Wednesday, July 08, 2009


In bad economic times, state wastes taxpayer money in Aloha Tower litigation

by Larry Geller

While local media focus on Governor Linda Lingle’s ongoing battle to extract money from public workers to balance the state budget, the state is dribbling away tax money in fighting an arbitration award against the Aloha Tower Development Corp (ATDC).

An article in the Memphis Business Journal (from the Pacific Business News, 7/3/2009) describes mounting fines of $438 a day and a present cost to taxpayers of more than double the $1.2 million original award.

How many state jobs can be saved if the state were to cut its losses right now?

The Texas developer is going to federal court to compel payment of the arbitration award:

“Even now, with interest running at $400 a day they are going to spend another $20, 30, 40,000 in taxpayer dollars to delay the inevitable,” said attorney Jeff Portnoy, who represents the developer, Kenneth Hughes of Dallas. “And that’s unfortunate. It clearly demonstrates they’re going to spend thousands more dollars in taxpayers’ money to avoid paying a hard-fought arbitration.”

Portnoy filed the lawsuit to confirm the arbitration award in U.S. District Court on June 16. Judge David Ezra has scheduled a hearing for Sept. 8.

As a conservative judge who has given the state plenty of slack in the Felix special education and other cases, Ezra may be reluctant to extract funds from the state as it struggles to balance its budget.

The state may argue that even if it agreed to pay the money the ATDC would have to go to the Legislature for payment, meaning it could be another year before any money is paid, and adding $185,000 to the bill. But Portnoy said he will press for immediate payment, which could lead to garnishment of state accounts.

ATDC will likely file a motion to throw out the award, but it was made by experienced arbitrator Keith Hunter and is unlikely to be reversed. Of course the outcome cannot be predicted.

It’s one thing to justify layoffs as necessary to balance the budget, and quite another to layoff state workers to pay legal fees and interest payments mounting in this case against the troubled ATDC. See the article linked above for a summary of problems that may result in the closing down of ATDC at the end of this current fiscal year.

Why not help balance the budget by cutting avoidable expenses such as for litigation, or ending the failed and costly war on drugs that keeps our prisons filled and enriches private prison operators?



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