Tech remains isles’ best bet to achieve self-sufficiency

This just in: The support we’ve been getting from Washington is no longer something we can rely on. We have to find new self-sufficiency at home.

The struggles over the federal budget must remind us of the money problems we have here at home. Indeed, when we consider our state’s unfunded obligations, we should be even more concerned.

Hawaii has so many unfunded obligations, but we spend money so freely on pay raises and the like you’d think things were just fine. Instead, we should be increasingly uncomfortable that these obligations will take us to our own kind of cliff.

Officials don’t usually care about obligations that come due after the election cycle. These go quietly onto the back burner, where they stay until crisis. By then the officials responsible are usually gone.

So the snowball rolls on until it hits the wall. Then we pay much more, if we still can, to do what we should have done earlier. Such delays are costly.

Here are some of those obligations:

» The antiquated state computer system needs to be revamped. The state cannot be efficient until then.

» Incredible, but the Employees’ Retirement System hasn’t been fully funded.

» The schools, including the University of Hawaii, need to be repaired and restored.

» We need an interisland ferry. No private investor will ever invest in one again. The state must do it.

» The sewers in Waikiki need to be fixed to comply with the Environmental Protection Agency.

» Power plants need to be modified to comply with environmental requirements.

» Storage and grid technology need to be installed to distribute the clean energy we are generating.

» An undersea cable needs to be laid to connect and balance an interisland grid.

» The run-down roads need to be upgraded and expanded. We’ve let them go terribly.

» We need to adapt our infrastructure for sea level rise, to protect tourism and our way of life.

» Climate change also undermines our water supply, and we’ll need to build alternative systems.

» The overruns and underpayments on rail will be huge. We’ll be on our own for the shortfall.

» It will cost a fortune to bring the growing thousands of homeless back into the community.

Given the events in Washington, the federal safety net for our disadvantaged and senior citizens is also at risk, and we’ll probably have to fill that gap, too.

The total cost of these obligations is anyone’s guess, but cumulatively they will be staggering, probably several tens of billions. Many will be ongoing.

Even if we spent our entire $11 billion state budget on this, which we can’t, and even if we didn’t need rainy-day money for storms and disasters, it would take years to get current on these obligations.

As government gets bigger, the priorities get more difficult. Stressed, the Legislature spends everything it has, leaving little to improve our existing infrastructure, much less for payments on unfunded obligations.

There are two logical solutions: reduce expenditures and increase tax revenues. Reducing expenditures is politically challenging. Increasing revenue is unlikely unless we can grow the economy first.

Diversification could grow the economy, but after decades of discussion we remain a tourism economy, completely vulnerable, with minimum wages and offshore owners. We’ve lost plantation agriculture and defense. We need local industries, but in what?

As before, the best leverage is in tech. Waves of tech entrepreneurs came, and went, with Act 221. From earlier visions of big pharma and curing cancer, now we work in small cells developing phone apps. We need to be more ambitious; tech is more exciting every day.

We’re spending $5 billion for rail, but the state has shrunk tech funding to $2 million a year and is closing Manoa Innovation Center. Although startups get modest funding from Blue Startups and some federal funding from the Energy Excelerator, that’s not nearly enough.

We need to take much more expansive steps. We need to offer eye-popping incentives to fund and foster tech startups to play hard and win, and to make it clear that we are determined to diversify.

Hawaii has become dependent on dependency. Our future is at stake, so we need to decide whether we’re OK with that. Do we push for self-sufficiency now or wait for unfunded obligations to bite us later? Complacency is easy but oblivious.

The worst alternative is to ignore all of this, lose our ability to diversify, and leave our young families and aging elders, least able to do so, to pay the bills we should have paid before. Will you have your checkbook ready?

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Jay Fidell, a longtime business lawyer, founded ThinkTech Hawaii, a digital media company that reports on Hawaii’s tech and energy sectors of the economy. Reach him at fidell@lava.net.