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The Honolulu Advertiser
Posted on: Monday, August 28, 2006

COMMENTARY
Oregon offers cautionary tale on transition

By Tony Schmidt

David Shapiro's Volcanic Ash column (Aug. 23) raises the valid concern of "two senators in their 80s who could both depart office around the same time" and the harm this could do to Hawai'i's economy. The experience of other states confirms that Shapiro has accurately identified this risk. It also highlights Hawai'i's need for an effective transition in which our junior senator works under the tutelage of its more senior senator.

Having moved to Hawai'i from Oregon in 1996, I am struck by distinct parallels between Hawai'i's current situation and when Oregon was forced to face a future without a plan for "transition" into new Senate leadership. Hawai'i should view Oregon as a cautionary tale.

One way of measuring a state's relationship with the federal government is federal discretionary spending. Using this measure, Hawai'i's residents and businesses have enjoyed a favorable relationship with Washington. In all but one year since fiscal year 2000, Hawai'i has placed second — Alaska is at the top — in per-capita federal discretionary spending. It is also no secret that within our congressional delegation, Sen. Inouye has been chiefly responsible for "bringing home the bacon."

Like Hawai'i, the people of Oregon used to enjoy a high level of discretionary federal spending, thanks in large part to U.S. Sens. Bob Packwood and Mark Hatfield. Sen. Packwood served from 1968, holding key positions on the Senate Finance Committee, including chairman during the years 1985-1987 and 1995. Sen. Hatfield served from 1959, holding important positions on key committees, including the Senate Appropriations Committee. As a result, Oregon at one point ranked fourth among all states in per-capita federal appropriation dollars, with a level of $103.8 million.

But Oregon's relationship with the federal government changed dramatically for the worse when Sens. Packwood and Hatfield abruptly left the Senate in 1995 and 1996, leaving Oregon with no senior leadership in the Senate.

Following Sen. Packwood's resignation, newspaper articles in Oregon's largest daily newspaper aptly noted: "No wonder analysts are taking a look at Packwood and Hatfield as a powerful team for Oregon interests and trying to gauge the depth of the loss should both leave Washington D.C. 'Seniority is what makes the process run,' said Portland pollster Tim Hibbitts. 'If both go, the diminution of power would be hurtful to Oregon, no question.'"

Indeed, Hatfield's retirement the following year had the disastrous results that had been predicted. With two first-term senators in office, Oregon's federal appropriations plummeted more than 94 percent.

Moreover, the negative impact has been long-lasting. Since 2000, Oregon has only once made it to the top half of all states in terms of federal discretionary appropriation money. It has finished in the bottom three twice.

While Shapiro points to West Virginia and Massachusetts as states implementing an orderly transition plan — from the perspective of protecting federal appropriation dollars — it is hard to ignore Alaska.

With senior Sen. Ted Stevens firmly in power, Alaska has begun its transition into new leadership with the appointment of Lisa Murkowski in 2002 and her subsequent victory in the 2004 general election. Since 2002, with Sen. Stevens still in power, Alaska has managed to hold on to its top position among all states in per-capita federal appropriation dollars, while Sen. Murkowski continues to build up seniority behind him.

The importance of federal discretionary spending to Hawai'i's economy is common knowledge. In his column, Shapiro states: "Hawai'i is a small state heavily dependent on federal spending— so much so that Hawai'i's senior Sen. Daniel Inouye, also 81, has been called the second most important leg of the local economy behind tourism for his success in bringing home federal funds."

If Hawai'i is to avoid the disaster that befell Oregon, it must plan for the future. A precipitous drop in discretionary federal appropriation money, similar to what happened in Oregon would have a devastating effect on our economy.

This contingency cannot be ignored, as it will impact everyone: business, government and labor.

The high stakes that are involved underscores the vital need for an orderly plan for transition that will ensure that we will always have a healthy and effective senatorial delegation to serve and protect our interests.

Tony Schmidt, a former Oregon resident who now lives in Manoa, owns a consulting firm. He wrote this commentary for The Advertiser.