Ken Schoolland Next Sunrise Speaker

The next monthly SBH member Sunrise Networking breakfast is Thursday, March 29, 7 - 8:30 am in the Liberty House Pineapple Room, Ala Moana Center, 4th floor. There is easy access and plenty of free parking. The popular SBH networking Forums are held the last Thursday of each month through October.

Speaking will be Ken Schoolland, free market economist, professor at Hawaii Pacific University and author "Shogun's Ghost," and "Jonathan Gullible". He is lively, informative and business savvy.

The February 22 speaker was Donna Estomago, of Lanikai Elementary Charter School. Estomago discussed the role of Charter schools and their business approach to improving education in Hawaii.

Emphasis at Sunrise is on networking. There are also surprise guests, and current business information. Sunrise Networking costs $15 for SBH members and their guests who pay in advance (refunds until March 27); $20 for non-members and at the door, provided space is available. You'll network, meet new people, do more business, and enjoy a full breakfast buffet. Call SBH at 396-1724 for details or send in the reservation form in the printed edition of SB News.

House Demos Stifle Legislative Debate

The majority State House Democrats (32 of 51 members), faced with a Constitutional challenge from a newly reinvigorated Republican minority (a record 19 ) for the first time, responded in mid-February by attempting to stifle debate, deny open discussion, and block voting on controversial issues. The GOP was unflinching in its determination to represent the public and to have much wanted legislation publicly aired. The majority ignored the mandate of both the Hawaii and U.S. Constitutions. Gridlock occurred on Friday, February 16 as the majority maneuvers resulted in a shutdown of the House. Bills were supposed to be moved by that day; the House leaders changed their own calendar to delay. The gridlock was finally broken on Tuesday, February 20 when the 19 Republicans won the right to pull certain bills to the floor for a vote. Three General Excise Tax reductions bills were finally openly debated, then all defeated along straight party lines, 31-18 (with two absent). All Democrats opposed the tax cuts.

The 21st State Legislature started the 60-day regular session January 17. With nearly one-half of the Session already over, no major business improvement bills have been passed: no action taken on tax reduction, workers' comp reform, privatization or regulatory relief, but some are moving. Bills to increase taxes, minimum wages, a "living wage," and more fees and regulations ARE also moving.

Many bills died an early Session deathãor were never given a public hearing. Some current legislative issue highlights (still alive):

* Taxes & Fees ã HB 427, a Small Business Caucus bill, accelerates the 7-year phase-in of General Excise Tax de-pyramiding. SB 656 accelerates the GET deduction for leasing and sub-leasing. HB 426 originally about de-pyramiding, amended by Rep. Lei Ahu Isa to include a new luxury tax. HB 428 reduces the corporate income tax (a similar bill, SB 1271, was held). The Employment and Training Fund Tax (addition to the UI tax) was to sunset, but heavy lobbying by the State Labor Departmentãand those businesses and organizations who have been the beneficiaries of other business' tax ãmoved SB 733 to be permanent. It is a bad bill and if passed will guarantee that the EPT tax will increase to provide more subsidies. SB 198 allows tax appeals without paying the tax first. Many businesses testified in favor of SB 588 which would exempt Professional Employer Organizations (PEO) from double 4% taxation. HB 938 increases the income tax personal exemption, and HB 459 establishes a GET "tax holiday' for retail clothing sales. HB 1256 (HD1), HB 1382, SB 1351 are beverage container deposit bills that add additional fees to the state for "processing." SB 446, SB 1392 and SB 729 involve easier payment of UI tax benefits to strikers or workers not negotiating. SB 1029 (SD1) increases the transient accommodation (hotel) tax. SB 536 (Matsuura) increases the GET. Refund of Hawaii Hurricane Relief Fund (HHRF) monies to Hawaii homeowners appears dead.

* Privatization ã HB 620 responds to the Kono v. County of Hawaii case providing government privatizing options. SB 706 extends the sunset date of Act 230, (1998), also relating to privatization.

* Workers' Compensation ã "Stress" claims would end under HB 355, and HB 529. SB 16 increases the medical fee schedule which would increase WC premiums; HB 308 creates a WC advisory council.

* Employer Mandates ã which add costs to all businesses include, HB 841 (HD1) which extends drug abuse treatments on all medical policies, SB 78 requiring "parity" for mental health treatment, and various minimum wage bills (combined into one bill, SB 1144) and HB 166. SB 857 requires contractors with the state to pay a "living wage" of $9.43 per hour. HB 1502 (Yoshinaga) is a good bill that would create medical savings accounts for medical insurance purposes.

* Regulatory Reform ã Not much from the Lt. Governor's "SWAT" (Slice Waste and Tape) program. HB 948 extends the Small Business Regulatory Flexibility Act and funds the small business defender. SB 1312 keeps the "defender" in the Legislature. SB 28 requires employers to give 90 days (45 now) notice of intent to close.

