Hawaii State of the State Address 2002
By Stateline Staff
Mr. President, Mr. Speaker, Members of the Legislature, Lt. Governor Hirono, Mayors Harris, Apana, and Kim, Admiral Blair, Governor and Mrs. Waihee, members of the Consular Corps, distinguished guests and my fellow citizens. Aloha.
Every time I enter this chamber, I can't help but think, "This is where it all started." I was elected to this House in 1974. Those were the years of Watergate and the Oil Crisis. I was part of a reformist group 34 years old, idealistic, geared up to change the world. Well much has happened since then. I think I am still as idealistic as ever, but obviously a little older and perhaps a bit wiser. There have been ups and downs, but for me, it's been mostly ups. It's been a great experience, and I want to thank some people who made it possible.
First, I want you, and everyone watching this morning, to know how grateful I am to have been given the privilege of serving as Governor of this great and beautiful state. I want to thank my wife, Vicky, who has been a terrific First Lady and my biggest supporter. You know she didn't vote for me when I ran for Governor in 1994; she didn't like how I came across on television. Well, I don't like myself on television either. But when she got to know me personally, well, as they say, "The rest is history." It's not easy being the son or daughter of a politician, especially this one. And so I want to thank our children, Brandon, Janeen, Samantha, Marissa and Will, for their love and support through it all. And I want to acknowledge my cabinet, including some of my former cabinet members who have joined us today.
These are just highlights of some of the great things our cabinet has done. If you want to see what fine achievements the rest of them have done, read this special supplement, which has been provided to you. I would also like to recognize my Chief of Staff Sam Callejo, my entire cabinet and their deputies, former cabinet members and executive assistants. Would you all please stand. They are terrific. Underpaid, not a single pay raise in eight years, understaffed, overworked, but totally dedicated, hardworking, smart and honest. It has been a great privilege to have them aboard.
When I took office in 1994, the State was mired in a severe economic crisis. The Japanese bubble had burst. We saw record bankruptcies, foreclosures, business closings, and the economy was flat, no growth at all. In my 1995 State of the State, I gave you our road map to economic recovery.
In my 2001 State of the State, I reported some of the promising results. I reported that in late 1998, the economy began to recover; by 1999, it was in full recovery; -- 2000 saw the economy grow stronger and even expand in areas such as high technology and healthcare. Tourism was back again with a record 7 million tourists, the unemployment rate had dipped to 3.7%, well below the national average, the lowest since 1992. Real estate sales and values were rising; auto sales reached record levels for the second straight year. Private and public construction was up. Thousands of new jobs were created, personal income growth had increased significantly, averaging 4.1% in 2000 and 5% for the first half of 2001, the highest level in seven years. We increased teachers' salaries, extended the school year by seven days, and built a record number of schools and other facilities. And I announced the launching of our new Pre-Plus Program for preschool children from needy families, to be headed by Lt. Governor Hirono.
This year, I was ready to report more good news, about the economy, about programs like Pre-Plus, and the great progress we have made.
But then came September 11th, and like many Americans I saw our country plunged into its worst domestic crisis since the Great Civil War. Hawaii suffered more than most states. Our economy was hit, and hit hard. In the two months that followed domestic tourism fell by 30%, international tourism by more than 50%. Thousands of workers lost their jobs. Initial claims for unemployment insurance averaged nearly 2,700 per week. Our State unemployment rate rose from 3.7% in November 2000 to 5.5% in November 2001. Nearly 7,000 jobs were lost and thousands of workers saw their work hours cut.
These events brought back dark memories of the Gulf War, a war that had a tremendous impact on tourism, devastated Hawaii's economy, ushered in more than a half decade of economic stagnation. To quote Yogi Berra, it was "like dj vu, all over again."
