GENERAL EXCISE TAX HIKE
RESURFACES AT LEGISLATURE

Small Business Hawaii had warned ‹and predicted ‹since the outcome of the '98 election, that residents and business could expect tax HIKE proposals during the '99 Legislative Session. The politicians did not surprise or disappoint. They only know tax and spend.

In late March, the Senate pulled a hat out of a rabbit, resurrecting a 34% increase of the onerous General Excise (gross income) Tax to a rate of 5.35%‹the same rate taxpayers fought so vehemently during 1998, an election year. Since voters re-elected‹by the slimmest of margins‹the same Governor and the same majority party lawmakers‹it was a no brainer that a tax increase (along with other taxes and fees) would come forward. Only the timing was in doubt.

Senate Labor Chair Bob Nakata (23rd District Democrat) and Commerce & Consumer Protection Co-Chair, Brian Taniguchi (11th District Democrat) offered the tax increase on March 24‹the 37th day of the 60-day 1999 Session. The sponsors alleged it would be a package beneficial to taxpayers, small business and our keiki. They claimed there would be a phase-out of GET pyramidding, exemption of food for home, and additional revenue for education.

The fact of the matter is that the bill represents a substantial, economy numbing tax increase with no benefits. The vaunted food exemption‹supported by Republicans and opposed by Democrats for 40 years‹was not even in the bill; an "inadvertent error," Nakata claimed. The pyramidding would be phased out (maybe) over seven long years. As far as money for education, it was not earmarked and so all revenues would wind up in the General Fund.

House Minority Leader Barbara Marumoto said it best: "Stop using our children as either a shield or a battering ram" for failed state fiscal problems.

A public hearing hastily prepared for Saturday, March 27‹during the Kuhio Day holiday weekend‹drew testimony from 125 individuals and organizations. Only 4 people‹including unions and a welfare advocate‹testified in favor of the tax increase. The bill is still alive for conference negotiations between the Senate and the House.

The shibai of a $154 million "surplus" bandied about by the Governor during last year's election campaign was never produced and now the state's finances continue to worsen. Lawmakers insult the intelligence of the voters and small business by saying this tax increase would also produce some tax reductions when the bottom line is a substantial revenue increase adding to the burden of the nation's most taxed residents.

We can't tax Hawaii into prosperity; we can only make the worst-in-the-nation economy worse and taxpayers even more desperate.

TAX, FEE HIKES LOOM AS '99 LEGISLATURE SCHEDULED TO END MAY 4

The 20th State Legislature which began January 20 is heading for its May 4 adjournment but through 2/3 of the Session has nothing to show for its efforts to date.

Promises made at the opening focused on: cutting government; reducing taxes; improving education and reforming civil service. By the 40th day of the 60-day Session, only two bills had actually passed‹one authorizing nearly $20 million to pay for the Session.

The Governor spent less time at this Session so far than in previous years and seems disinterested in his legislative mandates.

The Governor did manage to have three tax INCREASE bills introduced: (1) adding a 4% ad valorem tax on motor vehicle sales; (2) adding a 4% tax on vehicle sales between private parties, and (3) hiking the daily rental car tax 50% from $2 to $3. All were "killed" in the Senate, but were resurrected for "conference leverage." Cayetano was also behind the scenes on the 34% hike in the General Excise‹gross income, not sales‹ Tax (GET) See story above.

Fees by nearly every agency and new charges are being proposed. One suggestion that has pet owners howling mad is the proposal to raise mandatory animal quarantine fees from the current $290 for a dog to $875. This comes a year after the 120-day period was reduced to 30 days; but less time and more pre-quarantine costs to owners still equate to a horrendous increase to preserve union jobs and a bloated bureaucracy.

Several positive small business bills (elimination of pyramidding, export relief, regulatory reform) are moving, but at a snail's pace. There is no urgency this year . No bold, new plans are advancing to reposition Hawaii for Y2K.

Hula has become the official state dance. Breastfeeding in the workplace will be protected and Hawaii will join other states in punishing "hate" crimes. But what about jobs?

Judges are likely to get hefty pay increases; more public workers and OHA trustees will dip into lucrative pension and retirement benefits and retirees will continue to get extra bonuses. But what is there for private business and employees who pay for all this overhead? What incentive for outside capital?

The battle of the state budget and the final juggling of figures has begun. "Emergency" appropriations and newly created "special" funds abound as the State falls deeper into the financial abyss of its own making.

SBA NAMES 1999 AWARDEES

The U.S. Small Business Administration (SBA) released the names of its small business awardees for 1999. They will be honored in May at the Annual SBA Awards Luncheon at the Ilikai Hotel, cosponsored by the SBA, Chamber of Commerce of Hawaii, Hawaii Business League, NFIB and Small Business Hawaii.

