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Tonight I am going to talk about the 1999 Legislative Session, the interim, and some of my ideas for the 2000 Session.

With the ending of the legislative session last month, we are now in the process of awaiting the Governor’s approval or rejection of bills and deciding whether the legislature will convene next month in special session.

Whether you consider the 1999 Legislative Session a "Do Nothing Session" as Governor Cayetano has suggested, or you consider it a mild success, the truth of the matter is that the 1999 Session disappointed more people than it pleased. And there are solid reasons for this.

First, it will be more known for being the Bronster Session than anything else. It was a disappointment to many of us who would have liked to see Margery Bronster continue in her post as Attorney General, but the Senate felt differently with 14 Senators voting against her confirmation.

43 of the 50 States elect their Attorney General. I think Hawaii should become number 44 and I will introduce a Constitutional Amendment to provide for electing the Attorney General. We elect the Prosecuting Attorney, it makes sense to give the Attorney General similar independence.

Another reason the 1999 Session disappointed a lot of people is because it started with such a high set of expectations. For example, during the Opening Day speeches everyone got the message that the Legislature was going to fix the economy and fix education as its top 2 priorities for the Session.

Fixing the economy was so high on the public’s agenda that when former Speaker of the House, Joe Souki, said there was no message in the November 1998 election about the economy, he lost his job. Though we didn’t fix the economy, we did a few things that you may agree make sense and a few things that you may be upset with as I am.

First, most of us are pleased that a bill reducing the pyramiding of the General Excise Tax actually passed. The sad thing about this bill is that it will take a full 7 years before the G.E.T. rate of 4% will be reduced to .5%, and this is only for intermediary services. For example a lawyer would not have to pay the general excise tax on a printer’s invoice for copying a client’s files; and a real estate agent hiring an appraiser would not have to pay 4% on his client’s assessment.

The other good news is for businesses that export their services overseas or to the mainland. A bill was finally passed this session that exempts all exported services from the 4% G.E.T. and will stimulate exports from the state of Hawaii.

These two bills, while good for some businesses, do not do enough to stimulate the economy. Dribbling in a tax cut over seven years is not going to make any difference or create any jobs in the next few years. Looking to the future we need to make tax cuts for all of us. I will continue to push to exempt everyone from the GET when they buy food, pay rent, or get medicine. Broad-based tax cuts will stimulate the economy.

The Governor used his line item veto to modify the State Budget (House Bill 100) to reduce contributions to the Employee Retirement System (ERS) by almost $83 million. This reduction in ERS contributions reflects the impact of Senate Bill 1518, which raided the state employee pension fund to pay retroactive salary increases for current employees. Pension funds are special and should be treated with respect – not used to avoid making hard economic decisions. Our retirees deserve better.

There are a number of us in the legislature, both Democrats and Republicans, who think the State should create a defined contribution retirement plan for state employees. A defined contribution plan is one where the state and the employee make tax-deferred contributions to individually owned retirement accounts. The employee gets the money invested in the plan when they retire or leave state employment. A defined contribution plan cannot be raided by the legislature every time they need money, because the retirement account belongs to the employee. Another advantage of a defined contribution plan is that it is portable – if you leave state government you can take your pension with you. To be fair to all employees they should have a choice between the existing pension plan and a defined contribution plan. Employees would be able to compare the two types of plans and decide which one is best for them and their family. I will introduce legislation next session called the Portable Retirement Option Act which will give state employees the freedom to choose a defined contribution plan if they want to do so. Employees who are concerned with the annual raids on their pension fund by the legislature would be well advised to sign up for the defined contribution plan.

Regarding our promise to fix education, let me say we’re still in a fix. Instead of helping education we hurt it by passing a bill that cuts the Educational Facilities fund from $90 million per year to $45 million per year. This means less money will be available for school construction in the future, and we all know how important building maintenance funds are for the upkeep of our facilities.

The most we did to fix education was to add $114 million to the education budget. Unfortunately most of the money will not go to fixing education so much as satisfying some court mandates as well as collective bargaining agreements we must now pay for. On the positive side, it’s a pleasure to report that a "New Century Charter School" act (Senate Bill 1501) was passed and signed into law that allows up to 25 schools the option to choose more autonomy (but not from collective bargaining) and the ability for the community to form their own board of education.

