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The state’s top economists appear in agreement: Billions of dollars in federal aid have rescued Hawaii’s economy, and while some help is expected to continue, Hawaii’s old bubbling tourist-based economy is still shaky.
That’s the consensus after last week’s meeting of the state Council on Revenues.
The council took a short-term and a long view of Hawaii’s economy.
The tax revenue forecast for the period ending June 30 is predicted to rise 5% as local residents keep on spending and tourists return as the global pandemic lockdown slacks.
Panel member Marilyn Niwao, a Maui attorney and CPA, said the recovery is due to the billions that the federal government has pumped into the state through special programs.
“It meant quite a bit for the businesses, it allowed them to remain open,” she said during last week’s meeting. The state estimates that federal funds allocated to the entire state totaled
$18.6 billion.
The report shows the economy is up from the 2.5% decline the council estimated at its last meeting in March, according to the Associated Press.
This, however, doesn’t mean Hawaii is doing great; revenue is still expected to come in below pre-pandemic levels.
Late last week, the Honolulu Star-Advertiser reported that “April visitor arrivals were more than 10,000 times better than April 2020, the worst month of the pandemic for travel.
“But even with the gains, last month was still 43% below April 2019, a pre-pandemic time when 849,397 visitors came to Hawaii.”
Mike McCartney, state Business, Economic Development and Tourism director, said Hawaii’s economy is still years away from pre-pandemic times.
“Due to the lagging in tourism recovery from the international market, we expect the full recovery of our tourism industry will be beyond 2024. This is because international visitors accounted for one-third of the total visitors and their daily spending is higher than U.S. visitors,” McCartney said in the DBEDT release.
Ige and legislative leaders have trimmed state spending and in some cases, stopped programs. For instance, the University of Hawaii system had its operating budget cut by
$90 million over the next two fiscal years. In reaction, UH President David Lassner said his administration is searching for ways to avoid furloughs and workforce reductions, but is still studying what can be done with the reduced budget.
What is clear is that Hawaii didn’t willingly walk into this financial crisis and it would not get out of it without the help of the federal government. So the question remains unanswered: Where are Hawaii’s leaders capable of providing concrete ways to broaden an economy today that’s based on hawking hotel rooms and zip line rides?
Richard Borreca writes on politics on Sundays. Reach him at 808onpolitics@gmail.com.
