Monthly Archives: April 2003

Honolulu Weekly Interview on Representative Jon Riki Karamatsu

Honolulu Weekly Interview on Representative Jon Riki Karamatsu
By Ryan Senaga
April 23, 2003


Ryan Senaga

On a late April evening, after the final decking for nonfiscal bills, Waipahu-Waikele state Representative Jon Riki Karamatsu still sat in his office, graciously signing last-minute bills and unwinding after a grueling finance meeting with a few fellow legislators.

Elected last November, Karamatsu, 27, is one of the youngest — and youngest-looking — lawmakers in the Legislature. For a man whose lifelong ambition has been to serve in public office, the UH/Gonzaga law school grad’s first season of law-making has been the beginning of a dream come true.

So how was your first legislative session?
It’s going pretty good. I’ve learned a lot. I knew what I was getting into, working as staff before and also working in the [Democratic] party. But what I realized was that working with people is critical, and relationships mean a lot in this business. I mean, you gotta have ideas, you gotta have drive, but at the same time, you need those people skills in order to get things done.

How was working with the new governor?
She put us down on the budget, about us not taking a stand. When you think about it, we did take a stand. She cut education and higher education, and those are the biggest cuts. There was supposed to be a 5 percent reduction across the board, but education cuts doubled that. Almost tripled it. People were surprised. I got calls about why the governor is cutting education, charter schools. …

When she went to the Mainland, on CNN, the reporter asked if she balanced the budget by cutting education and she said, “No, we were just cutting the additional appro-priation by Governor Cayetano,” which is not true. There was a base cut, higher than a 5 percent reduction. So what we did was restore it and put education as a priority. Without higher education being fully funded, really, how are you gonna try and diversify the economy?

She wants to knock Act 221. She says we’re not being fiscally responsible, but Act 221 gives such an attractive package. It attracts talent and investments into industries that are not solid in Hawai‘i. It is not fiscally solid, where it will put in revenue, but things are starting to happen. Companies are starting to form. Investments that would not be here but for Act 221, are here. These are things that the governor spins in a different light. Act 221 will bring in more than we’ll lose.

Was your first session everything you expected?
There were a lot of pleasant surprises. I was nervous at first, but I realized what was important for senior members is respect of history. Our age difference is huge. Some of these guys are in their 60s, even 70s … 80s — Helene Hale. But when we talk about “Oh wow, I remember when you guys did this,” it kinda opens your eyes. Even though we didn’t suffer the suffering that they’ve suffered, at least we try to understand it.

What were your disappointments?
I won’t name anybody, but things change quickly in this building. Issues can cause emotions, and things can flip super-quickly. And some people will jump to another side, based on the issue. As long as you don’t take it personally, you’ll be okay. Once you take it personally, it can kinda drain you emotionally.

With your law degree, are you ever planning to work full time?
I’m so focused on this job, and I want to do it well; but once I feel comfortable with the process, I think I’ll be open to a law firm part-time. But it’s really tough because the hours will interfere with my time to do legislation and go to community things. It does take a toll on your life.

Can you envision yourself being a politician for the rest of your life?
It’s hard to see that far. I think it depends how much of a toll it takes. Things can change, like, say, if I got married and had kids and stuff. During session, I really don’t go home too much. I sleep over here now.

Because you look young, do you get ripped on a lot?
I know that, at first, people might look at me and think I’m young but once I start talking, and it goes through the grapevine, you can win respect for what you do.

What do you do for fun?
Nothing much right now.

What did you do for fun?
I used to lift weights, hang out with my friends, but I haven’t really hung out with my friends too much because of this position.

Are you going to the 50 Cent concert?
Uh, no.

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Floor Speech on Relief for Airport Concessionaires

Representative Jon Riki Karamatsu
Floor Speech on Senate Bill 44, S.D. 2, H.D. 2, C.D. 1
Tuesday, April 29, 2003

Mr. Speaker, I rise in support of this measure.

Senate Bill 44 has been amended to give the administration as much flexibility as possible. The bill, as amended, provides that if the Administration and concessionaires cannot agree on relief, the Administration can either; (1) terminate the concession contract; or (2) force the concession to remain in business on a break even, no profit basis. Even if expenses exceed income, the Administration can require the concession to pay some rents in addition to its monthly losses for a period up to 6 months. Disputes as to what constitutes break even, no profit rents would be decided by a court-appointed arbitrator. Moreover, anytime while a concession is receiving relief, the Administration can terminate the concession contract.