Union arbitrated pay raise demands still dominate the Session with HGEA, HSTA and UHPA standing in line demanding nearly $300 million in pay hikes. HSTA and UHPA authorized strikes if negotiations fail. Meaningful collective bargaining reform bills are not progressing.

The proposed biennium budget is 11% higher than currently. The Governor proposed more than $1 billion in new projects including a $75 million aquarium, new medical school and assorted pork projects.

The newly appointed head of the House Economic Development & Business Committee, Rep. Lei Ahu Isa stunned the Hawaii Venture Capital Association by declaring, "the role of government is to help redistribute wealth to the poor." Senate Economic Development chair, Rod Tam told the group, "there is no definition for high technology."

The Legislative Auditor, Marion Higa, continues her scathing financial audits of government mismanagement and waste. Her latest reports blast unaccounted for monies under the Felix v. Cayetano consent decree; the continuing accumulation of power in the executive branch due to legislative impotence, and waste in the Department of Human Services, including welfare payments to "dead" recipients.

Still time to salvage a positive Session if business becomes more visible at the Capitol this month. The SBH Legislative Coalition needs your input! Call Dick Rowland (487-4959) and plan to attend the next meeting, Wednesday, March 21, 11 AM, #224, State Capitol. Learn how the Legislature works and how you can make changes.

GOP Wrestles to Free "Age of Consent" Bill

The 19-member House Republican caucus pulled an "Age of Consent" bill out of the House Judiciary Committee on February 13 in order to bring it to the floor and debate the merits of the bill. Their efforts were foiled by some questionable rulings by House Speaker Calvin Say.

The Republicans had announced the day before that they intended to use their authority to "recall" an "Age of Consent" bill from the Judiciary Committee where its Chairman, Representative Eric Hamakawa, (D, Hilo) had not scheduled hearings for any proposal addressing the question. The Republicans argued that there was sufficient public interest in the bill and that it should be heard. They noted that many of Hamakawa's own constituents, including the Big Island prosecutor's office, supported raising the age of consent after trying a case involving a forty-four year old man and a fourteen year old girl.

After acknowledging that the legislation had been legally pulled, the Speaker Say immediately entertained a motion to recommit the bill back to the Judiciary. He made this ruling even though there was a Republican motion already on the floor to allow the "consent" bill to pass. The Republicans challenged Speaker Say's ruling but the Speaker used a partisan voice vote to support his ruling. The Republicans, declared all they wanted was to allow the bill to have a debate. They directly asked for assurances from Chairman Hamakawa to schedule a public hearing if the bill were recommitted. Hamakawa would only say that he may consider it along with many other bills before his committee.

The particular bill the Republicans recalled was actually sponsored by a Democrat, Rep. Marilyn Lee (Mililani). Rep. Lee awkwardly voted to recommit her own bill, where it will probably never see the light of day again.

"It seems as though the Democrat "old boys" would rather bend the legislative and constitutional rules rather than give an inch to the Republicans on this important issue," said Rep. Colleen Meyer. "In their arguments for re-committing the measure, they said they were doing it only to give it a chance to have a public hearing. But they already had their chance and they failed to act. When given the opportunity to pledge a hearing at a later date, they refused to do so."

The House Republican caucus had pointed out in their press conference the day before that the present age of consent in Hawaii is fourteen years of age, the lowest in the nation. Many groups have urged the passage of a measure raising the age and increasing the penalties for adults who have sex with girls and boys under the age of consent.

Representative Colleen Meyer added that not only teen-age pregnancy was a great concern for parents of 15 year old daughters who worry about males who lure children into drugs and then into prostitution to support them. Eventually these poor children are tossed out on the street when they become sick or pregnant. Said Meyer, "We need to resolve this question now. Already too many of Hawaii's children have suffered because society offers them inadequate protection."

State Requests Transfer of Stadium to University

By Malia Zimmerman

The Aloha Stadium, parking lot rows A, B, C, sections 3 and 4 stood noticeably empty on Sunday, February 11. It was just one of many sections at the Aloha Stadium Swap Meet that once boomed with the activity of 900 vendors and thousands of shoppers. That was until October of 1999 when the state seized operations of the swap meet from Edward Medeiros, 71, who founded 20 years ago and operated the Aloha Flea Market, paying the state $4 million annually in rent to lease the land around the stadium.

Now the state-run swap meet operations have withered substantially causing serious unrest amongst the vendors who say the state has no idea how to run a swap meet, has broken numerous promises to them, and is hurting them financially. Some vendors have packed up and left all together out of frustration.