Now, however, four months after September 11th, I am pleased to inform you that there is light at the end of the tunnel. There are signs that our economy today is more resilient, stronger -- than it was during the Gulf War crisis. There are signs -- that not only are we weathering the storm -- but our chances for a quick recovery are better than we expected. As of mid-January, for example, domestic travel to Hawaii was running only a few percentage points below the same period last year. Japanese tourism in Hawaii -- which was down as much as 65% -- is expected to reach pre-September 11th levels within the next six months. There are other good signs. Initial claims for unemployment benefits appear to have stabilized after peaking in early December. And Hawaii's holiday retail sales showed -- the highest increase among all western states. Real estate sales and values continue to increase -- construction authorizations are still up -- auto sales are still going strong. And tax collections remain stable.
Where is this resiliency coming from? Why hasn't Hawaii been hit harder as it was during the Gulf War? Our economists tell me there are two big differences. The first is the major economic reforms and restructuring that have taken place since 1995. We've made some significant changes. Between 1998 and 2001, we approved 10 major legislative acts that lowered taxes for residents and businesses. We also provided generous tax incentives for new investment in technology, new construction and renovations. These savings will total more than $2 billion over a six-year period one of the biggest tax cuts in the nation. These tax cuts have put more money into the pockets of our people -- and they are spending or investing it.
A recent American Legislative Exchange Council study reported that Hawaii's budget had the third lowest growth of all states from 1990 to 2000. And between 1995 to 2000, state government spending by this Administration grew by only 1%.
Today, state government is more efficient, it's smaller, and it accounts for a smaller proportion of the economy. Government regulations have been reduced and the state has made a concerted effort to partner with the private sector, to become a facilitator rather than to impede economic growth. These reforms helped the business community invest in technology and other improvements -- that have made them more efficient and competitive. Today, business productivity is higher. Hawaii companies are developing national and international markets through their unique products and use of new technology, including the Internet.
And there are indications that Hawaii's economy is diversifying, reducing our dependence on tourism. Between 1996 and 2000, for example, the number of high tech jobs increased by 23%, while jobs as a whole increased less than 4%. Hawaii's healthcare industry grew as well and is now the State's second largest provider of jobs. The visitor industry itself is changing. Specialized markets such as sports, culture, health and eco-tourism indicate that the industry is moving beyond its sun and surf base. These new developments will help Hawaii retain its status as one of the premier visitor destinations of the world.
The second difference was the outstanding and strong response by the community to the crisis. After September 11th, business, labor, military and community groups quickly answered my call for help. Working with legislative leaders, we developed and implemented an action plan that helped prevent more layoffs and economic hardships. Respected business leaders like Walter Dods, Tony Vericella and Peter Schall were asked to develop a marketing strategy to counter the drastic drop in tourists. And they did -- in record time. Not everyone liked the plan, but I thought it was brilliant in its simplicity and its eloquent appeal to visitors to experience the wonders of Hawaii. And, now, we are seeing the first signs of the plan's success. Church leaders like Reverend Dan Chun and leaders of community non-profit groups like Susan Doyle organized the churches and nonprofits and formed Hawaii Together. Their goal is to provide a network of technical and spiritual assistance to the newly unemployed and homeless. It is a great example of the community's widespread compassion and caring for those who were hurt in the crisis. It's a great example of the Aloha Spirit. And whenever we needed them, our military community was always there for us. These citizens did a great job, and I ask you to join me in publicly thanking them and the hundreds of citizens across our state for their tireless and unselfish efforts in helping us meet the challenges of September 11th. They had faith in the strength of our economy and the spirit of our people.
And so there is reason for optimism as we enter 2002. However, we must also be prepared for setbacks. The national economy is still in recession and is not recovering as quickly as expected, and Japan's economy will be weak for the better part of this year or longer. The gains we have seen in recent weeks could slip away in this uncertain and volatile economic environment. Therefore, we must continue our efforts to make needed reforms and investments which will strengthen our economy, help us through the current crisis, and position us for Hawaii's long term economic growth. And most of all, we must not let the events of 9/11 defeat or intimidate us. Our courage, determination and belief that Hawaii's future is bright are our best weapons in meeting the challenges before us.
