Wall Street Journal's John Fund (standing) met with SBH Leadership Circle members in early August to discuss a myriad of issues including the GE Tax increase and the Akaka Bill.

Aloha Also Means Goodbye

By John Fund
The Wall Street Journal

Hawaii Republicans were thrilled when they took control of the governorship for the first time in 40 years with the victory of Linda Lingle in 2002. Now as Ms. Lingle prepares to run for re-election, the good news is that no prominent Democrat has stepped forward to challenge her, she has raised a formidable $2.2 million in contributions and is a solid favorite. The bad news is that she is increasingly governing as a RINO, or Republican in Name Only.

Conservatives are so disillusioned with Ms. Lingle that several told me they now despair that Hawaii will ever overcome its high-tax and oppressive regulatory environment. In July, Governor Lingle allowed a bill raising the minimum wage by $1 an hour over two years to become law without her signature. She has pandered to politically correct thinking by embracing a disastrous attempt to treat Native Hawaiians like an Indian tribe and create a separate, race-based government for them. And she signed a bill that gives local counties the right to raise the state's general excise tax by 12.5%.

On August 10, the Honolulu City Council voted to hike the tax to finance an as-yet undefined multibillion-dollar mass-transit monorail for a city with only 800,000 people.

She's been such a disappointment that if I had to vote today, I'd leave my ballot blank," one leading conservative told me. "When the governor's staff is approached by conservatives, they are waved away and told, ‘Where else do you have to go?'" Governor Lingle may well be headed for a second term, but she also is bidding to become an Aloha State version of Christine Todd Whitman, who made history by becoming New Jersey's first female governor but was so reluctant to challenge the status quo in office that her two terms are largely remembered for their mediocrity.

John Fund is a n editorial writer for the Wall Street Journal and Opinion Journal and author of several books. He is a frequent observer of Hawaii's political and business events. Fund has been a keynote speaker at the annual SBH Business Conference as well as other SBH events and is a frequent guest on Rick Hamada's KHVH radio talk show.

PUC Warns Gas Caps May Hurt The State

By Malia Zimmerman, HawaiiReporter

Gasoline supply shortages, one of the state's two oil refinery closing, wholesale marketers ceasing operations; smaller, remote gasoline stations running out of gasoline, businesses wary of investing in Hawaii - these are just a few of the predictions the state's Public Utilities Commission are making about the impact of the state's new gas cap law - the first of its kind in the nation.

The PUC, the agency in charge of implementing the state's new gas cap law set to go into effect Sept. 1, 2005, also notes there is an "increased risk and uncertainty due to the ethanol blending requirements that go into effect in April 2006."

In a recent letter to Gov. Linda Lingle and the House and Senate leadership, the PUC outlines these and other potential problems that may arise once the gas cap law is implemented.

To see the PUC Docket 05-0002 on the Gas Cap Law in an Adobe Acrobat pdf version, go to: PUC on the Gas Cap. To see the PUC letter to Gov. Linda Lingle in an Adobe Acrobat pdf version, go to: PUC letter to governor.

The gas cap law was introduced by Sen. Ron Menor, D-Mililani, and passed in 2001 with the approval of then Democrat Gov. Benjamin Cayetano, but implementation was delayed for four years.

Gov. Linda Lingle, who is opposed to the bill and was not in office when it first passed, has the power to stop the legislation from going into effect through use of her executive powers.

Several groups have filed petitions asking for the governor to stop the gas cap, but the governor has so far refused to use that option. Here are the recent filings from those entities opposed to the cap: Chevron filing; Shell filing; Tesoro filing; HPMA filing

Supporters of the gas cap say it will lower the cost of gasoline and force big oil companies to reduce their profit margin, which they claim is excessive and illegal.

However, opponents of the gas cap plan say the impact on the petroleum industry, on consumers and on the economy in the state will be severe. They predict the cost of gasoline will rise by an estimated 20 cents a gallon, gas stations will close, one of two oil refineries in the state may shut down and the economy will be hurt.

Lowell Kalapa, president of the Tax Foundation of Hawaii, is confident the gas cap law will deter investors from out of state. "Just put yourself in the place of a potential investor or business looking for a place to locate a new business and you come across Hawaii as one of your considerations. Hey, what a great place, great climate, access to the Asian markets, and maybe you can even get a tax credit or two. But wait, here is a state where the local government has dictated how much can be charged for gasoline. If that government can decide what the selling price will be for gasoline, will they someday tell me how much I can charge for my product?"

An independent study commission by Cayetano and funded by the state at a cost of $400,000 also found the cap will hurt consumers and will likely cause a gasoline shortage. See the report here: "A Policy and Market Analysis of Gasoline Pricing and the Petroleum Industry in Hawaii" Lingle said in a recent interview about the gas caps that she plans to allow the law to go into effect despite the dire predictions.

"I've argued against the gas cap, but Democrats have insisted it go forward," Lingle says. "I hope the proponents of the gas cap are right - and it brings down the price of gasoline, but I don't believe it will."

Critics of the legislation say the governor should take a strong role in halting the gas caps from going into effect and lead the state in finding other ways to reduce the price of gasoline in the state, such as reducing taxes, increasing competition and reducing regulations.

Hawaii has nearly the highest gas prices in the nation, but the state also has the highest gasoline tax in the nation.

September 2005 SB News Front Page

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