"This parking lot used to be filled with vendors and now many have dropped out because they are frustrated with the management of the swap meet. Some vendors just don't bother showing up because there isn't the crowd there used to be," says retailer Mike Chung, who pointed to the empty parking lot behind his booth. "This used to be a prime section."

While Aloha Stadium Authority members maintain the state is bringing in more traffic and money for vendors and the state, $3 million annually and thousands more shoppers, dozens of vendors interviewed, including the president and vice-president of the 200-member vendor association, adamantly dispute the state reports. They say unanimously that business has never been worse. Armed with personal testimony, vendors gathered at the State Capitol, February 13, to testify at a hearing about the problems they are encountering with the state-owned business.

SB 1079 before the Senate Economic Development Committee proposes that the Aloha Stadium management be taken over by the University of Hawaii. Vendors did not have an opinion on the state departments switching management responsibilities, however they pleaded for a voice in their future. Jim Cablay, president of the Aloha Swap Meet Vendors Association, told legislators that hundreds of small business owners are operating at the Aloha Stadium to pay for their food, children's education and rent. "We want to continue to conduct business in the same location without disruption to the swap meet. We'd like a say in how the state markets the swap meet or in any changes that can affect our ability to make meet our financial obligations or affect vendors in a negative way," Cablay says. There were no representatives present from the Aloha Stadium management or Aloha Stadium Authority to testify and no testimony was submitted. This after representatives of the management were specifically asked by legislators earlier in the day to make sure they were at the hearing to listen to vendors' concerns.

"The stadium management just doesn't care about us or the swap meet and never listens or acts on our concerns," says Shin Lin, vice president of the Aloha Swap Meet Vendors Association. A representative from the state Department of Accounting and General Services, employed with the state just three months, could not answer questions about how much the swap meet is allegedly making over previous years, nor could she reassure vendors of their future. One of the biggest complaints by vendors who were interviewed at the swap meet is the lack of traffic at the stadium on swap meet days: Wednesday, Saturday and Sunday. They blame lack of traffic on the state's poor marketing and advertising efforts by Consolidated Amusement and the state.

The Department of Accounting representative says Consolidated Amusement is given $50,000 a year to market the swap meet. A report given to legislators by the Aloha Stadium management documents that it is actually $186,940 that was given to Consolidated annually by the state to market the swap meet. Unfortunately, vendors say, the budgeted monies are devoured by Consolidated Amusement and spent on advertising in its own theaters. The in-theater advertising that runs before the movie features a still slide of the swap meet. And this marketing strategy doesn't seem to impress the vendors.

"Before there were advertisements directed at visitors, in tourist publications and in Waikiki. We don't get the public or the visitors to come here because of advertisements in the theaters," Chung says. Sen. Sam Slom, R-Hawaii Kai, voiced strong concerns over what the state is really spending and bringing in to operate the swap meet and how the vendors are being treated." I spent three-and-a-half hours at the stadium the other day just talking with the vendors about how unhappy they are. I am concerned because the state has not kept its commitment, responded to health, safety, concerns or other problems that the vendors have brought forward," Slom said.

Political retribution by an outraged Gov. Benjamin Cayetano was the catalyst that led the 9-member Aloha Stadium Authority headed by Michael Green, the governor's cousin-in-law, to cancel Medeiros' 5-year lease, then in its third year. The governor was rabid over the support Medeiros and the majority of the flea market vendors gave to his opponent, Linda Lingle, in a 1998 gubernatorial race that brought Cayetano a victory by around 1 percent. The cancellation of Medeiros' lease was followed quickly by the Authority putting the operations out to bid. When no company showed any interest in the state bid, the Authority decided it was time for the state to go into the swap meet business. A new bid was made public and it requested bids from companies that could manage the swap meet. Consolidated Theaters, the company that already manages another swap meet in Hawaii, won the bid and took over in October of 1999, taking in 12 percent of the revenue from the operation. That move shut down Medeiros' business all together.

Now instead of the Aloha Flea Market paying for the operation expenses, state taxes, and $4 million annually for the privilege of leasing state land, the state used taxpayer monies to pay for services. The state's intention to fool the taxpayer came at a Legislative hearing at the State Capitol in 2000. Aloha Stadium Authority representative requested and was granted $1 million to operate the swap meet. Despite numerous denials by state officials who say the $1 million was simply needed upfront and would be paid back to the state, the authorization is listed free and clear in HB 1600 on the state Legislative Web site. The money was used to hire new state workers, hire security, market and advertise the swap meet, and pay Consolidated to ensure the market operates smoothly.

Meanwhile, Edward Medeiros sued the governor's administration in state and federal courts and won his case, settling for more than $300,000, but Medeiros has still not been paid any money from the settlement. He sells his food products three days a week at the swap meet he founded and continues to watch business decline. "It is sad what the state is doing here to the people "and it is all over politics," Medeiros says.