Hawai’I Governor Lauds Network of Care in State of the Union Address

January 22, 2013
Hawaii Reporter

HONOLULUMister Speaker, Madame President, former Governors, distinguished justices of the courts, representatives of our Congressional Delegation, members of the Hawaii State Legislature, other elected officials, honored guests, family and friends. Aloha.

My friends, politics isn’t a hobby or a past time. At its center, politics is community, and we as office holders are obliged to address our efforts to the greater good of the larger community. At its heart, politics is about doing good and relieving suffering. If politics is done right, it is all about making life better for people.

In Mahayana Buddhism, we are admonished to renounce all evil, practice all good, and save the many beings.

But when politics gets reduced to slogans and bumper stickers – what is right; what is good? What is wisdom and virtue to one, is grounds for accusation and denunciation to another. Observation can quickly become doctrine, and demands for fidelity to the true faith come even more rapidly. In secular political terms, the Party Line is established and with today’s cyber-technology, internet-hysteria often takes on a life of its own. Perspective gives way to prosecution or even persecution. We can do better than what we have lately witnessed. The level of discourse in our public policy discussion stands in need of elevation.

Today it seems everyone’s motivation is suspect. An opposing view is likely to be judged that of a fool or a tool of special interests. One’s position is not merely faulty or misguided, it is characterized as the work of someone consciously plotting to destroy the environment, or stealing public benefit for private gain, or willfully corrupting the good and welfare of the community. This is not the model of dialogue and exchange that we want or need in Hawaii.

The virus of absolutism now infecting the Congress of the United States appears to be seeping into Hawaii – whether it is the use of public lands, dealing with gun violence, determining who may marry, or decreeing how we are to be born or die. Even caring for the sick or preparing young children for life are opportunities for mocking dismissal or patronizing skepticism.

This absolutist attitude eliminates the human dimension from political discourse. The absolutist has answers for everything and questions about little or nothing.

I think perhaps it may be time to step back a bit and take a few deep breaths. In the wake of Senator Akaka’s request that we let a sense of Aloha enter our lives more deeply, could we not try a little harder to practice Aloha with each other. Could we not express some generosity of spirit for each other – both in our deliberation and in our decision making?

As I set about organizing my thoughts for today and reflected on the political atmosphere,
I concluded what we confront today is a situation of political Jeopardy. In the game of Jeopardy, everyone already has the answers; the challenge is to figure out and frame the right questions.
We are so busy telling each other what the answer is, so certain we already know what needs to be done, that we can ignore the questions behind our pronouncements.

My thought is irrespective of what we are for or against, we cannot allow ourselves to pre-empt the raising of pressing questions we need to comprehend and address lest we lose our way before we even begin to understand where we need to go or what path to take.

We need look no further than the question of unfunded liabilities. How do we address recurring needs like paying for healthcare benefits and exploding pension deficits and the means to finance them on a recurring basis?

How do we make use of our resources and assets, both public and private, with continuing investment security in the future?

The Public Land Development Corporation is but one example of an attempt to answer the struggle to come out of the worst recession in memory. What we cannot do is allow controversy over the answer to this or any other challenge to pre-empt asking or facing up to the questions before us.

And then there is the greatest unfunded liability question of all – the failure to address early childhood development and education in Hawaii. Leaving our keiki unprepared for elementary school puts them at  a crippling disadvantage in terms of being able to meet the demands the future will make on them.
These questions and the questions which follow require us to embrace our island values and steward our precious island home to become more self-sufficient, more self-resilient, more self-sustaining. We must move from the status quo and provide for future generations of Hawaii.

Therefore, our primary and priority initiatives need to be aimed at preparing ourselves as we assess the demands of the 21st century. We need to look at state government and the budget; our energy goals, our economy, and our kupuna and our keiki.

First, the question of the state budget. Unlike some of the fiscal uncertainties and core fundamental economic issues facing our federal government, our state stands on a solid financial footing
and has a stable financial outlook.

