Remarks of Governor David Ige as prepared
June 2, 2016 – VERGE at UH West Oahu
I just wanted to thank the Kapolei Chamber for inviting me and asking me to be part of today’s session. I wanted to thank all of you for coming to listen. I’m a little bit nervous that they gave away the door prizes because you’ll all stand up and leave the room but that’s all right, I won’t be offended. Usually, we try and hold those things till the end so that there are some incentives to stay through the whole presentation.
But I just wanted to talk a little bit about different things that we’ve been working on, and then have some time for questions and answers in case there’s something that I didn’t talk about. I know that I can be here for hours and talk about many different things so I just want to make sure that you know that we intend to allow some time to respond to questions and I’ll go through a couple things that I guess I’m most proud of but most importantly, I want to allow some time for you to ask questions.
We have been focused from the Administration on making things right to make things happen. It really is about changing the corporate culture in state government, to be frugal with your tax dollars, to treat each tax dollar as an investment, making sure that we can meet the needs of our community. Our vision is really about restoring trust in government, about assuring our communities that government can work for them as we move forward.
I would want to say that since becoming governor, I think you’ve seen less headlines in newspapers. It really has been about trying to reduce the drama, and I’m a collaborator by nature. I just wanted to start by thanking the Legislature, I thought it was a good session. Senator Gabbard is here, Senator Espero is not, but Representative Lopresti is here too. I don’t see any others, but it really has been about working together to serve all of you, and I think that there was great work done this session. I know Campbell Estate people are here and we’ve talked a lot.
I’ve been in the Legislature, state government, for 30 years now, and we talked about West Oahu for a long time. We did know back then that the West Oahu campus would truly be a catalyst to accelerate the development of Kapolei as the second city. I know that Doris Ching is here. I think we’re into the second year, and everything that we thought would happen is beginning to happen in and around the West Oahu campus and the surrounding area. So I just wanted to acknowledge that, and that I think this was a great session working together.
We’ve made more investments in this campus. I’m excited personally about the creative media funding with building a home for the Academy of Creative Media here, right here in West O‘ahu, where I believe it should be.
As you know, we’ve been working to develop creative media in our public schools for about 20 years now, and the leaders in the State is on the West side. Searider Productions starting out on the coast and working all the way through the public schools in West Oahu are among the best digital media programs in the country. Many of you may not know but our students from public schools around the State of Hawai‘i have probably for the last 10 years won more than half of the national awards at the student youth conference every year for at least the last decade. It really started with Candy Suiso at Seariders and she was gracious enough to train all the other teachers all around the State. I’m proud of the creative media program that we have developed here in our public schools because clearly it is just one more demonstration of why our public schools should be the best in the country.
We’ve been working on a lot of things and schools was a priority this session and more specifically, it really was about cooling our schools. I just wanted to thank the Legislature again for supporting funding for cooling our schools. We’ve committed a hundred million dollars statewide starting with the hottest schools and by chance, that happens to be on the West side of O‘ahu. Campbell High School, Ilima Intermediate and Leihoku Elementary are all schools that rank among the hottest in the State. Nanakuli Elementary and Kamaili Academy are all scheduled to be part of this first phase of cooling the schools.
If you want to just talk about it, we talked about why government doesn’t work but this is an example of government working. Clearly when we started the session, we all agreed that it should be a priority. We could not figure out what’s the best way to fund it? Working with the Legislature, we got agreement that we would spend a hundred million dollars.
We are working with the Department of Education. I signed the bill two days after the Legislature passed it. The Department of Education went to bid on the projects the day after that. So really in essence, in three days we went from talking about cooling our schools to actually taking active action to cool our schools. We really do look forward to extending that, and getting to work on more classrooms as we progress through the system.
We have focused a lot this past 18 months on homelessness. Homelessness has truly been something that has touched each and every community across the State, and I do know that housing and homelessness are connected. We are finalizing and will be publishing our state strategy on homelessness, and it really addresses the three levers that we think are fundamental to changing long-term, the homelessness situation.
First and foremost, it is about housing. It’s about having more housing at all price points but specifically from the State’s perspective, working on affordable housing, public housing so that our citizens have a place to call home. So we worked with the private sectors, looking at what can we do right now to improve the housing situation.