Now let me turn to our State Budget. Our first task is to balance the State Budget. We have proposed a financial plan, which requires us to use the Hurricane Relief Fund and to raise the tax on alcohol. If you disagree with this proposal, we are open to your suggestions. I disagree with some of the assumptions made about the Hurricane Relief Fund, but my main concern is to balance the budget as we are required to do by law and to do without jeopardizing the safety net for our poor and disadvantaged.
Keep in mind that education makes up 52% of our State General Fund Budget and this time, I cannot spare the Department of Education from carrying its fair share of budget cuts. Our state programs servicing the sick, poor and disadvantaged suffered greatly during the first four years of my administration. And, except for adjustments to the costs for Felix, simply cannot be cut anymore.
Our second task is to continue our efforts to strengthen our economic infrastructure. September 11th demonstrated what we all know: Hawaii's economy is over-dependent on tourism. Diversifying our economy will strengthen it and make it less vulnerable to the ups and downs in tourism. Over the past seven years -- we have focused on healthcare, biotechnology and high technology.
Since 1995, we've taken some big steps toward diversification. To encourage the development of high technology, we approved one of the most progressive high tech laws in the nation. We've provided additional funding for the University's College of Engineering and aggressively solicited high tech business. In spite of the dot-com crisis, we've made some progress. In technology, according to the Center for Digital Government and the Progress & Freedom Foundation, Hawaii now ranks 13th in Technology Management, 15th in Electronic Commerce and Business Regulation, and 23rd for Taxation Revenue Systems in 2001. Considering Hawaii was ranked near the bottom only a few years ago these are signs our high technology industry is growing.
It has long been part of my vision to make Hawaii the premier Healthcare Center of the Pacific. Your approval of the UH's new $300 million bio-medical research center in Kakaako was a major step this goal. The new school will not only train doctors, it will also have a strong research component, which will create hundreds of jobs good, high skilled jobs for our people. About five years ago, I expressed my belief that a biotech industry was a natural for Hawaii. Some thought I was dreaming. I was, and the new bio-medical research center will help that dream come true. In fact, Kamehameha Schools and the Ward Estates, two major landowners in Kakaako are prepared to develop a biotech park for biotech companies which will be attracted by the new Center. I won't be governor when the Center is built and the biotech park is established, but I expect you to invite me to the dedication ceremonies. Healthcare, Biotechnology and High Tech have been my priorities. I am certain there are other opportunities which we are not aware today. Our job is to find or create them.
But new economic opportunities will mean little if our young people do not have the education and background to compete for them. And that is why I am pushing for more improvements to our public education system. Education is the great equalizer. It certainly has been for me. And that why over the past seven years, in spite of our state's fiscal problems, we have given education our top priority. That's why we spared the DOE from budget cuts and cut other departments more to make up the difference. That's why we built more new schools and facilities than any other administration. That's why we increased the pay for teachers, boosting the pay for starting teachers from $25,000 in 1997 to $34,300 in 2003 a nearly $10,000 increase in just six years.
Today, our starting teachers earn more than their counterparts in Arizona, Colorado, Oregon, Washington, Nevada, and New Mexico. Our new contract with our teachers provides more than just a pay raise, it is a step toward a culture which focuses on accountability and professional development, rather than just seniority. For example, under the new contract, a teacher who acquires certification by the National Board for Professional Teacher Standards will receive a $5,000 salary differential. Acquiring national certification is no easy process. It requires hard work, study over a two-year period. But it is a tool that gives teachers an incentive to improve their professional skills and increase their compensation as well. So far, only seven Hawaii public school teachers have achieved it each one of them is an excellent teacher. The two teachers who earned their national certification this year are here today. And, I'd like to introduce them to you. First, Teresa Tugadi -- a special education teacher at Pohakea Elementary School -- and Lisa Yanase who teaches at Waialua Elementary School. The good news is that there are about 50 more public school teachers who will enroll in the program. The bad news -- is that you will have to find the extra money to pay for them. I suggest you pay them it will be well worth it.
