Governor Lets Tech Credit Cuts Become Law

Today was the last day Gov. Linda Lingle could veto bills from the 2009 legislative session. And while she didn't sign SB199, she didn't veto it, either. So, despite the extensive lobbying efforts by the local technology and business community, and despite the fact that she listed it as a potential veto [PDF] weeks ago, SB199 will indeed limit Act 221 investment credits for the next two years.

It appears even last minute meetings with opponents of the bill failed to persuade her.

The response from Hawaii Venture Capital Association president Bill Spencer was swift and strong. In an e-mail blast, Spencer wrote:

This confirms what some of us have always believed, which is that the Governor and her official policy staff have never been authentic about their public support for creating an "innovation" industry in Hawaii. Her "kitchen cabinet," former members of the administration and big campaign contributors, have always been against this one stimulus package that has actually created quality jobs (more than 4,000) and supported tech companies that leverage some of Hawaii's globally competitive strengths.

You can thank the Governor's Senior Communications, Policy and Economic advisors, her "kitchen cabinet" and their friends at the Honolulu Advertiser for doing their best to confuse the public about the intent of Act 221 and promulgate myths about abuse by investors and the companies they invested in.

Interestingly, though, even Gov. Lingle's second in command dissented. Lt. Gov. Duke Aiona says he also opposed SB199. He released a statement moments ago, printed below in full:

This bill should not have been allowed to become law. While I recognize the need to alter certain provisions of the high tech tax credit, this flawed measure has the potential to cripple an industry that we have worked for nearly a decade to build up in order to diversify our economy. Investors and businesses plan years in advance and fundamentally changing the rules midstream is short-sighted and detrimental to our future. Given the current economic challenges, our policies must convey that Hawai‘i is open for business, but this bill sends the wrong message.

Nonetheless, as Spencer goes on to say, "It is time to put the Act 221 argument behind us. Let's not be mad, it is time to do something." He says the HVCA will establish a Political Action Committee to support candidates that understand and support measures to diversify Hawaii's economy via venture capital like the type now stymied by SB199.