We have a packet of bills that we were focused on, and how we can accelerate developing affordable housing. Leaders from the industry say it’s about changing our processes and we changed how the State supports the Housing Finance and Development Corporation, how we solicit proposals, how we work with developers, how we utilize tax credits. We’ve totally revamped our processes to be more in line with the developer.
We jointly went in and asked the Legislature to change the tax credit program to compress the depreciation schedules, to go from 10 years to being able to write off those tax credits in 4 years. Just talking with the developers, even though the cost to the State is exactly the same, it makes more capital available for the private sector developers to fund affordable housing projects. All totaled, the legislature funded $75 million to help speed affordable housing to our community.
So I just wanted to thank them again for that focus on housing. The first lever in dealing with homelessness is really about making more housing available, and then have the State focus specifically on affordable housing.
The Legislature also supported transit oriented development so we do have, and have funded a person focused on looking at the State parcels all along the transit route, thinking about how we can make the State lands available for affordable housing.
I did talk about our Kalihi 21st century. It really is about looking at the O‘ahu Correctional Facility site in Iwilei, and thinking about what could we do if that site became available. It’s right up the transit line. It’s a significant parcel. We have a challenge because all of our jails are poorly designed, antiquated and over capacity. If we could envision a jail site off of that site, what could we do to redevelop Kalihi? More importantly, in a way that the community would support.
It’s really about trying to do Kalihi right. It’s about looking at all of the State assets, the opportunities for us to reinvest in the State assets and then more importantly, looking at what benefits we can coordinate with the community to get away from the situation. So we’re excited about that effort in Kalihi. We believe that it’s tied to homelessness as we make more affordable housing available in the urban core. We will do a better job of getting people off the streets.
Second lever of change in homelessness really deals with services. We know that many of those who are homeless have mental health or substance abuse problems or challenges. It really is about not only putting them in a permanent housing situation, but making certain that we can provide the support services that they need to become contributing citizens in our community. So I just wanted to thank the Legislature again, $12 million, to look at what kinds of programs we need to put in place to support those formerly homeless people as we transition them into a permanent housing situation.
And then the third lever of change really is about public safety. It’s about making a commitment to assure all of you that you have the benefit of public spaces for public purposes, and not allowing the homeless to take over those assets and public spaces that should really serve the entire community. Again, thanks to the Legislature, we made progress. We’ve appropriated funds.
We do know that we need to do a better job of enforcing and keeping public spaces public, and the Legislature supported us in establishing a process so we can establish personnel that would enforce public spaces and more importantly, begin to establish the infrastructure so we can do that on a regular basis so that we can ensure that public spaces remain public. At the same time, we encourage those who are homeless in public spaces to move into an emergency shelter or some other housing situation. So we are making progress.
For any of you who saw what Kakaako looked like 12 months ago and if you drive through Kakaako today, it is a world of difference. We placed more than 200 of those who are formerly homeless into shelters. We continue to counsel those who are homeless, make shelters available to them, and then continue to focus on establishing and building more affordable housing throughout our community.
I’ve been a big advocate for being smart about managing your money. We made a tremendous effort to focus on our bonding capacity in our plan to present to all of the rating agencies, talking about our fiscal philosophy, about our commitment to unfunded liabilities and our commitment to ensure that we set funds aside for pensions and other most important benefits so that we don’t pass those costs onto future generations. Again thanks to the Legislature, this session we’ve committed almost a quarter of a billion dollars, $240 million to pay down unfunded liabilities and to refinance our bonding.
For the first time in more than a decade, we had a competitive process when we went to the bond market to issue our bonds. This is the second bond quote of my Administration, and we got the lowest cost to issue our bonds in the history of the State of Hawaii.
We are focused on taking care of your taxpayer dollars. We know that if we get better at issuing bonds and we can reduce the cost of issuing the bonds, we can deliver more services to each and every one of you. So this past bond quote we refinanced, we saved more than $32 million in the life of the bonds. I think more importantly, we established this process where we would competitively bid part of that bond issue and we expect to be able to see a resulting savings going forward. So I know I get excited about doing these things because I do know that it allows us to do more with your taxpayer dollars than we would if we did not do it.
Tax modernization is something that I’m very proud of and we’ve been talking about it a lot. We finished the first phase last December ahead of schedule actually and on budget, and we’ve already seen the results.