This measure will also allow fair market rents to be applied, which will obviously be lower after force majeure events occur such as September 11th and the War on Iraq. The fact that the bill gives the Administration the right to terminate the contract and put it out to bid ensures that it will have the opportunity of seeking fair market rents at all times. Further, the fact that the bill allows the Administration to require the concessionaire to remain in business on a break even, no profit basis provides the Administration with the option of recovering better than fair market rents since no one remains in business on a break even, no profit basis.

Some of my colleagues on the other side of the aisle mentioned that the smaller concessionaires should be separate from bigger concessionaires. Why split up a handful of companies in this regulated industry? By doing this, the administration can divide and conquer, and broker different deals with the various concessionaires. This would lead to unfairness to certain concessionaires because of their gross sales, size and type of customers.

The Administration and some members across the aisle keep mentioning Hawaii's largest concessionaire, Duty Free Shoppers, which is being targeted because of its size and the amount of money they generate for the State. DFS' Waikiki store was again mentioned as one of the reasons for the attention being placed on the company. As I stated in the past on the floor, had it not been for the DFS Waikiki store, the State would not have been able to receive approximately $2.5 billion dollars, and a good number of the $575 million unrestricted-surplus-special fund is from DFS.

On December 2, 2002, the Administration explained that Hawaii is now open for business. Those words meant a lot to me; however, actions speak louder than words. Let me emphasize that the concessionaires are businesses that hire local employees and pump millions of dollars into our State. While the House is encouraging new businesses and investments in the knowledge-based industries, it is keeping current jobs alive and revenues flowing in the regulated industries, the airlines and now the concessionaires. Yet the Administration has proposed to gut Act 221 and refused to negotiate with the concessionaires until the legislature introduced relief bills for them this session. This measure and Act 221 is as pro-business as you can get. The actions taken by the House of Representatives and Senate clearly show that yes, Hawaii is indeed open for business.

Thank you Mr. Speaker.

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Conference Committees

I was very busy this past couple of weeks with conference committees. I was assigned to 41 conferences, 24 of which he served as a co-chair, representing the interest of the House Finance Committee of which he serves as a member. This week will be the last week for the 2003 Legislative Session. Tomorrow, the legislature will be preparing for Tuesday and Thursday's final reading on the floor for all conference drafts.

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Speech on "Equal Pay Day"

Representative Jon Riki Karamatsu
Speech Before the Press
“Equal Pay Day”
National Committee on Pay Equity
Tuesday, April 15, 2003

In honor of “Equal Pay Day,” I would like to express my utmost support of the equal pay movement. In my different occupations as a teacher, attorney and legislator, I have seen firsthand the ability and experience of my female colleagues and I believe that appointments and salary should be merit-based rather than rooted in gender.

In the last few decades, there has been heightened awareness of wage inequity between males and females. Still, we must take great strides if we are to eliminate gender discrimination in the corporate world and reach the ultimate goal of wage parity.

I am committed to many women's causes, including pay equity in America and I will do what I can to ensure that women receive “equal pay for equal work.” I will support legislation that more clearly defines what constitutes wage discrimination, as ambiguity has allowed this type of prejudice to persist. Finally, in observance of Equal Pay Day 2003, I urge the equal treatment of all people, regardless of race, color, sex, religion or national origin. Thank you.

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Remarks Entered Into the Journal on Resolution for State-Province Relations of Friendship

Representative Jon Riki Karamatsu
Remarks on House Resolution 17, House Draft 1
State-Province Relations of Friendship Between the State of Hawaii of the United States of America and the Province of Ilocos Norte of the Republic of the Phillipines
Friday, April 11, 2003

“Mr. Speaker,

I am proud to represent the district of Waipahu, which has a very diverse and rich history. Many of my constituents are of Filipino ancestry and have family roots that trace back to the Province of Ilocos Norte of the Republic of the Philippines. A State-Province relationship of friendship between the State of Hawaii of the United States of America and the Province of Ilocos Norte of the Republic of the Phillipines will promote cultural, commercial, and financial exchange between the two regions. Furthermore, this relationship will foster peace and diplomacy for years to come.

Thank you.”

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Floor Speech on Relief for Airport Concessionaires

Senate Bill 1478, Senate Draft 2, House Draft 1
Airport Concessionaires Floor Speech
Tuesday, April 08, 2003

“Mr. Speaker,

The operations at the Honolulu International Airport are primarily funded by two sources: airline landing fees and airport concessionaire rental payments.

With the threat of terrorist attacks, the federal Homeland Security mandates has greatly affected the flow of people going through our airport. Long lines prevent travelers from purchasing at the concessionaire stores. Further, families and friends who used to enter the airport terminal to greet or send off passengers at their gate are now stopped at the security checkpoints and cannot enter the area of the airport where the concessionaires conduct business.