Two years ago, our administration had just taken office amidst an extremely difficult fiscal and economic outlook. As a state, we faced a daunting $1.3 billion potential budget shortfall for Fiscal Biennium 2011-13. But, as a result of our collaborative efforts, shared sacrifice and judicious administrative action, the year-end general fund balances for FY 2011 was $126 million, and for FY 2012 $275 million. For this year, which ends in approximately 5 months, we are again looking at a healthy positive balance.

I want to thank the Legislature for your collaboration. Thank you to the public, our taxpayers, and businesses for weathering these difficult times. Thank you to those state employees, who agreed to labor savings and additional payments for health benefits. There was no way we could have balanced our budget and achieved today’s fiscally favorable outlook without the commitment of all those public workers.

Because of that sacrifice, we were able to support our workforce and avoid massive public worker layoffs. We have maintained our pension benefits for our retirees. The question is will we be able to secure these benefits for todays and future workers.

For the record: This is not Wisconsin. This is not Michigan. This Administration is not going to abandon collective bargaining, but neither will it bankrupt the future for all by buying some temporary solution that does not address the fundamental fiscal issues we cannot escape.

Because we did what needed to be done, we were able to restore critical public services such as agriculture, elevator inspections, vector control, and restaurant inspectors.

We achieved unprecedented success in earning a high bond rating and being able to finance state construction at impressively low interest rates. That means our tax dollars stretch farther in improving the state’s infrastructure and in creating the jobs that come with capital improvements.

It is for these reasons that we have now turned a fiscal corner.  As of July 1, 2013, the 5 percent pay reductions will end for state workers, and full pay will be restored.
Good faith collective bargaining negotiations are essential if we are move toward a resolution that is fair to everyone. Fair to our employees who create public value every day, fair to our taxpayers,
and fair to future generations.

Tourism numbers and profits are on a steady rise, construction is vigorous and growing and unemployment is back down to the low rates that we enjoyed before the recession.

The recent bond sale of more than $800 million, along with historic low interest rates at 2.6 percent, is a positive indicator that the bond raters, the marketplace and its investors, consider Hawaii’s fiscal condition to be sound.

The question is, will we continue to invest in the economy via construction and repair/maintenance projects and public private ventures. Not only is this important to ensure that communities, schools and our residents continue to have much needed infrastructure, buildings and improvements, but we can do so at historic low interests rates, saving the state millions of dollars in debt service. More importantly, these projects could mean that the state not only will be investing back into our economy, but through partnerships generate needed revenue not otherwise available.  I have asked Lt. Governor Shan Tsutsui to take a lead role in working to expedite addressing this opportunity.

I welcome the new Lieutenant Governor here today as my partner. Formerly President of the Hawaii State Senate, he is a valued addition to this Administration. He is exactly the sort of young and able public servant/leader that Hawaii needs. He is taking the place of another young and capable leader, Brian Schatz, our new Senior United States Senator. Senator Schatz joins a congressional team with our vigorous senior Representative Colleen Hanabusa in the House of Representatives and Senator Akaka’s dedicated and committed successor, Senator Maize Hirono. A team that for the first time in the fifty-three year history of the State of Hawaii, will not have Senator Daniel Inouye at its helm. For many of us, we have never known a time when Senator Inouye was not the center of our political life. But while his physical presence may no longer be with us, the spirit of his example of public service sets an unmatched standard we can only aspire toward.  Senator Schatz joins another young leader in Congress -Tulsi Gabbard, like Senator Inouye a war veteran – but of this generation. With these bright and energetic young people, Hawaii looks to its future.

They understand we can only continue to get good bond ratings and sell them at record low rates by continuing to practice sound fiscal management. As such, a primary budgetary priority is to recapitalize the Hawaii Hurricane Relief Fund and the Rainy Day Fund. When my administration began, we were forced to borrow from both the Hurricane Relief Fund and the Rainy Day Fund. Now that our fiscal house is in order, it’s time to pay back those debts. Bond raters look to these reserves, and the levels to which they have been restored. Therefore, to keep our favorable ratings and attract investors, we must recapitalize these funds.