If you think about twelve months ago this time of year, we’re talking about tax income tax filing being delayed and delayed, and people are complaining about not getting their refunds in a timely manner. You noticed in the first five months of this year, there hasn’t been a single story about delays to tax processing, income tax processing.
The first phase of our tax modernization was focused on document imaging and intake so that we could do a better job of receiving your tax income tax forms, processing it and then returning your tax refunds for those of you who have refunds. There hasn’t been a single story, why is that? Because we finished phase one ahead of schedule and on budget, and it’s allowed us to be more efficient in processing income taxes.
Not only that, we established a fraud unit. Last year, we stopped $20 million of fraud payments and I don’t have the current tally, but I know that in the first two months we stopped more than $12 million additional tax refunds from being processed. So we are definitely looking and making sure that everyone is paid their fair share of taxes, and the tax modernization system allows us to ensure that happens.
The other part of that, and I know that some of you are small businesses, we quietly got rid of the delay in processing tax payments. It was typical in the past that it would take an average of about 45 days to process a tax payment. So if you are a realtor or business person used to making tax payments and counting on the 45 days of float before the State actually deposited your tax payment, we established a process to deposit it the same day received. So probably from about December, for those of you making tax payments, you might have noticed that we’re actually depositing the payments. We are depositing it much, much quicker and we tried depositing it the same day. But the last time I calculated, the float ended up being hundreds of millions of dollars. If you think about it, if you just distribute the general excise tax payments, and I know that it’s not straight line distribution but it’s about a hundred million dollars a week. It used to take us 45 days to deposit those checks. You know, it’s like $900 million that is lost in the float. Well, anyway, we did implement same day tax deposits, so sorry for those of you counting on the days of float. We plan to be smarter about that.
One other thing I did want to talk a little bit about is Every Student Succeeds Act (ESSA). Public education is really important to me. I’m a proud graduate of Pearl City High School. We’re talking about it a little bit here but I truly believe that we have the opportunity to create the best public education system in the country. We definitely are working toward that.
For many of us who have dealt with education, we knew that the No Child Left Behind law, which was on the books for a very long time, we knew that it was not a workable law. We knew that No Child Left Behind ensured that every single school in the country would be labeled “failing” because the standard was so unreasonable and the criteria so strict. All of us involved knew that at some point in time every school would be labeled “failing.” Then Congress passed the new Every Student Succeeds Act to replace No Child Left Behind and for the first time, restores the ability and the states to take responsibility for public education.
At the National Governors Association (NGA) session in Washington, D.C. this past February, Senator Lamar Alexander from Tennessee, the author of the Every Student Succeeds Act, presented to NGA, because he served as governor of Tennessee, served as secretary of education in a previous administration and is now a U.S. senator from Tennessee. He talked about how governors today have a bigger role to play, especially in light of the fact that Congress often times cannot make progress. So he talked about the opportunities that Every Student Succeeds gives back to the states, to really redefine what’s important to the states, to really stop the federal government from one size fits all, and providing specific requirements and deadlines to the states. He talked about from his perspective that he wanted to give control of public education back to the states.
So we did form a Governor’s team that is looking at the opportunity that Every Student Succeeds Act provides to every state. We have a summit and, all of you interested in public education, I would just invite you to be part of that. It’s scheduled for July 9th. We are encouraging, we are going to be meeting, talking about how what’s required to develop the best public education system in the country. We’ll be looking at the opportunities that Every Student Succeeds provides to us, and redefining the criteria and the requirements to really move our public schools forward. So I invite you to participate. If you’re interested, please check the website. I would give you a notice that we have not yet publicized, that we’re taking registrations and we have 300 people signed up for the conference already by word of mouth. So if public education is an interest, please check out our website.
We have been working on a number of other things. As you know, I’m an electrical engineer by profession. Since joining public service and serving in the Legislature, I really have been committed to diversifying our economy.