Let us consider the largest vendor, Duty Free Shoppers Hawaii (DFS): a company that employs 1200 Hawaii residents and pays tens of millions of dollars a year in state taxes. In its 40 years of doing business, DFS has never been held in default on an airport concession agreement anywhere in the world. This company has generated approximately $2.5 billion for the Hawaii airport system. Keep in mind that this is a company that had humble beginnings as a small little store in Waikiki.

In addition, in giving relief, it is important to note that in regards to DFS, like the airlines, government heavily regulates them, as a majority of DFS' customers must be international travelers. Therefore, DFS is not your average store where all merchandise can be sold to anybody. When asked in the House Finance Committee why the concessionaires pay a higher percentage of the operating fund for the Honolulu International Airport when airports in other states require a much lower percentage from their concessionaires, the Department of Transportation replied that the reasoning was DFS has a Waikiki Store outside of the airport. However, had it not been for the DFS Waikiki store, the State would not have been able to receive $2.5 billion from them.

That being said let me clear up some confusion as to DFS' rental payment to the State. It is true the company made a required partial debt repayment of $100 million to its primary financial creditor, LVMH Moet Hennessy Louis Vuitton. But consider this. In this post-9/11 airline and airport related business environment, it is risky for corporations to assume the financial risk in supporting companies such as DFS. In order for DFS to survive, it had to pay its primary creditor Louis Vuitton to receive continued financial support from them so it can pay its airport rents. Recently, the company made a $25 million rental payment to the State and it would not have been able to do so if it went bankrupt. Instead, DFS wants to continue to be a contributing partner in Hawaii by providing jobs and bringing revenue into the State.

In the aftermath of 9/11, much of the airline landing fees have been waived or greatly reduced by the State of Hawaii in addition to relief from Congress. Likewise, we must do what we can to help the concessionaires who in the past 20 years have contributed close to 60% of airport operating revenues when the airlines contributed close to 10%. For most airports, these percentages are reversed and relief for concessionaires was given. For example, in California, LAX Airport recently provided relief to DFS by suspending their minimum rent of $37 million a year until 2005. Instead, DFS will pay 23% of sales this year, 27% in 2004 and 28 to 39% through mid-2005 depending on sales.

We must not allow government regulations to smother the businesses in our airport or the State may be left with even less revenue from them or none at all. The airport concessionaires are offering to pay DOT rents they can afford with the DOT having the right to replace them if someone is willing to pay 10% more rent. If replaced by a new tenant and not penalized and barred from future re-bidding, the airport concessionaires agree to make no claims against the DOT and to suffer the loss of any improvements and any losses relating to the cancellations of their office, warehouse and equipment leases. This offer by the concessionaires shows their good faith effort to remain in business, keep Hawaii's people employed, and generate revenues for our State.

In this period of global turmoil, we do not always have the ideal alternatives before us. Sometimes we need to make a decision that is right for the times and circumstances we live in. This is the right choice for this time and under these circumstances.

Thank you.”

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Floor Speech on the State Budget

Representative Jon Riki Karamatsu
Floor Speech on House Bill 200, House Draft 1
Wednesday, March 12, 2003

“Mr. Speaker, I rise in support of this measure.

In the Governor's Message – signed and dated on February 7, 2003, the Governor cut $11,015,863 to our public schools' funding for fiscal years 2004 and 2005.

However, seventeen days later, on February 24, 2003, on CNN Inside Politics, Governor Lingle was asked whether she cut education to balance the state budget. The Governor responded, “We did not cut education funding at all in the State of Hawaii. It's just what the previous governor proposed as an increase was not realized in the budget that we submitted.”

It is one thing to speak rhetoric on all the promises she wants to do that is not fiscally feasible, but now she is going further by sending lies out to the general public on her cuts to public education.

Despite this, Mr. Speaker, we are pushing the Governor's proposals forward because we want to work with her and will continue to work with her.”

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This weekend was very eventful. On Saturday morning, Senator Brian Kanno and I co-chaired an easter egg hunt in Village Park.

On Saturday night, my friend Stacey Hayashi I attended the premiere for a documentary on U.S. Senator Daniel K. Inouye at Pearl Harbor. The event took place on and around the U.S.S. Missouri.

On Sunday moring, I attended the 60th Anniversary of the 442nd Regimental Combat, a World War II unit made up of mostly Americans of Japanese ancestry. This is the most decorated unit ever. I was very emotionally touched to see all the veterans and the Congressional Medal of Honor awardees. That evening, I presented an award at the 6th Annual Hawaii Music Awards at Kapono's.

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