But, we must also deal with the question of the looming cloud of current liability obligations that have not been paid for and that will wreak havoc upon our state’s future fiscal stability. During the last few years of the recession while staring in the face of obligations to retirees, other states and cities nationwide have blinked and have either slashed retirement benefits that were previously earned or declared bankruptcy. That is why I am asking the Legislature to start paying toward our Other Post-Employment Benefits. This is the “OPEB” debt.

To pay down this liability would require the state to put up more than $500 million every year for 30 years. This is a number impossible to meet all at once.  I am therefore proposing to address this liability by budgeting $100 million starting this next fiscal year, with plans to continue to pursue payment in coming years.

Next, the question of energy. When we consider long-term financial stability and talk about controlling our own destiny, energy is at the top of the list.

Two weeks ago today, Tesoro Corporation announced it would be closing its refinery here in Hawaii.
That means about 200 people will soon be out of work. Our Department of Labor and Industrial Relations stands ready to assist with job assistance for those who need it.

It also means that Hawaii only has one refinery to process oil for our state’s energy needs, and that we will be importing the rest of our fuel. We face greater exposure to the events occurring elsewhere in the world that affect our fuel pipeline – whether in the Middle East, Asia, on the seas, or at Mainland refineries and ports.

Therefore, I am establishing the Hawaii Refinery Task Force, a collaboration of government, energy industries and utilities – 27 interested stakeholders from various levels of government and private sector – to immediately work on short-term and long-term findings and recommendations prompted by Tesoro’s closure.

Reducing our dependence on imported oil will take an equal commitment from all of us.

Our new energy future, one that allows Hawaii to utilize and rely upon its fortunate circumstances and geography for renewable energy, is a long but necessary journey. We have already taken several proactive and affirmative steps down that road.

But along the way, we are facing financing hurdles and policy obstacles that require us to look not only at renewable energies, but current alternative energy sources that are available now. One of those is Liquefied Natural Gas or LNG. This is a resource that would allow us to purchase fuel from American sources, and not be reliant upon foreign sources, friendly or otherwise.

LNG will reduce energy costs, and reduce our carbon footprint because the resource is abundant, available, and the technology exists for us to use it now.

Our state, our residents, our constituents, our businesses and communities need relief. To do nothing puts everyone in the state at risk. Empty rhetoric and magical thinking avoids the question.

The data is clear; embarking on a path to LNG will result in long-term avoided costs – whether those costs are mandated improvements to utility facilities or imported low-sulfur fossil fuels at exponentially growing prices. The energy storm is on Hawaii’s horizon. Will we take the necessary steps to weather it?

I ask the Legislature to move forward with us. There is no time to lose.

Likewise, there is a false controversy over renewable energy tax credits, and the interim administrative rules that were adopted. Reasonable limitations and controls upon expenditures, including any tax credits, have been critical to financial/fiscal management and our stable financial outlook. But more importantly, the lack of clarity and confusion by some gaming the system, created an uneven playing field for the renewable energy companies. It placed taxpayers, and even their expert accountants, in uncomfortable situations of not knowing whether they were following the tax law correctly.
This resulted in the unsustainable growth of the tax credit.

Therefore, I have asked my Department of Taxation to work with the Legislature to find the appropriate balance, and the proper amendments to the tax credit so that we can make the law fair for everyone, and maintain a sustainable incentive for the long-term.

Still, the problem with our reliance on a tax credit incentive is that it principally helps those with the capital means to pay upfront for a system, a cost typically in the thousands of dollars. We need to find an approach that allows all responsible residents to take advantage of Hawaii’s renewable energy options, save money, and contribute to moving us off of fossil fuels.

To that end, the Department of Business Economic Development and Tourism will propose a sensible and fiscally sound financing mechanism that will allow residents, businesses and organizations,
to take advantage of renewable energy options.

