As the 2008 Legislature convenes today, familiar issues such as workers' compensation and tax reform are on the minds of small-business owners.

Recently passed bills lowered unemployment insurance and workers' compensation costs, but business leaders are looking to the Legislature to cut the cost of doing business even more.

Sam Slom, a Republican state senator and president of Small Business Hawai'i, called on his colleagues to reduce the tax burden on business owners.

Slom said he supports reducing or eliminating the general excise tax surcharge, which went up half a percentage point in Honolulu a year ago to 4.5 percent. The increase is intended to help fund the city's proposed $5 billion mass transit system.

Slom said he also wants the Legislature to reduce the corporate income tax and eliminate the beverage container tax.

"I will never give up on taxes," said Slom, R-8th (Kahala, Hawai'i Kai). "Our taxes are too high, the tax burden is too high."

Slom said the Legislature also must limit tort litigation and damages. He said doctors are leaving the state in droves as a result of what he said were a large number of malpractice lawsuits and payouts here.

Although in the minority in the Democratic-controlled Legislature, Slom said he's hopeful that progress will be made this session.

"I'm always optimistic. A lot more issues will be determined this year because it's a major election year," he said.

The heads of two small-business advocacy groups also are optimistic that the Legislature will continue on a trend to help small businesses. They pointed to a new law that lowered the taxable wage base for unemployment insurance payments as an example.

"There is an effort from legislators to hear from small business and a recognition that it's a vital part of the community," said Melissa Pavlicek, director of the 1,200-member National Federation of Independent Business Hawai'i chapter. "I'm encouraged. Legislators seem more willing to hear from small businesses and incorporate our feedback."

Still, Pavlicek said there are issues that her group would like to see addressed this session. One would be an exemption for owners of limited liability companies and partnerships from having to buy workers' compensation insurance for themselves.

Under current law, all businesses with at least one employee must have workers' compensation insurance, which helps pay for medical bills, rehabilitation and lost wages should a worker be injured on the job. Owners of registered corporations who have more than 50 percent interest in a business are exempt from the law, but it does not extend the waiver to owners of limited liability companies, partnerships or sole proprietorships.

Pavlicek estimated that an exemption would save LLC and LLP owners about $1,000 in premiums each year.

"That would make a big difference for small businesses in Hawai'i," she said.

A similar measure stalled at the Legislature last year.

Another issue that the NFIB will be monitoring this year is a possible proposal to extend medical benefits to employees who take time off to care for a family member. Pavlicek said she would like to see this done in a way that won't increase costs to businesses.

"One of the things being considered by some legislators is a voluntary program where employees contribute to a pool," she said. "We're hopeful there's something that can be done to support employees without costing employers a lot of new administrative burdens in actual costs."

Tim Lyons, executive director of the Hawai'i Business League, said he's collecting surveys from his members and has not come out with an "official" rating of their concerns. He said his organization will likely "wind up playing defense" and will be on the lookout for bills that could hurt small businesses.

Lyons said workers' compensation "still has its ills," although he didn't consider it a high priority. He also said a law that lowered unemployment insurance costs to employers last year was a "major victory" for small businesses.

He said it helps that many members of the Legislature are young and have experience running businesses.

"A lot of them have business backgrounds or they're in business for themselves, much more than it used to be and as a result they start to understand," Lyons said. "Being firsthand with business issues and business problems on a day-to-day basis makes you understand how important they are."

Lyons added that many of the concerns he hears from members can't be directly regulated by the Legislature, such as rising fuel costs and lease rents, and a shortage of qualified employees.

One issue that neither the NFIB nor Hawai'i Business League has taken a position on is the Constitutional Convention. Voters will be asked this year whether to convene a convention in 2010, and Pavlicek and Lyons said their members appear to be split on the proposal.

"Last time (1978) after the ConCon was over, business came out and thought that it wasn't all together a very good idea because it came out with a lot of new initiatives," Lyons said. "There's some resistance when business has to do initiatives."

Slom said Small Business Hawai'i supports a constitutional convention.

"We've always supported ConCon. That's the way to make a lot of these changes that the Legislature has been unwilling or unable to make," Slom said.

Reach Curtis Lum at culum@honoluluadvertiser.com.