Economic Initiatives for the State of Hawaii

In December of 2009, after I submitted my Saving the DOE to Hawaii's State Senators and Representatives, I was asked to interview with, and was subsequently offered a job, by one of our Representatives.  It was my "out of the box" thinking that inspired and encouraged him.  At his request, I provided the following economic ideas that could be accomplished in both the short and long term.

Economic Initiatives for the State of Hawaii

The key to economic savings is to realize just how much fat we still have to trim, and to reap the benefits from expecting more from our own economy.  They say a conservative is a liberal with a mortgage, and now is the time for us all to take ownership of our home we call Hawaii.  While one cannot make "The Grapes of Wrath" required viewing or reading, we must agree that as a State we still have adequate resources to adapt and innovate.  Monumental change must occur or else we may begin stewing in our own dust bowl.

My short and long term proposals are summarized, and then explained, below.

1. Conduct a comprehensive audit, through hearings, testimony, disclosure, and visits, of all DOE expenditures.
2. Conduct a telecommunication audit and streamline State telephony and data operations.
3. Advocate and integrate vendor neutral fiber to the premise in future properties.
4. Prioritize fiber optic connectivity and broadband upgrades by placing these 'roads' under the DOT.
5. Conduct an audit of the hardware, software, data, and voice procurement strategies of the Hawaii State Library System.
6. Retro-fit and install drip irrigation for all trees and plants.
7. Require justification for the disposal of functioning computer equipment and allow on-island processors to separate the copper yolk and other materials from old equipment.
8. Re-stripe and double the capacity of key highways and roads to allow small form factor and alternative energy vehicles.
9. Consider and replicate the example of Swift Industries, Purdue University, and Switchgrass.
10. Understand, regulate, and reduce the crack spread that is manipulated by our two refineries.
11. Turn the travel time to Hawaii into a required training and education opportunity
12. Provide targeted tax credits or deductions for companies or individuals creating and openly sourcing software code used for education and government purposes.
    
13. Pass tort reform.
14. Streamline and accelerate the collection of excise taxes
15. Cease the acquisition of any proprietary, closed source voting machines and use the savings to fund the Office of Elections.  Source alternatives locally.
    
16. Cease collecting the excise dollars to fund the mass transit project until due diligence is adequately performed on competing, less expensive technologies.
17. Consider a mass transit system that is comprised of locally created vehicles and
    technologies.
18. Evaluate the benefit from shifting all federal and state marijuana law enforcement dollars to after school programs and facilities.
    
19. Make Aging in Place a job creator and a driver of exportable products.
    
20. Use Kalaeloa and its developing rules as a template for implementing many of the above ideas.

 

Conduct a comprehensive audit, through hearings, testimony, disclosure, and visits, of all Department Of Education expenditures.

There is no doubt that hardware and software savings can be achieved with my previously released recipe for success.  These savings are of the magnitude of the now fabled Furlough Friday dollars.  Given that State procurement law requires the consideration of lower-cost alternatives to meet software and information needs in the State, there are indefensible purchase taking place now, next fiscal year, and going out to bid.

These include

1. Licenses for Operating Systems
2. Licenses for Office Suites
3. Licenses for Email and Collaboration tools
4. Licenses for Curricula enhancing applications
5. Licenses for Productivity Tools
6. Licenses for Network Infrastructure
7. Licenses for Support Software
8. Acquisition of Hardware without consideration of long-term electrical costs
9. Acquisition of Software without requiring that it perform on existing hardware
10. Non-Competitive hardware purchases when lower-cost alternatives exist

For years I have been an active guest on the DOE's Tech Cadre mailing list.  This is a collection of Tech Coordinators across all schools.  Over the last few weeks discussions have included taking students on field trips to the Apple Store to see the hardware and to have an Apple 'expert' talk about how their products can enhance education.  I wish I was making this up, and it leads one to wonder if field trips to Wal-Mart or other retailers are next.