The statewide teacher strike we experienced was not just about money it was about doing what had to be done to improve the quality of public education. We need teachers who have the training and skills to provide a quality education to our children. And, we need ways to find out who the good teachers are, reward them, and help the teachers who need improvement to get better. We should not settle for mediocrity. After all, a public education system that teaches its students how to read, but not how to distinguish what is worth reading is not a very good school system at all. To paraphrase social commentator, Fran Lebowitz, if we are truly serious about preparing our children for the future, don't teach them to subtract, teach how to deduct. Good teachers know the difference between subtraction and deduction. Our contract is designed to produce good teachers.
The new schools we've built are state-of-the-art facilities. They are so good Mainland schools send their people to get ideas from them. But, our older schools are not state of the art, they are old, they are rundown, and they need help. The school repair and maintenance backlog was nearly $614 million in 2000. The Department of Accounting and General Services tells us that it grows by $51 million each year. We need to attack this backlog now. To cut it down to size, I am asking you to appropriate $255 million for school repair and maintenance. If you want to increase the amount, we welcome it.
The University of Hawaii is the intellectual heart of our community, but it is also an important driver of our economy. Last year, you gave UH $8 million for the planning of a permanent West Oahu campus. This session, I am asking you to authorize the $142 million needed to build it. UH-West Oahu was established about 25 years ago as West Oahu College. And for all of those years, the West Oahu administration and faculty, housed in their portables at Leeward Community College, have given their students an excellent education. It is time to give UH-West Oahu a permanent campus in Kapolei. This permanent campus in Kapolei will accomplish two objectives: one, educational, and the other economical.
More than 30 years ago, Kapolei was designated as the Second City. West Oahu will help transform Kapolei into a college town. It will be to Kapolei what the University of Oregon is to Eugene, Oregon, and what UC-Irvine is to the City of Irvine. The economic benefits are obvious. The new West Oahu will serve the booming population of the Leeward-Central Oahu area the fastest growing area in the State. The population there is more than the populations of all of the neighbor islands combined. And it is still growing.
Hawaii is a relatively young state. And at one time, when travel was difficult, the University of Hawaii was the only hope for higher ed for our people. As a state, Hawaii has matured. When I left to attend college on the mainland in 1963, UH community colleges did not exist, nor did UH-West Oahu. UH has grown, it too has matured. The policies, the curriculum, admission standards, requirements for out of state students, which were right for UH fifty years ago must be reviewed and where appropriate, changed. President Dobelle has said he would like to develop UH-Manoa to become the Berkeley of the Pacific. UH-Manoa is a fine research university but it is no Berkeley. If we want UH-Manoa to step to the next higher level to become no, to rival Berkeley -- then we must stop requiring UH-Manoa to be all things to all people. Admission standards for freshmen must be raised, curriculum reviewed, good alternatives must be created for those who can't make it to UH-Manoa. Nothing can elevate the quality of life in a society like a first-rate education system. Hawaii is not quite there yet. We can get there if we dream big and do big things. After all, nothing big has ever been done by people who think small.
A few words about my $900 million CIP request. Last week, I heard a lawmaker mention a $6 billion backlog. Simply stated, that number is misleading if the real concern is debt service generated by general obligation bonds. The amount of the $6 billion attributed to G.O. bonds is less than $900 million. And of that, over $700 million is in the process of being spent. In other words, there is no major backlog of G.O. bond projects. The last time I asked for a billion dollars and you gave it to me, we built a record thirteen schools, more than 1,100 classrooms, gyms, administrative buildings and cafeterias. And we are building them faster than ever. We build schools in 18 months instead of the 36 months it used to take. We built the State Office Building in Kapolei in 18 months. We built Dr. Yanagimachi's Institute for Biogenesis Research in just ten months and today there are new facilities on every campus in the UH system.
Clearly, there is confusion about the administration's ability to fast track appropriations and construction. I challenge you to try us after all, if you are not satisfied, you have the power to repeal the appropriations. A few months ago, President Dobelle told you he would build the new UH-West Oahu in 18 months. Why not give him a chance to do it? He's done it in other places I know he will do it here. If we want to improve public education, we need to invest. Interest rates are at an all-time low. I doubt it will get lower. Moreover, our local economy could use a boost in construction spending. Let's take a page from California where the California Chamber of Commerce, which is just about as fiscally conservative a group as one could find anywhere, has moved to place a $10 billion initiative on the ballot this election for voter approval to build schools, public housing and other needed public facilities. I predict the voters of California will approve it overwhelmingly.