Unfortunately, the Governor vetoed two important education bills. House Bill 310 required DOE to budget for athletic programs for new schools. There is no reason new schools such as Kapolei Middle and High should not have athletic programs, as should all schools. Senate Bill 46 required DOE to report to the legislature how the school budget is to be spent, school by school. I find it hard to understand why the Governor and DOE do not want the community to know how much of our money is being spent in our schools.

Our community is experiencing rapid growth. The 1999 Legislature appropriated funds to operate the Kapolei Middle School; construct Kapolei High School, and design a Family Court Center and Juvenile Detention Facility. The reason for mentioning all of this is to note the growth momentum that we’re experiencing in our Second City. If you’re like me, you anticipate a vibrant city with a full outfit of businesses and government services free from the need for a long commute to the "old city" of Honolulu.

There are many examples of what is special about our community. Let me mention some recent examples. Earlier this month I attended an award ceremony honoring a number of our neighbors. This was Campbell Estate’s annual KOA (Kapolei Achievement Award) ceremony:

Community Service Award: Paula Loring

Education Award: Gentry Homes, Ltd.

Entrepreneurship Award: The Sou Family, owners of Aloun Farms

Environment Award: Ihilani Resort & Spa

Lifetime Service Award: Martha M. Makaiwi

Also this month, Kent and Lori Untermann who run Pictures Plus, Kapolei, were honored by the Accounting and Consulting Firm, Ernst and Young as the Hawaii Retail Entrepreneurs of the Year.

And six Kapolei Elementary School Students and their teacher received a national award for designing an educational web site. The students are Kalalau Cantrell, Kawika Banes, Chaleesa Adrazado, Tisha Liu, Beverly Lapuz and Raymond Enriques, and their teacher Michael O’Connor. They won a Junior Platinum award for their website "How Our Hawaiian Islands Were Formed." Over 1000 teams from around the country submitted entries and our kids won.

The two biggest problems facing our State remain the economy and education. Each of us pays taxes to support a government that is too big and too expensive. We cannot improve our economy until we reduce the cost of government and lower the tax burden on all of us. Our challenge for the future is to make the State government efficient and effective.

I have 30 years experience working with government at the federal, state and city/county levels. The vast majority of those government workers were just like you and I – smart, dedicated and hardworking. Although our State government may be too big and too costly, we cannot blame the individual employees. In fact, our government employees are the solution to the problem.

Unless our economy improves we will soon face a crisis. Past tax reductions will decrease State revenues. We will be faced with having to cut State government with a meat ax - employees will be laid off.

If we act soon we can avoid layoffs. Our government employees know where the waste is and where we can make improvements. We need to harness their energy and knowledge to reform how government works. The Governor and the Legislature must look our government employees in the eye and say "we need your ideas and cooperation to improve how we do business, in return we promise no one will lose their job."

Each State manager and employee must focus on doing their job cheaper and better. As they improve how government works, some of them will no longer be needed at their current job. These valuable employees should not be punished for doing a better job, but instead reassigned to other agencies to help them improve. We will need to retrain some employees for new careers, but this is an investment in the future of the State and well worth the cost. We will use attrition, the normal loss of people due to death, retirement, or resignation, to reduce the size and cost of government. Few, if any, new employees would be hired while we reorganize and streamline State government. This will not be easy, but our employees can do it. They want to be proud of the their achievements and for working for the benefit of the public. Let’s free them from the bureaucracy and let them prove what they can do for their friends, family, and neighbors.

Streamlining will also help improve education. The Department of Education is a big bureaucracy just like any other government agency. Teachers, staff, principals and others are capable of doing a better job - if we give the tools and support they need. Again, we need to promise that no one will lose their job. I doubt we can ever have too many teachers, or too many people repairing and maintaining our schools.

I am committed to doing everything in my power to pass laws that increase the flexibility of government employees to do their job. We owe them the opportunity to help save their own jobs before it is too late.

Together we do make a difference.