Daily there is some teacher some where who has made a non-competitive acquisition like $300 3COM Wireless Access points when $50 alternatives exist.  Most recently is the talk of how the H.S.A. testing software will not perform on the plethora of inexpensive netbooks across our schools thus prompting justification for more hardware.  The fact that someone put out an RFP and contracted the creation of software that did not work with our least common denominator computer specifications is questionable at best.

Few have been able to see as many closets in the DOE as I.  These can be scary examples of horded and unused hardware, usable hardware scheduled for disposal to make room for new hardware, and excess hardware that overburdened Tech Coordinators cannot even remove from the packaging.  I am often shown this as if to say, “Help us to help ourselves.”  I also know where the rooms are that still operate at 74 degrees - often when school is in recess.

I am confident that I can overcome any roadblocks or objections from nearly any level, be they education, security, or policy, in defense of my discoveries.  I observe the two DOE employees who attend Ewalution meetings with me, who have little to no daily contact with students, yet have Lotus Notes accounts that would cost Charter School teachers $200.  The elimination of acronyms such as ATRB and CSD from the DOE could equal all software and hardware savings.

Conduct a telecommunication audit and streamline telephony and data operations.

I pay $1.49 per month for my 808 numbers.  I no longer use the circuit to my home that supplies dial tone and the electricity required to ring a bell.  This was novel technology in the 1800's, but I now have wired electricity, wired data services, and wireless data services.  The State can achieve exceptional savings both by reducing unused, surplus telephony circuits and by eliminating, where possible, all legacy phone systems.  Replacing these with VOIP services over existing data lines not only provides costs savings but also promotes telecommuting since your phone number goes where the Internet goes.

Advocate and integrate vendor neutral fiber to the premise in future properties.

Consider what I call the Ewa Plain of Opportunity.  DHHL property has fiber to the premise.  UHWO could, and should, have fiber connectivity to the adjacent DHHL community as well as to the potential DR Horton property.  Most importantly, peering these networks into that of the struggling, Doctor-owned Hawaii Medical Center provides a national model, and an immediate solution, for reducing medical costs while increasing access to those Aging in Place.  This also provides real time distance learning and the foundation to attract research dollars and faculty to UHWO.

Fiber to the premise, especially when it is community owned, is no different than the private access lanes, or the common grass areas, that my Homeowner's Association contracts to have maintained.  This model is the foundation for an 'Intelligent Community' which happens to be a globally recognized template for fostering entrepreneurship and education excellence through broadband.  Next month, at the Pacific Telecommunication Council's annual conference, certain community leaders from around the world will be recognized for their initiatives to achieve an intelligent community.

This utilization of broadband whereby upload and download speeds are the same, through fiber, and whereby one can collaborate with a neighbor without having their traffic routed through multiple ISPs, is exactly how we create innovators with, not users of, technology.  Considering that South Korea is now upgrading to a faster fiber infrastructure, this seems overdue and can be deployed across all islands as a matter of policy and initiative and not as cost.

Prioritize fiber optic connectivity and broadband upgrades by placing these roads under the DOT.

I have proposed this to the Oahu Metropolitan Planning Organization, to OMPO's Citizen Advisory Committee, and to the DOT's deputy director, among others.  I have learned that, ironically, the DOT has great, proprietary, overpriced teleconferencing equipment, but they do not have fast enough connectivity to use it.  This would be like putting a Convention Center down a dirt road.  By moving the DOT to Kapolei, they can peer into the TW Telecom backbone and have a real 'highway' to connect.  By putting future broadband growth under the DOT, in cooperation with UH and others, we can set national precedence for traffic congestion reduction through telecommuting, tele-medicine, and distance learning.

Conduct an audit of the hardware, software, data, and voice procurement strategies of the Hawaii State Library System.

Many state libraries share space with the Department of Education.  Many State Libraries have a connection to the DOE network while still paying to manage and filter content through their own data network.  For instance, at the Ewa Beach library the patrons suffer through partly functional equipment and a slow Internet connection.  Meanwhile, the Library has a connection to the James Campbell High School network, but they cannot use it.  This seems to defy all logic and any intent of the Broadband Task Force.

