Lawmakers mull ways to fan economy

Lawmakers looking for ways to cut spending this year are also floating ideas for churning up new money by stimulating the economy.

Proposals to reduce regulations on small business are on the table, while revenue-draining plans like tax incentives could be a tougher sell in one of the tightest budgets in memory.

"We're getting to the end of the spaghetti stage - throwing ideas against the wall," said Rep. Angus McKelvey, who chairs the state House Economic Revitalization, Business and Military Affairs Committee.

While the state's Act 221

tax credit for high-tech projects has come under scrutiny, with some questioning whether the benefit has been worth the

cost in revenue, McKelvey said he'd support revising but not doing away with the program.

Maui residents only need to look up to see how Act 221 has benefited them, he said: the Kaheawa Wind Farm above Maalaea used the tax credit.

"The ability to attract outside capital to Hawaii is going to be more important than ever," he said.

McKelvey also said he'd propose a longer grace period for businesses to pay their general excise tax bill, to "give them some breathing room." The extension could help struggling businesses choosing between paying their taxes and making payroll, he said.

He was also looking at an exemption to worker's compensation requirements for small businesses that primarily employ family members, saying they shouldn't be subject to the same rules as big companies.

And McKelvey planned to propose a tax credit for companies that allow their workers to telecommute.

He acknowledged it could be hard to get traction for ideas that would cost the state more money in an already tough year. But he said colleagues should look at the big picture.

"Don't be penny wise and pound foolish," he said. "If businesses continue to shut their doors, there's no more revenue coming in from any of them, and more people are on unemployment."

House Finance Committee Chairman Rep. Marcus Oshiro, D-Wahiawa, said a priority for the legislature would be to expedite infrastructure projects to pump money into the construction industry.

"We're also looking to kill two birds with one stone by lessening our oil imports and fostering our renewable energy industry here in Hawaii," including increasing staff to provide support for the private sector, he said.

Sen. Roz Baker, D-South and West Maui, agreed renewable energy would be a hot topic.

"There's going to be quite a bit of legislation around that, and that will lead to the creation of new green jobs," she said.

Sen. J. Kalani English, D-Upcountry, East Maui, Molokai and Lanai, said he would look at moving forward as many bridge and highway projects as he could. English, who chairs the Senate Transportation, International and Intergovernmental Affairs Committee, said transportation projects would help the state leverage matching federal funds.

"The theory is the government spends a lot of money in infrastructure, which puts money in the economy, gets people working and pulls us out of this," he said.

Rep. Joe Souki, D-Wailuku, said the Legislature could look at creating another economic revitalization task force, with leaders in business, government, labor, education and the community, to make recommendations for long-term growth.

"That's for the future," he said.

But Souki took a more optimistic view of the economic downturn than some of his colleagues.

"I believe it will stabilize sooner than people think, simply because Hawaii has a great military support system, and that's not going away," he said. "In fact, it will probably get even bigger with (U.S. Sen.) Dan Inouye as the (Senate) appropriations chairman. That's all additional dollars coming to Hawaii."

Ilima Loomis can be reached at iloomis@mauinews.com.