By utilizing moneys deposited in a special fund to provide capitalization, we will provide a periodic payment system that can be assessed through a customer’s electric utility bill that will amortize the costs of the system over a sustained period, allowing more of us to take advantage of renewable energy in our homes, our businesses, our churches and our communities.  No longer will a photovoltaic system be only available to those who can afford the significant initial investment. Instead, this program will allow users to take advantage now, and pay for it over the long run while deriving the immediate benefits.

If we are going to move forward on energy security and self-sufficiency, then we must also have the ability and resources to invest in these initiatives. It is for this reason that I will be proposing that we redistribute the funding from the barrel tax, as well as making this law permanent, so that the monies no longer go into the general fund, but go to the initially intended purposes of energy diversification and food safety and security.

As we strive to be more self-sufficient and decrease our dependence on imported foods, we must give local farmers the tools that they need to overcome the challenges that face their industry. To this end, we will aggressively promote state agency purchases of local agricultural products so that farmers know that there is a consistent and regular market for their goods. We will also increase access to capital for farmers and ranchers by expanding the state Department of Agriculture’s loan programs.  We are supporting the goals of the Hawaii Cattlemen’s Council and, I note, efforts by Kamehameha Schools to expand cattle ranching on Oahu’s North Shore.

An integral component to nurturing Hawaii’s agriculture industry is the College of Tropical Agriculture and Human Resources, or CTAHR. Under the vigorous leadership of its new dean, Dr. Maria Gallo,
CTAHR is poised to meet critical research and extension needs if given the support.

If we are going to nurture and expand our local agriculture – if we are going to be talking about how we meet the challenges of the 21st century and ensure that we perpetuate “our” Hawaii, its natural beauty and environment – the question is what must we do keep our watershed areas protected. The Department of Land and Natural Resources Watershed Initiative remains a top priority.

Our forests can capture and collect up to 50 percent more water than through rainfall alone.
When forests disappear, Hawaii shrinks its source of water. In the last 200 years, more than half of Hawaii’s forests have been lost. The longer we wait to take significant action, the higher the cost will be to reverse the damage, thereby threatening water supplies for future generations.

I thank the Legislature for providing funding last session. But what we need is a sustainable and ongoing source of funding. I will be asking the Legislature to look at alternative methods of funding this critical initiative. One is an increase in the conveyance tax, but limited to high-end property transactions – properties valued at more than $2 million. The bill would generate an estimated $10 million for watershed protection. The other approach is to look at a 10-cent fee for single-use checkout bags to go into the natural area reserve fund. This could generate an estimated $15 million.

Just as we need clean water to drink, our coral reefs depend on water free of silt, chemicals and debris to survive. The Department of Health – Environmental Health Administration will be proposing new measures to control polluted runoff, protect our streams, keep our reef environment from harm.

What about innovation? While the hospitality industry is fortunate to have Hawaii to rely upon; while the US Military derives clear advantages from our location, and while construction is rebounding, we must look to diversify our economy in order to grow our economic base.

To this end, I will be proposing the HI Growth Initiative, a state investment program focused on building an innovation ecosystem that supports entrepreneurial high growth businesses and creates high wage jobs for our people. We intend to provide $20 million of state investment capital that will focus on the critical building blocks of research commercialization, entrepreneur mentoring and the mobilization of startup investment capital.

This comprehensive investment program represents a commitment to reinvigorate state efforts to fuel an innovation economy. The HI Growth Initiative will engage with the private sector to startup and grow creative and innovative companies. This initiative will help keep our established industries competitive and create new areas of opportunities to allow our young people to pursue their dreams here in Hawaii.

We have examples of that entrepreneurial talent with us today.

Dr. Jeffrey Yu is CEO of Kineticor. His company is commercializing research done at the Queens Medical Center and the University of Hawaii. Kineticor has developed an innovative system that compensates for patient movement during an MRI. This will increase the efficiency of performing MRIs, reducing health care costs considerably.