I actually met with Library officials in Salt Lake to propose solutions with Free, donated computers and Free software.  This proposal included ways to utilized the taxpayer funded but unused RoadRunner connections at each library that are provided as part of our telephony rural telecommunication tax.  In what had to be the most egregious abuse of procurement law I am yet to witness, I was informed that they already worked with a certain vendor who they wanted me to go through in spite of the fact that I knew him and knew that he would simply resell and overcharge for my expertise.  The relationship existed, and in spite of the fact that I could have had free computers, wireless Internet, and faster Internet at all State Libraries two years ago, the Libraries are still begging for money.

Retro-fit and install drip irrigation for all trees and plants.

Requiring drip irrigation heads and eliminating mist irrigation wands at all State property can reduce water consumption and improve tree health at nearly no incremental cost.  It will provide substantial savings that are difficult to measure but that assuredly exist.

Require justification for the disposal of functioning computer equipment and allow on-island processors to separate the copper yolk and other materials from old equipment.

The current ewaste law ships usable computers and recyclable materials, with a market value, away from our island where jobs and raw materials can be derived.  Forbidding the disposal of all usable equipment and requiring on-island processing is a guaranteed job creator and skill enhancer for any transitional homeless shelter.  Seeding this program by requiring a slight ewaste fee at the point of sale for all monitors and televisions sold is consistent with how we buy new tires and batteries.  It actually funds computer refurbishment, repair, and recovery skills.

Re-stripe and double the capacity of key highways and roads to allow small form factor and alternative energy vehicles.

The Mini B Plan

It is not practical to build the roads required to meet future transit needs.  With the growing trend of small form factor vehicles, classified in Europe as the B-segment and in the US as subcompact, additional lane space can be added with the simple re-striping of existing roads and highways.  With a commitment to re-stripe at least one lane on H1 within 5 years, buyers and sellers can plan accordingly. With a commitment to re-stripe a second lane on H1 within 10 years, the carrying capacity of this corridor can eliminate future congestion and justify the cessation of mass transit funding.

Expanding this further – consider Tata and Kalaeloa.  The Tata Group, one of India's largest conglomerates, suffered a setback a few years ago when farmers blocked the construction of a new facility for its small form factor cars.  Simultaneously we were watching GM flounder.  This brought to mind the simple proposition – why don't we consider keeping all scrap metal on island, and recycle it into the required frames or components for the small form factor cars we will encourage buying?  Representatives from Tata attend the PTC conference, too, this upcoming January.

Consider and replicate the model of Swift Industries, Purdue University, and Switchgrass.

Swift Industries is a company that I have been tracking and who has been developing FAA approved aviation fuel derived from Switchgrass.  Swift Industries could, and should, be doing business in Hawaii.  Considering the military presence in Hawaii and our reliance of aviation-born tourism, we have the potential synergy to combine DOD and Department of Energy Dollars in a short term strategy of having Hawaii produce its own Aviation Fuels.  I understand that other biofuel initiatives are under way, but Aviation and Switchgrass with the DOD component merits attention.  We already have two on-island refineries that do not even approach peak capacity.  One could be retrofitted to produce Switchgrass aviation fuel.

Understand, regulate, and reduce the crack spread that is manipulated by our two refineries.

Cracking unrefined Petroleum produces usable products like gasoline and kerosene and vaseline.  Buying crude in the free market and producing a usable product involves risk.  Just as farmers reduce risk by trading on the future values of product, our on-island refineries, owned by Chevron and Tesoro, do the same thing.  They trade based on anticipated crack spreads, the profit margins they earn for cracking crude.  In doing so they create a paper trail of the relatively inflated profit margins achieved by non-competitive practices.