President Clinton has designated May 23-28 National Small Business Week.

Several Hawaii awardees are expected to win regional awards and are in contention for national awards as well. (An updated listing will appear in next month's SB News).

Hawaii's statewide Small Business Person of the Year for 1999 is actually two persons, Jon Martin and Wesley Jones of Martin & MacArthur Enterprises, Ltd. of Honolulu, craftsmen of fine koa wood furniture and gifts. The firm and the owners were nominated by Clifford Ogata of City Bank.

County and state awardees in various categories are pictured below and are listed on the next page. Several additional business awards categories have been added over the past several years. Competition has been stiff! Each awardee will be present at the annual luncheon.

Several of the '99 awardees have been recognized in other categories in previous years. Others are well known in the business community but not in the community at large and are usually not the subject of media coverage.

At a time when so much emphasis is devoted to the sour business climate, it is good to be able to step back and recognize achievements and success that is recorded even in these difficult times. It also shows the determination and creativity of Hawaii's small business entrepreneurs. If they can make it here, they can make it anywhere!

The community is generally surprised to learn of the calibre of SBA small business awardees and of the products and services they provide the community as well as their leadership and community contributions. Over the years, Hawaii has had several local awardees tapped as national honorees and more than its share of regional awardees even though in competition with California, Arizona, and Nevada.

Please take a moment and call and congratulate these outstanding small business awardees. Come to the luncheon. Nominations for next year may be made between now and October; contact the SBA (Jane Sawyer) at 541-2990, or SBH, for nomination information.

1999 SBA Awardee List | SBA Website

SMALL BUSINESS HAWAII CHANGES COMING

The Small Business Hawaii Advance Planning Session held Saturday, March 20, attracted SBH's Board of Directors and a dozen members who discussed the present and future direction of SBH. The group‹all members had been invited to attend or fax in comments ‹ examined SBH's organizational structure, networking programs and activities, forums, publications, membership and benefits. The five-hour free-wheeling meeting produced dozens of meaningful ideas and expanded service and benefit proposals. SBH is positioning itself for an even greater leadership role in Hawaii during the next millennium.

The SBH Board pledged action and implementation. This process will begin with specific actions to be taken at this month's board meeting on April 20. The membership will be kept apprised of the changes and is still encouraged to make further suggestions.

SMALL BUSINESS ON THE MOVE EXPO ANNUAL SHOW AT BLAISDELL MAY 4 - 5

The Annual Small Business on the Move Expo will be held Tuesday and Wednesday, May 4-5 at the Blaisdell Center. Production Hawaii is the organizer of the event. There will be booths, new products, seminars and valuable information‹as well as business networking.

Small Business Hawaii will have a booth and member volunteers are needed for the two-day event. Interested? Phone 396-1724.

For registration information about the expo, contact Production Hawaii at 532-7300. Be sure to visit Small Business Hawaii's booth at the expo.

3RD PBN SOLUTIONS 2000 BREAKFAST DEALS WITH SMALL BUSINESS ISSUES

Small business‹and specifically those that "started out small and are making it big"‹ will be the focus of the 3rd Pacific Business News Solutions 2000 breakfast.

Solutions 2000 is a series of 10 breakfasts and a half-day "business solutions summit" that were started to share the belief that amid the economic concerns, there is a lot of innovative thinking and action among businesses of all sizes.

"In the case of this breakfast, small businesses which have matured will be the main topic, but we expect that people from businesses of any size can gain from what the panelists have to say," said Larry Fuller, president and publisher of PBN.

The small business Solutions 2000 will be Thursday, April 15, in the Espirit Lounge of the Sheraton Waikiki from 7:30 to 9 a.m. Tickets, including a continental breakfast are $15 in advance by calling PBN at 596-2021, or $20 at the door.

OSHA WORKSHOP SLATED FOR APRIL 9

Bo Irvine, Safety Manager at Marine Corp Base Hawaii in Kaneohe, will deliver the keynote speech, "Why Y2K?," at the OSHA Hawaii Safety and Health Workshop on Friday, April 9 at the Hilton Hawaiian Village Coral Ballroom.

The all-day event, offering 15 seminar sessions and exhibits, is sponsored by Gaspro and the Hawaii Chapter of the American Society of Safety Engineers.

State Labor Department deputy director Lennard Agor, will give the welcome address. Upward of 500 safety and health professionals are expected to attend.

Registration fee is $50 and it includes lunch and fully-validated parking. For more information contact co-chairs George Mauliola or Joanna Clark at Gaspro, phone 842-2222.