Hawaii’s billion-dollar tech sector

Hawaii’s billion-dollar tech sector

Filed Under Sunrise on KGMB9

Politicians do this a lot: they sell an expensive project to the public by promising a lower price tag and a shorter time frame than will probably turn out to be the case. The way they do it is to accept the unreasonably optimistic forecasts that are given to them by consultants and other unsavory people.
We do this a lot: when something that politicians promised us fails to materialize in the time frame we were given, we jump to the conclusion that it will NEVER happen.

That’s what happened with Hawaii’s technology sector.

Politicians a generation ago got so excited about diversifying the economy that people got the impression it would arrive 10 minutes after tax credits were enacted. Instead, it took years. When it happened, many didn’t noticed, or assumed it was a scam, because they had fallen into the fallacy that late arrival mean no arrival.

They nodded their heads knowingly when the occasional tech start-up folded or moved to the mainland.
Remember the computer graphics company that went broke? Sure you do. What you may not remember is that another company bought the equipment and today is the highly successful renderfarm company Pipelinefx, still based in Honolulu.

Remember CheapTickets? It was sold to a big mainland company and moved to the mainland, eventually phasing out most of its Hawaii operations.

But other companies, like Oceanit and STI and Hawaii Biotech and Hoala Medical and Loea, have continued to operate and thrive in Hawaii.

The Hawaii Science & Technology Council briefed state lawmakers Wednesday and told them that for a 2002-2005 investment of less than $195 million the state got expenditures of more than $1 billion, half of it in wages and salaries for 5,383 jobs that pay an average $67,000 a year.

Act 221 companies generated 287 jobs, but the whole tech community benefits from those tax credit, so the credits are responsible for more jobs than that.

As tourism eases back from record highs we will be increasingly glad that officials of the last generation made the effort to diversify the economy.

So what should lawmakers do now?

Nothing.

There are a few states offering better tax credits than Hawaii does. And there are many states with better reputations for bending over backwards for business. But on the other hand we have the weather and the scenery and the culture and the food and the music and the key people in high-tech research and development are the sort of people who can name their terms and work where they like.

The best thing we can do with the tech tax credits is leave them alone, leave the rules of our local game unchanged for several years, and content ourselves with the tax revenue that comes from the payrolls and spending these companies have. Let the mainland venture capital community get used to the current situation; don’t fiddle with it.