Consider that in Savannah, Georgia, where I come from, refined gasoline is piped to our market from the Gulf Coast refineries who buy crude from the same commodity market as our own on-island refiners.  Other sources for refined gasoline include European refineries who ship their product to Savannah.  However, gas prices in this market remain consistently lower than those in Hawaii.  Without adherence to any economic law, we pay the Price of Paradise in the form of a Crack Spread.

Turn the travel time to Hawaii into a required training and education opportunity.

When traveling to Hawaii from the East Coast, one can invest more than 20 hours in transit.  This time can be transitioned to a training and education
excursion that may receive Federal or employer support.  The stigma of traveling to Hawaii in a struggling economy can be offset by orchestrating and promoting programs that are 'edutourist' in nature from the moment one  steps on the plane.  Within a year of becoming a national model in cost savings through the growth of a technology sector that produces critical software code for government operations, trips to Hawaii can become required by those municipalities wishing to learn from our example but wary of the stigma from traveling here during hard times.  By ensuring that travel time is work time, people will have cause to reconsider the value of flying to Hawaii.

Provide targeted tax credits or deductions for companies or individuals creating and openly sourcing software code.

As one who witnessed far too many companies utilizing the benefits of 221
(and its derivatives) for personal gain, tax credit favors, and absolutely no meaningful research or development, I favored its dissolution.  My assertion is that nearly incalculable savings can be achieved through the use of locally supported and locally created free and open source software.  Providing tax credits to companies who create software that remains free for public use would raise revenue.  Providing credits, or at the least creating a State deduction, for companies providing free and open textbooks and education software would raise  revenue and create jobs.  We would encourage the creation of new businesses, the expansion of current  businesses, and the relocation of existing businesses.

Facilitate the financing of home alternative energy upgrades when tax credits are lost due to a lack of cash flow.

It seems a bit ludicrous to be in Ewa Beach where I live and to see so few homes with solar panels on their roofs.  It is a bit depressing to understand how close this could be to free if I had the cash to pay for the installation and the time to wait for the credit.  If I could sell the credit, or lease my roof, or if my electric utility also owned a bank, then a financing mechanism might emerge that could drive jobs, save energy, and allow upside-down homeowners to recoup a few hundred dollars a month.

Facilitate a re-evaluation of future earnings expectations from the ERS around fixed income instruments and local investments.

When CIT declared bankruptcy and did not receive Federal assistance, a devastating chill was felt across the economy.  CIT, perhaps the leading creditor for Small to Mid-size Businesses who depend on lines of credit to survive the seasonality of sales, has only recently emerged from bankruptcy protection.  Its effectiveness is uncertain, and it leads a void for ERS to evaluate local opportunities.  Fixed income instruments can be beneficial not only to ERS but also to the local businesses and entrepreneurs eager to pay a reasonable and manageable rate of interest for the lines of credit they cannot currently get.

Pass Tort Reform.

This needs little explanation except to re-iterate that it stands to solve our problems with rural access to health care and with uncertain future medical costs.  Having found myself in the E.R. on 9-15-2009 being diagnosed for one of two fatal side effects to a Sulphate-based drug called Bactrim, I understand better than ever the devastating effects for accidents.  However, we can no more condemn medical practitioners for their errors than we can the business sector and educators for their errors.  There is some medium between fair restitution, punishment, and economic viability.

Streamline and accelerate the collection of excise taxes.

Requiring that all businesses pay excise taxes on a monthly basis, regardless of size, may improve State cash flow.  Increasing late penalties may not hurt, either.  I am my own best example of this.  I generally earn an amount of money as a consultant that is easier to declare and be taxed upon once a year, when I do my taxes, than it is to keep up on a monthly basis.  While this serves me well, my benefit is procrastination and not productivity.  The State could use the cash, and if I had to do this in a paperless manner, I would get the cash to the State more quickly and consistently.

Cease the acquisition of any proprietary, closed source voting machines and use the savings to fund the Office of Elections.  Source alternatives locally.