Tina Fitch, from Maui, created a company that became a leading provider of software to the travel industry. She’s now leading a new software startup, umicam.  Importantly, she also mentors other Hawaii startups to inspire and motivate the next generation of entrepreneurs.

Skai Ventures, a company established by kamaaina, including Ellary Kim and Mark Mugi-ishi, has created 5 companies that employ more than 200 people. For example, TruTag Technologies has successfully developed a way to easily authenticate real prescription drugs from counterfeits, and is now looking to expand the manufacturing of its products in Hawaii.

There are also grassroots and farming entrepreneurs who want to work the land, improve their communities, and put their neighbors to work. They will be crucial contributors to our economy and to our food-sustainability.

An outstanding example of the synergy of communities and agricultural food self-sufficiency can be seen in the Veterans to Farmers program in Waimea. It is designed to combine classroom and on-farm education by creating operating farms. The program teaches lessees to build and manage greenhouses that grow produce ready for market while still working another full-time job.

The Department of Agriculture, the Office of Hawaiian Affairs, Department of Labor and Industrial Relations, Department of Hawaiian Homelands, University of Hawaii Hilo, and the County of Hawaii are all working together to bolster this new agricultural venture and keep Hawaii dollars and workers in the state.

Here with us today are the local leaders responsible for this vision and for helping their neighbors to put their hands in Waimea’s healing soil. Mike and Tricia Hodson are the owners of Wow Farm. Mike, Tricia, and their partner David Ruf have spent endless hours creating this innovative program to help their community, their neighbors and veterans to build a future in farming. I am committing $3.5 million in my fiscal year 2013 budget to building the community agriculture park that is central to the program. This program is already changing lives, we are fortunate today to have Ramona Noa here with us.
Ramona is one of the 14 new farmers, and has expressed a desire to build a legacy for her family with her new farm. I had the great honor of handing her the first diploma she has ever received, though she has long since earned one in our hearts.

Our veterans not only deserve these opportunities, but they deserve our respect and our support for their sacrifices. Just look around you, one out of every ten people in Hawaii is a veteran. It is vitally important for us to take care of them.

In August 2012, we launched the Hawaii Network of Care website, a state of the art way to make it easy for our veterans to find all services and support. We created the Hawaii Military Veterans Women’s Task Force to address the fastest growing group affecting almost 12,000 women veterans here in Hawaii.

And we also formed a Veterans Treatment Court, partnering with our State Judiciary and Veteran Affairs counterparts to help tie in critical treatment, counseling, and follow-up, while helping promote low recidivism rates for repeat offenders.

In the future we will partner with the Hawaii Health Systems Corporation to explore an additional veterans’ home on Oahu, and develop multi-service Veterans Centers in Kahului, Maui; Lihue, Kauai; and in Kona, Hawaii.

These veterans deserve our full support to recognize and appreciate all that they have done for our communities, our state and our country.

Another group, just as important and affecting every one of our families, is our kupuna. As we look to the future, we must never forget where we came from, and to whom we owe our gratitude. Those that came before us, sacrificed to help build our state, and create the foundation upon which we stand today.

To those that have long contributed to our society, we owe much, and we should not ignore their needs.

I will be asking the Legislature to increase the Kupuna Care budget by $4.2 million and make it permanent. Senior advocates should not have to come back year after year to secure their funding.
By being part of the permanent base for the Department of Health and the Executive Office on Aging, we can allow programs to properly plan and rely upon a steady stream of funding. This should be seen as an investment that will pay immediate dividends as the aging population of Hawaii both grows in numbers and lives longer.

Many of Hawaii’s residents are the products of plantation-era workers – people who worked and toiled in the fields, earning the bare minimum in order to afford a better opportunity for their families.

Today, there still exists a hard-working sector of our society that deserves continued recognition. These are the working-class residents who earn the minimum wage. The minimum wage, currently at $7.25