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Saturday, July 26, 2014         

OUR VIEW: STATE OF THE STATE


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Abercrombie starts boldly


POSTED:



Gov. Neil Abercrombie made an auspicious start to his new administration yesterday, delivering an address warning lawmakers and the public that tough changes are needed to put the ship of state — or the "canoe," in the governor's metaphor — upright and back on course.

The real test will come over the next few months as Abercrombie, an alumnus of the state Legislature himself, demonstrates how well he can win over support for his general strategy.

As outlined in the annual State of the State address, he seeks to make some cuts in publicly funded benefits and programs, and targeted increases in revenue aimed at closing a roughly $844 million deficit in the upcoming budget negotiations.

Further details are needed on the plan, and given that the governor's budget is still being hashed out, final evaluations of his proposals will have to wait. But there were elements of the speech, both in the substance and tone, that begin to outline a bold, reasoned strategy for economic recovery.

» Abercrombie seems willing to touch a third rail of government policy, particularly sensitive for a Democrat: curbing spending on "unfunded liabilities" such as public-employee retirement plans. He specifically slated reimbursement of retiree Medicare B costs as a bonus the state can no longer afford. That's an easy case to make with taxpayers, but public worker unions surely will push back here.

» Further tax changes include repealing the deduction for paying state taxes, which he rightly characterizes as an "absurdity." And retiree pension plans should be taxed the same as other income, he said, underscoring that the more financially strapped retirees will be exempted. Precisely where that line is drawn will help to define the impact this has on the state budget, but on first blush this appears to be at least a modest source of revenue.

» Another bump in tax income, from sales of alcohol and sodas, would be directed toward public-health services, including educational and prevention outreach. This won't help erase the deficit as much as it might offset some of the programs the governor said will be lost with reductions in federal welfare spending.

» Assessing a hotel room tax on timeshare units, as Abercrombie proposes, deserves consideration, as long as the law would target units that truly are part of the visitor industry rather than apartments that are shared among family members.

» What is most noteworthy in the tax plan is what's not mentioned: any increase in the general excise tax. A promise to leave that alone was a key plank in Abercrombie's campaign platform, a pledge that must be kept in the interest of helping businesses rebound.

Recurrent themes from past administrations figured in yesterday's speech, too. Abercrombie vowed to streamline the processes businesses face in order to support, for example, transit-oriented development along Honolulu's rail line. He also kept a spotlight on energy independence efforts, and listed ways to boost construction through improving public buildings. It was good to hear the new governor commit to worthwhile older ideas.

Things are certain to become far less congenial when the real knockabout of lawmaking gets under way. Abercrombie must embrace a new executive role that requires both vision and the ability to persuade a building full of other politicians.

The governor said yesterday that he is open to other ideas, and there is at least some indication already that he is listening. For example, he seems willing to consider restructuring the Public Utilities Commission to be the vehicle for clean-energy development, in lieu of an energy authority.

There's a hard slog ahead for Abercrombie and the legislators with whom he shares power. But judging by the collegial tone of yesterday's overture, there is at least the prospect of a session that produces better governance for Hawaii's people.






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