It seems like poetic justice that the Office of Elections, after willfully purchasing more expensive electronic voting machines, is now underfunded.  Free and Open Source alternatives exist to the platform we licensed to use.  Imagine the benefits we would be enjoying today if the machines were assembled locally, the software was written and supported locally, and the cost savings from not licensing the current
voting machines would be used for tax credits, deductions, and support contracts for the much less expensive but more reliable locally produced solution. 

Cease collecting the excise dollars to fund the mass transit project until due diligence is adequately performed on competing, less expensive technologies.

The taxpayers on the Island of Oahu are currently providing tremendous capital and cash flow for a project that failed to perform due diligence on competing, less expensive technologies.  At no point did the voters of Hawaii authorize the creation of a local funding mechanism in the form of an excise tax increase for a single technology.  Many, like myself, supported the funding mechanism but falsely presumed that a fair and appropriate evaluation of technology would take place.  The collection of this tax must either cease or its proceeds must go towards other technologies or initiatives such as fiber to the premise.

Consider a mass transit system that is comprised of locally created vehicles and technologies.

The fact that we have excess vehicles being recycled for scrap on Oahu, yet we are willingly spending money for transit technologies from the 1800's, seems to fly in the face of economic sense.  Whether we build a  dedicated guideway for small form factor vehicles built on-island from the recycled steel formerly shipped off island, or whether we choose another technology, the chance to build an economy of exportable  technologies is being lost with the current transit decisions.  Simple realities like Chinese control of the market for Rare Earth Metals necessitates an honest assessment of just how 'green' we can afford to become.

Evaluate the benefit from shifting all federal and state marijuana law enforcement dollars to after school programs and facilities.

While some states have begun to discuss de-criminalizing or even legalizing the consumption of Marijuana for limited personal use, none have focused the discussion on how to re-allocate the savings.  We must provide our children with enough safe, diverse, after school activities that it becomes nearly impossible to choose to use.  This is understandably controversial, but to the degree that the debate is about after school programs versus overpriced surveillance equipment, there are public benefits.

Make aging in place a job creator and a driver of exportable products.

Considering my Ewa Plain as an Intelligent Community proposal, imagine your mother being available to you, now, for a quick video or audio hello.  She does not have to do anything.  If she wants to call you, she presses a button.  With this same appliance, the use of which I have proposed for DHHL properties, USB monitoring devices can be used for critical vital signs documenting and uploading to an EMR.  This simple process, already developed, can become a product for long-term medical savings and short-term exportable solutions.

Use Kalaeloa and its developing rules as a template for implementing many of the above ideas.

Kalaeloa and the rules we are creating for its use should be focused on accelerating all of the above in any form necessary.  As a multi-year member and regular contributor to HCDA's Kalaeloa Advisory Team, it is alarming to see the lack of innovation and forward thinking in the rules for and expectations of this opportunity for research and development.  I consistently propose thoughtful small business ideas and rules that might encourage the likes of Google to locate employees here.  Nonetheless, what we see in our evolving rules is standardized 1950's thinking based around a mode of fixed rail transit.  As a State we would be wise to ask how Silicon Valley emerged from its agricultural roots, and how we can set ourselves on the same course.

When I attend meetings where Federal officials from the NREL (National Renewable Energy Labs) and vendors selling solar solutions are in the same room with various state employees, and I am told that the Federal officials with the most important energy lab in America are not here to advise on technologies or specific rules, I have to wonder where the leadership and direction is for such an entity.  Without real direction, what opportunities are being lost?  As if to add insult to irony, the Federal representatives from NREL were with its 'deployment' team.

To drive home my software procurement issue, I learned two weeks ago that HCDA was paying for a document management solution that was put out to bid in the classic manner whereby the RFP was designed for the pre-selected vendor.  Unfortunately, this software does little more than Google Docs does, for free.  So here, with HCDA, we have meetings with energy experts unable to provide expertise and we organize documents with software purchased off island that has nothing to do with Hawaii's community development or any authority.  The opportunity is overwhelming.

R. Scott Belford  December 15, 2009

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