Matrix for recovery

Film production. Research and development. Aerospace. Renewable energy. State construction.

State House members are moving a package of related bills — what they are calling a matrix — to position Hawaii for economic recovery. The legislation, now before the House Finance Committee, is intended to lift emerging sectors of the state’s economy and to feed the core drivers of tourism and the military.

"This is a matrix. We’re trying to create a vision. The people of Hawaii want a vision for economic recovery," said Rep. Angus McKel­vey (D, Olowalu-Kapalua), chairman of the House Economic Revitalization and Business Committee.

The House might also go much further than the state Senate to streamline permitting and procurement for state construction. Citing the rules as potential barriers, lawmakers have proposed time limits or temporarily suspending judicial review of procurement decisions and giving the governor and county mayors the authority to exempt certain state and county construction projects from environmental review.

The Sierra Club Hawaii chapter and others have urged lawmakers not to bypass such oversight, arguing that the state does not have to choose between the economy and the environment.

The matrix is the House’s main economic development initiative in a session lawmakers have dedicated to job creation and economic recovery. The Senate has lined up behind a massive $500 million investment in bond-financed state construction to attack repair and maintenance backlogs at public schools, hospitals and other state buildings.

While the House and Senate are on separate tracks, there is some overlap, especially on film production tax credits and state construction.

The House would extend a tax credit for motion picture, digital media and film production — set to expire in January 2016 — until January 2025. The bill would raise the production credit ceiling to $10 million, up from $8 million, and increase the credit for production costs on Oahu to 20 percent, up from 15 percent. The bill would also provide separate tax credits for production costs and staff wages and offer an extra credit for wages paid to Hawaii residents.

"It’s a top priority. It floats all boats. We’ve made it fiscally responsible by tying the increases to the use of local labor and local businesses," said McKelvey, whose efforts to boost tax credits and lure Hollywood film studios to the islands failed last session.

In the Senate, Sen. Carol Fukunaga (D, Lower Makiki-Punchbowl), chairwoman of the Senate Economic Development and Technology Committee, would enhance film and digital media production credits and offer a new production infrastructure credit. But senators would require entertainment companies to hire from 50 percent to 75 percent of production cast and crew from Hawaii to be eligible for the enhanced credits.

"I think ultimately we’re going to wind up in the same place," Fukunaga said of the two approaches.

In contrast to the Senate’s $500 million repair and maintenance investment, the House envisions "Ten for Ten," a state policy commitment to back major construction projects over the next decade, including the city’s rail project and the Thirty Meter Telescope on Mauna Kea. Lawmakers have amended the bill to focus more broadly on emerging sectors, such as renewable energy, film production, broadband and aerospace, but the specific projects are still included as goals.

Both the House and Senate would streamline permitting and procurement so state construction projects would move faster, but the House appears ready to go further. One bill would impose time limits on administrative and judicial review of procurement decisions, restrict contract protests and require protest bonds that would be forfeited if the challenges fail. Another would suspend judicial review of procurement decisions until July 2014.

Aaron Fujioka, the state’s chief procurement officer, told the Senate earlier this month that a typical state construction project can take 20 to 40 months to complete. He said procurement takes up only about three to six months of that time, with the rest of the time due to other government regulation.

"We’re working really hard on the procurement code and the protest area, trying to eliminate some of the complexities and trying to streamline jobs," said Rep. Isaac Choy (D, Manoa), adding that the goal is have more state construction projects ready to go by the third and fourth quarters of this year.

While there might be some consensus about improving permitting and procurement, lawmakers will likely encounter heavy opposition if they exempt state construction projects from environmental review.

House Speaker Calvin Say’s bill would give the governor and county mayors the authority to free certain state and county construction projects from environmental review until July 2014. The bill describes exemptions for narrowly defined projects where the environmental affects would be minimal or are weighed against the economic and employment benefits of speedy construction. The bill specifically excludes Hono­lulu’s rail project and other major projects such as wastewater treatment plants, landfills or power generation facilities.

Robert Harris, director of the Sierra Club’s Hawaii chapter, said lawmakers wrote the environmental review law three decades ago so environmental concerns are given appropriate weight along with economic and technical considerations. He urged against being overcome by a "turn-the-bulldozers-loose mentality."

"As we scratch at particular examples, it’s not the regulations that are causing the problems," Harris said.