thing it did stimulate was it stimulated a lot of Americans buying imported goods from Japan and China and the other other imported goods. I wonder if a tax cut isn't more of a stimulant for Japan and uh the exporters from Southeast Asia than it would be for the economy of of Hawaii.
[00:59:30] Randall Roth: Okay. Keith, thank you. You took exactly 30 seconds. That's great. Um folks, we're down to the last couple of minutes and I want to give one each to our three guests in the studio. Pat Louis, you're first.
[00:59:43] Pat Louis: Okay, again, [unintelligible — audio glitch] would hope that the public will will come out and make their comments. We welcome uh their input. At the same time, I think that the task force and all of the participants, the 600 plus, almost 700 uh email and fax input suggest that we need to do something structural. And and I think that when we are looking at the structural changes, we've tried to focus focus on uh taxation, on deregulating government, on stimulating our major industry uh in Hawaii through increased marketing efforts, and overall, this will will reduce the cost of living for all of us, for for [unintelligible — audio glitch] uh the small business person, for the average resident uh and for the lower income. And together with this, uh I believe that it will also help to stimulate jobs [unintelligible — audio glitch] create the new jobs that we so desperately need in Hawaii.
[01:00:36] Randall Roth: Okay. Tom Okamura, State Representative.
[01:00:39] Tom Okamura: I just want to encourage the public to get involved. As I stated, we will be holding a series of town meetings uh on both on live TV and radio on each of the major islands. In addition to that, we will hold bipartisan town meetings in regional areas uh held sponsored by the legislators and so we welcome the public to come in and provide us with their input.
[01:01:01] Randall Roth: Okay, well, they've been so crisp in their comments, Tom Leopard, you've got a minute 25 seconds.
[01:01:06] Thomas C. Leppert: We need a strong economy. We need it for all of the reasons that your your listeners have have called in today and and made some very good comments. We need it to attract businesses so that we've got a strong economy. We need it to create a tax base that'll allow us to deal with the infrastructure we needs, to to be able to meet the needs uh of of all of our our citizens. That's the reason that we all need to focus on this issue. I think that this task force program, this plan is bold, it's aggressive, but it also needs to be. We live in a much different world than we lived in 40 years ago. We need to adapt to that world. I think this this plan does that and addresses it in a fundamental way so that we can compete and provide benefits not only to our people today, but our children tomorrow.
[01:01:52] Randall Roth: Okay. Well, I want to thank uh our guests this morning, Tom Leopard, who is uh currently vice chairman of the holding company for Bank of Hawaii, Patricia Louis, who is president of Omnitrack, a marketing and research company, and Tom Okamura, a State Representative from here in Hawaii. Uh folks, I really want to encourage you out there. If you don't like this package, get together a group of like-minded individuals, uh debate among yourselves, figure out what your vision, what the package looks like and offer it. And we want to do everything we can to encourage people to consider not just the package we've talked about this morning, but the package that other groups would like to offer. Our producer is Susie Roth, our technical wizard and director of operations for Hawaii Public Radio is Jeff Alardi. You've been listening to the Price of Paradise Radio show. I'm Randy Roth, Aloha.
[01:01:32] Speaker 1: I think that this task force program, this plan is bold, it's aggressive, but it also needs to be.
[01:01:38] Speaker 1: We live in a much different world than we lived in 40 years ago.
[01:01:41] Speaker 1: We need to adapt to that world.
[01:01:43] Speaker 1: I think this this plan does that and addresses it in a fundamental way so we can compete and provide benefits not only to our people today, but our children tomorrow.
[01:01:52] Speaker 2: Okay. Well, I want to thank our guest this morning, Tom Leppert, who is currently vice chairman of the holding company for Bank of Hawaii, Patricia Lui, who is president of Omnitrak, a marketing and research company, and Tom Okamura, a state representative from here in Hawaii.
[01:02:09] Speaker 2: Folks, I really want to encourage you out there. If you don't like this package, get together a group of like-minded individuals, uh, debate among yourselves, figure out what your vision, what the package looks like and offer it.
[01:02:21] Speaker 2: And we want to do everything we can to encourage people to consider not just the package we've talked about this morning, but the package that other groups would like to offer.
[01:02:29] Speaker 2: Our producer is Suzy Roth, our technical wizard and director of operations for Hawaii Public Radio is Jeff Allardi.
[01:02:35] Speaker 2: You've been listening to the Price of Paradise Radio Show. I'm Randy Roth. Aloha.
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