It seems that elected officials have that unique characteristic that they believe know better what needs to be done to solve the problems of the world. Here in Hawaii, that practice has and continues to be a marked facet of
It seems that elected officials have that unique characteristic that they believe know better what needs to be done to solve the problems of the world.
Here in Hawaii, that practice has and continues to be a marked facet of the elected official, proposing laws that somehow meddle in the course of everyday life of residents. Laws are passed to protect consumers, regulate the size of buildings, order the number of parking spaces that buildings must have, decide what kind of sink a restaurant or day care center must have in order to serve a hot meal and so on. In some cases, elected officials have decided which types of businesses are good or bad for the economy and have passed laws to either encourage or discourage certain types of activity.
Apparently lawmakers in their infinite wisdom somehow know what is good or bad for residents or for that matter for the future of the state.
For example, in passing tax legislation over the past two years, incentives were adopted that would give tax holidays or exemptions to high-tech companies.
Similarly, several years ago, the state administration proposed a tax exemption for the activity of aircraft maintenance just so a specific airline would commit to build a maintenance facility here in Hawaii.
In both cases, somehow elected officials decided that they knew better that an aircraft maintenance facility was just what would help spur the economy or for that matter that high-technology businesses will be the answer to Hawaii’s economic future. And of course it wouldn’t be so bad if it did not cost other taxpayers some money. But in both cases, both tax breaks shifted the burden of paying for public services to other taxpayers.
In the case of the aircraft maintenance exemption, the upshot was that the exemption then discriminated against others who provided maintenance activities for similar aircraft in the islands. The result was that the next year found lawmakers extending the exemption to all other persons who perform aircraft maintenance.
In the case of the high-technology tax incentives, taxpayers will just have to wait and see what sort of effect those tax incentives will have on the community. However, a preview is now playing out in the San Francisco Bay area where the growing tentacles of Silicon Valley have reached the Bay City limits.
Tax incentives have furthered the onslaught of dot-com companies into the Bay City bring with them the demand for new office space and a heightened demand for housing. And how can the City fathers complain? After all, these upstart cyber companies are bringing new economic wealth and upscale jobs with them.
Well, the City fathers and the community as a whole is seeing the down side to the tidal wave of cyberspace. Housing prices, as well as rents, have gone through the roof.
But housing is only one downside aspect of the boom that was created by attracting high-technology companies to the City.
Industrial areas that long provided blue-collar jobs to the working backbone of the City are being torn down left and right to make way for brand spanking new office buildings to accommodate the dotcom companies.
The City even passed an ordinance to encourage dot-comers who work unusual hours to set up shop in what is now known as “live-work” loft areas and gave them a property tax break and a holiday from the fees that are usually charged other businesses. The concept was to encourage the use of “loft” space in old industrial areas to be opened as store fronts on the first floor and living space on the floors above.
However, instead of spawning a synergy of businesses in what had been run-down industrial areas, enterprising property owners have abused the system and merely set up shops without actually living in the floors above. Now the City is concerned that they don’t know how much money they have foregone as a result of this scheme. However, what is apparent is that many industrial enterprises have been driven from the City together with the blue collar jobs they provided.
Another downside of this drive to attract the dot-comers to the City is that they have snatched up empty loft space and have driven nonprofits and the arts out of warehouses and other economical sites. As a result, the arts community and nonprofit social services agencies have no where to go.
Thus, while well-intended, the side effects of San Francisco’s efforts to attract high-technology industries has come with a lot of unforeseen problems that could reshape how San Francisco moves into the next century, So much for know-it-all meddling of elected officials.
Lowell Kalapa is director of the Tax Foundation of Hawaii.
