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Isle business leaders size up Abercrombie

They give him good marks but will keep watch on his pledge to hold down taxes

By David Butts

LAST UPDATED: 1:58 a.m. HST, Nov 7, 2010

As a candidate, Neil Abercrombie promised to "hold the line" on state taxes, specifically pledging not to increase the general excise tax.

But he also said he wants to "build a modern infrastructure in Hawaii, focusing on the energy grid, information, irrigation and transportation, including supporting Honolulu's rail system the right way."

Abercrombie, a Democrat, promised voters he would "rebuild the safety net ... so we can stave off hunger and poverty, curb domestic violence and substance abuse, and provide services for the most vulnerable in our society."

Hawaii business leaders will be watching closely to see whether Abercrombie as the new governor will keep his promise on taxes or give in to the temptation of raising fees to pay for some of his other priorities.

"I hope he'll keep his promise," said Eddie Flores Jr., L&L Hawaiian Barbecue president and CEO, and a Republican activist. "You cannot just keep raising taxes." With small businesses already struggling, a tax increase will lead to more layoffs, Flores said.

Taxes top the list of concerns among business owners as the state shifts from eight years under Republican Gov. Linda Lingle to a new Democratic administration. The prospect of more government regulation, an unwillingness to confront public-sector unions and the absence of any check on the Democratic-controlled state Legislature have business leaders worried.

Conversely, many in the business community see Abercrombie as a listener who will work with business to improve the economy and will bring in more federal dollars.

"He's a stand-up guy and a listener," said Kitty Lagareta, CEO of Communications Pacific and former Lingle political adviser, who has known Abercrombie for more than 30 years.

"He's a really smart guy," added Mitch D'Olier, Kaneohe Ranch president and CEO. "I see more of an opportunity side with Abercrombie than concern."

D'Olier, who said he did not take a public stance on the governor's race, said Abercrombie "knows you have to get the economy going to do what he wants to do." D'Olier does not expect Abercrombie to raise taxes in a slow economy and anticipates he will consult with businesses before moving ahead with major changes, such as his plan to create a state energy authority. "I think there will be dialogue before that is done."



"The general excise tax will not be raised. Given the public's lost confidence in government, no reasonable argument can be made to raise the GET. Government will have to make better use of the revenues that it has and grow the economy if more revenues are needed."


"Based on the Lingle/Aiona administration's own projections, there will be room in the general fund for the next governor to restore broken services and for making smart public investments without raising taxes."


"A review and revision of all processes, beginning with business startup requirements, must be conducted with small-business participation and the goal of supporting entrepreneurs. Government agencies that lack capacity or sufficient IT infrastructure will be upgraded. Businesses also need a stable regulatory environment and a higher degree of certainty that rules, regulations, programs and laws affecting business won't change substantially from year to year."


"I will aggressively work to develop projects in wind, solar, geothermal, ocean, biofuels and other emerging technologies."

"We will overhaul our outdated regulatory system by creating a Hawaii Energy Authority that will put clean-energy projects on a fast track. "

"Even though converting to solar power and creating a more energy-efficient home saves Hawaii families money over time, many lack the resources to pay the upfront costs for these improvements. Government can provide the funds to be paid back over time using its bond issuing authority."


"An Abercrombie administration will use its relationships and knowledge of Washington, D.C., to capture hundreds of millions of dollars left on the table for projects in transportation, housing, health care, education, energy, environmental sustainability, technology, agriculture and small business."


"Recent efforts to dismantle and renege on tech-related tax credits sent a message to businesses, investors and our young talent that Hawaii's commitment to change is unreliable. It is the worst message we could have sent."

"It is now time to construct a new policy regime, not only with incentives to attract investment, but also with additional supports to help businesses become viable here in Hawaii and create jobs for our people."

Source: Abercrombie campaign pamphlets, "A New Day in Hawaii, A Comprehensive Plan" and "A New Day in Hawaii, Recovery and Reinvestment Plan" pamphlets

Sam Slom -- the sole Republican in the state Senate and president of Smart Business Hawaii, a small-business advocacy group -- also praised Abercrombie's intelligence.

"Neil is a smart man," Slom said. Once Abercrombie takes office on Dec. 6, he will see the budget numbers and realize he might not be able to do all the things he wanted to do, Slom said.

While the new governor might adjust some of his goals, Slom said he expects Abercrombie will eventually raise taxes to safeguard public union jobs and pay for new programs.

As for Abercrombie's promise to review government rules to make them more supportive of entrepreneurs, Slom said he has heard many candidates pledge to cut red tape only to run into entrenched government workers, who resist any change that could reduce their numbers.

Lagareta agreed: "If one public-sector job may be lost, we won't do it."

Lingle held the line on excessive government regulation of business, and with her departure the Democrats will want to "make a rule for everything," she said.

While there is debate about whether Abercrombie will raise taxes, most agree he will do all he can to bring in more federal dollars, which could help jump-start the state's languishing construction industry.

Highway, harbor and airport projects would give the economy a quick boost, said Panos Prevedouros, a University of Hawaii engineering professor and former candidate for Honolulu mayor. "Get on with the projects," Prevedouros said. "The projects will bring prosperity and jobs."

"Hopefully he (Abercrombie) will help get more stimulus money to work on construction," added Flores.

An early test of Abercrombie's impact on business will come with the planned increase in state unemployment insurance premiums next year. The average annual premium paid by businesses will jump to $970 from $630 per employee.

"It's a big job destroyer," Slom said.

"Everyone in business is concerned about unemployment insurance," added D'Olier. "It would be great to have some relief."

One common theme with the business leaders interviewed for this article is the expectation that Abercrombie will be willing to hear them out.

"The people I know feel this is going to be a breath of fresh air," said Jay Fidell, a longtime business lawyer, founder of ThinkTech Hawaii and Abercrombie supporter. "Everyone has the feeling that this governor is going to be much more accessible ... For the first time in eight years they will be able to get into Washington Place."

To be sure, over his 30-plus years in public office, Abercrombie has made many friends in the business community, even among those who don't support him politically.

In the early 1980s, Lagareta, whose youngest son was born with bacterial spinal meningitis, witnessed the difficulty neighbor island families had when their children needed treatment on Oahu. She began taking other parents to her house for showers and meals and became involved with planning for the first Ronald McDonald House. But she couldn't find a neighborhood on Oahu willing to accept a house for visiting parents with ill children.

Abercrombie, a state senator at the time, "became a crusader for us," Lagareta said. With his help, the first Ronald McDonald House opened in Manoa in 1987.

"I've always been grateful," said Lagareta. "I will never forget."

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