Let me end on a personal note. This is my 28th year in public office. It will be my last. Every time I reflect on the journey I took to get here, I am truly amazed. I am the luckiest man in the world. I was born and raised in Kalihi. My father raised my brother and I. I attended public schools, got into some minor trouble with the law, nearly flunked out of high school, married at 19 and at 23, finally woke up and moved to California to get an education.
I was usually the oldest student in my college classes. And I learned a lot just listening to my younger and bright classmates. The Viet Nam War and the Civil Rights Movement were at their peak. Martin Luther King, Jr. and Bobby Kennedy were assassinated while I was in college. These events shaped my values and my thinking. They shaped my politics. I graduated from UCLA in 1968 and got my law degree in 1971. For me, it was as if I realized the impossible dream. America is a great nation because it is the land of second and sometimes even third chances.
I got my start in politics from another Kalihi boy -- Governor John A. Burns. Governor Burns appointed me to a very important public commission. And yet I had never met him before, never really got involved with politics, nor did I seek the appointment. After the swearing in I asked him why he had appointed me to such an important commission. He looked me in the eye and said, "Well, Ben there are not too many young Filipinos from Kalihi who become lawyers." He did not have to explain -- I understood what he meant and what he stood for.
In 1974, I decided to run for the House of Representatives. I was running in Pearl City. The political pros the guys who think they know everything laughed and said a Filipino boy like me didn't have a chance in a heavily Japanese district like Pearl City. Well, they were wrong ... dead wrong. They misjudged the fairness and decency of the people there. Like I said earlier, America is the land of second chances. I tell you this story so you understand why I believe that there no greater calling than public service. And why I believe that those of us who are in this business have an absolute duty to do what is right for the people, regardless of the consequences.
Yesterday, I read in the newspaper that some of you are looking for guidance and advice in my State of the State. Vice Speaker Luke said she wanted to me to "lay out a plan for five or ten years down the road." I had to chuckle I mean where have you folks been the past seven years? This is our last session together. And this is the first time you've publicly asked for advice, so let me offer it: I really believe that the best kind of politics is getting the job done. That's what I've tried to do in my 28 years of public service. And even if you don't get it done, I believe the people will know how hard you tried and respect you for it. When you passed the Health Fund Reform and Privatization bills last session that was a defining moment for many of you. It took guts to do it and you should be proud. I was proud too. When I met with business, labor, community and legislative leaders after the September 11 attacks, at the end everyone spoke. Minority Leader Galen Fox got up and said that the crisis we faced was the worse Hawaii had ever faced and that we "should set politics aside." He meant it and I was moved and proud to work with him. Last week, hearing some of the speeches on Opening Day, it seemed like nothing had changed.
You know, recent polls show that after September 11th, there was an upsurge in the public's respect for public officials. I suppose some of that was due to the fine leadership shown by President Bush and Mayor Giuliani, but I can't help but believe it was mostly because the American people were awed by the courage and sacrifice of the firefighters, police and rescue personnel who lost their lives at the World Trade Center. Those firefighters, police officers and rescue personnel were public servants like you and me. And they lost their lives because they did their job.
Senator Warren Rudman, a Republican, when asked by Time Magazine about his retirement from the United States Senate said that when he was a marine captain serving in Korea, he commanded young marines who were ready to risk their lives for their country, and many lost their lives. But he was disappointed with his colleagues in the U.S. Senate he said because too many of them were not even willing to risk their political lives for their country. So for once, put politics aside. Let's discuss the issues frankly and truthfully so the people know what's at stake. We owe them the truth. We owe them the courage and wisdom to make wise decisions. We owe them hope. We owe them a better and greater Hawaii. Do your job to make Hawaii better even if it means you may lose your job. You owe it to the people, and most of all, you owe it to yourselves.