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‘No big fix’: Local historian forecasts failure in Act 221

DODGE THE MAGIC BULLET: Tom Coffman cautions continued implementation of Act 221, which provides tax incentives to high tech investments in Hawaii

By Rajan De Los Santos

Local historian and filmmaker Tom Coffman openly refuted Act 221, saying its promise of economic recovery through tax incentives for technology-driven investments will fail.

“Act 221… may be seen in context as a search for the one big idea,” Coffman, 67, said Wednesday at a business forum in downtown’s Plaza Club. “But on the scale of cost and benefit, the magic bullet called Act 221 missed its mark to (an) extent the public (cannot afford) to support.”

While admitting technology should be encouraged in Hawaii, Coffman however laments that the continued implementation of Act 221 demands “giving away (close to) a billion dollars from the (state’s) treasury with no serious identifiable (financial) return.” And with a reported $22.3 million budget deficit and an ambitious $5.6 billion rail transportation project underway, Coffman doubts Hawaii can afford to sustain Act 221.

“(T)he public is not going to support (it),” Coffman said. “The political will is not there. The money is not there. The tax credit is not there.”

Passed in 2001, Act 221 encourages investment from technology companies through a 20 percent refundable state research and development tax credit for a period of five years. In 2004, amendments were made including a five-year extension in tax credit as well as eligibility requirements restrictions.

Speaking before a mix of business leaders, media, and state officials, Coffman cautioned both the state’s Capitol and the private sector against crafting an “all-encompassing” economic measure such as Act 221. “There is no single answer (to the economic downturn),” he said. “There is no big fix.”

The former political journalist also deplored the current practice of the government bailing-out the private sector through solutions that turn into a “socialized business failure.” “I would like business people to actually do their business and if they fail, fail. Don’t burden us with your debts,” he griped.

Coffman, who authored the statehood politics book ‘Catch A Wave,’ offered several – albeit general, non-specific – measures as an alternative to Act 221, namely to “tighten our belts, take care of our resources, exercise ingenuity, (and) celebrate diversity.”

Although his talk centered mostly on the historical pattern of Hawaii’s economy, Coffman posited the state is in a “fork in history” with the upcoming elections. “We’ve reached a point where we are going to either prop up (the economy) again with infrastructure and private development or do something more complicated, more challenging, (but) potentially more gratifying,” he said.

A resident for 45 years, Coffman hopes the elections would usher in new leaders who will bring Hawaii into an age of “new thinking” that diversifies the economic benefits of tourism and uses the university system as an economic driver. “I’m trying to encourage people to think about doing a wide range of things well and not become fixated on a single magical solution,” he explained. “Tech(nology) definitely has a crucial place (in the solution) but we need a varied, more balanced approach.”