Neighbor islands forecast to host more malihini

From stricter tax rules for solar systems to potentially lower health insurance costs and increases in neighbor island tourism, 2013 will bring some major changes to Hawaii’s economy.

NEIGHBOR ISLAND TOURISM PICKUP

Increasing neighbor island visitor traffic in 2013 is one of the Hawaii Tourism Authority’s top priorities after a banner year in tourism, concentrated primarly on Oahu. State tourism officials are working to re-establish more direct flights to the neighbor Islands, particularly international service between Japan and Kona, where foreign traffic plunged after Japan Airlines ended its decade-long service from Narita in October 2010.

Officials are hoping new heights will be reached on the neighbor islands in 2013 similar to those reached on Oahu in 2012. Oahu’s growth was largely due to expanded airline service and increased flights from international markets, particularly Asia and Oceania.

Hawaii Tourism Authority expects continued growth in airlift in 2013.

Alaska Airlines boosted service to from Bellingham, Wash., to Maui, as well as Portland, Ore., to Maui and Kauai. Meanwhile, Hawaiian Airlines increased flights from San Jose, Calif., to Maui, while Allegiant Air added service between Bellingham and Maui as well.

"We can anticipate either increases of service from existing carriers or possibly some new carriers jumping into some of these markets," said David Uchiyama, vice president of brand management for the Hawaii Tourism Authority. "They’ve seen substantial growth year over year, but we want to continue distribution to the neighbor islands."

ENERGY TAX CREDIT RULES TIGHTEN

Meanwhile, state lawmakers will be under heightened pressure in 2013 to revamp a renewable energy tax credit program that has become a significant drag on tax collections.

The state estimates the amount of tax revenue foregone as a result of the wind and solar tax credits grew to $173.8 million in 2012 from $34.7 million in 2010.

Starting today, new rules imposed by the state Department of Taxation will reduce the tax credit many homeowners get for installing a solar system.

It is up to lawmakers to decide whether they want those rules to remain in place, be rolled back or be tightened even further.

Lawmakers failed to pass bills during the two previous legislative sessions that would have reduced the amount of the tax credit, which allows owners of renewable energy systems to directly reduce their tax liability by up to 35 percent, subject to limits.

HEALTH EXCHANGE REVS UP

This is the year the federal Affordable Care Act, also known as Obamacare, will really begin to take shape. Hawaii will set up a health insurance exchange — the Hawaii Health Connector — that will allow individuals to buy health coverage at group rates but also require most residents to get coverage or face a tax penalty.

The Health Connector is supposed to give residents access to affordable coverage as a one-stop shop where individuals and businesses can purchase insurance through a variety of competing health plans.

The system is expected to be up and running by the fall for health policies that are effective Jan. 1, 2014.

The formation of the Hawaii Health Connector, established as a nonprofit by the state to match uninsured individuals to subsidized health care plans, was mired in controversy in 2012 because of the perceived conflict of interest in having health insurance representatives on a governing board appointed by Gov. Neil Abercrombie and approved by the Legislature.