When I graduated from the University of Hawai‘i in electrical engineering, I had 41 job offers. In Hawai‘i, University of Hawai‘i has an excellent engineering program and we had companies from all across the country come to recruit engineers from the University of Hawai‘i. So I had 41 job offers, 40 of them were on the mainland. The first time I ever left the State of Hawai‘i was in my junior year and my first trip out of state was to be interviewed up in Silicon Valley, Mountain View. I was interviewed by IBM and Intel and Hewlett-Packard and a number of other companies but I had one local job offer and needless to say, I took the local offer. It was the last interview that I went to and I was pretty much all set. I had the job offer down to about three that I was seriously looking at. I went to the last interview about three weeks before graduation and talked about a job opportunity here. The interviewer asked me, “so, what’s your best offer?” I told them and at that time, it’s $24,000 a year. So he says, “I’ll pay you $27,000 if you stay in Hawai‘i.” So I took the job offer.
But we need to create more opportunities for young people, we need to create opportunities that our young people want, and it really is about creating a diversified economy. Yeah, I want to see that change so that when the graduates today have job offers, they get many, many job offers from here in Hawai‘i.
So we focused at the state capitol, and this session I made a priority to support innovation because we do know that the economies of the future is about innovation and creativity and intellectual property. That’s the economic drivers that will drive job creation moving forward. So again, with the support of the Legislature, we’ve committed more than $8 million in this budget to creating an innovation economy. It really is about supporting risk capital.
You know, we made an investment in the innovation initiative, which is the State’s venture capital program. State funds are made available to private sector, accelerators and private equity investors to really be co-invested in creating companies of the future. The UH accelerator has been very effective, developed 15 companies so far, generating more than $600,000 in revenue, raised almost $8 million in external capital. It really is about trying to create an eco-system to support entrepreneurs and job creation because we do know that’s where the job creation will come in the future. It’s really supporting small entrepreneurs looking for creating that next economic breakthrough.
We do know that the fundamental change that was heard in the global economy is that geography matters less, and technology has gotten so good now that virtually any business can be located virtually anywhere and deliver goods and services throughout the world and be competitive. So that’s the opportunity we are investing in, programs to support innovation, business accelerators that I’m looking at mentoring and coaching, and creating eco-systems to support them.
We’re creating, supporting the innovation sandbox in Kakaako to create a space for innovators to meet. We’re creating community work spaces like they have in other technology towns for people with ideas to meet and talk and be able to develop in a supportive environment. So we continue to be focused on innovation, about supporting innovation, about creating and figuring out ways that we can help entrepreneurs create the next businesses in our economy.
I just wanted to talk a little bit about Kapolei and West Oahu. People have commented to me, some of you who live on the West side think that you’re often forgotten. I just want to say that if you took any region in the State and looked at state investment into that region, there is no other community than Kapolei or the West side that has received as much investment as the West side of O‘ahu has. And you can thank Representative Har, Senator Gabbard, Representative Lopresti and the rest of your delegation for doing that. Part of that was driven by me, but part of that was really driven by our desire to create the second city here out in Kapolei, and I do think that we are beginning to see the seeds really accelerate.
As I said, I do believe the West Oahu campus is truly a catalyst to spur more and more investment in this area and job creation. I think Chancellor Ching has done a terrific job stepping in. We are making sure that the West O‘ahu Community is going to have the resources. I told some of you that I truly believed that the West O‘ahu campus will become the jewel in the University of Hawai‘i system very quickly because of your receptiveness and responsiveness to really meet the needs of the community.
So I’m excited. I’m excited to be here. I kept waiting till we break ground on the Academy for Creative Media. I know that there are other state lands that we’re looking at to see how we can partner with various private sector developers.
We are making an investment in infrastructure. Besides this campus, we have made investments. We are making investments in the Kalaeloa Barbers Point Harbor. It’s getting $55 million in investment to ensure that we can move forward in that space. We’re making an investment in Kalaeloa Airport, adding additional hangars and other support activity at Kalaeola Airport.
And again, we made significant investment in the roadways. I know that traffic is the number issue and there’s lots more work to be done but we’ve invested in the interchange and a number of roadways, Koalakai Parkway extension, improvements to H1, Farrington Highway. We are talking about contraflow, trying to ease transit right now in various communities. Obviously, we think that West Oahu would be a prime opportunity to look at contraflow and see how we can ease traffic concerns.
Altogether, we’re doing a lot. We are focused on helping Kapolei become the second city. We’re focused on cooling our schools. We’re committed to an innovation economy, and we are committed to making government work on your behalf.
And so with that, I’m more than happy to take any questions you might have. Thank you.