State can’t afford to ignore heap of unfunded liabilities

Gov. David Ige wants to balance the budget and is not inclined to spend on new initiatives. But we have huge unfunded liabilities, largely in failed and delayed infrastructure, and it’s time we figured out how we’re going to pay the piper.

The current controversy about funding the rail makes this clear. Beside rail, there are a number of other obligations we need to pay for. Here’s a list, not necessarily complete or in order of importance:

Public worker pensions and health insurance; the state hospital system; repairing state buildings and schools; the State Computer System; the UH athletic program; upgrading generation facilities; building smart grids; upgrading bus systems; upgrading Wai­kiki sewers; repaving, widening and modernizing roads and traffic systems; upgrading airports; helping the homeless; creating affordable housing; restoring beaches and protecting them from sea level rise; upgrading broadband; improving water systems; maintaining and building public spaces, parks and recreational facilities; building agriculture and tech industries; creating an interisland ferry.

Instead of addressing these hard problems, we regularly distract ourselves with soft ones. Is this the result of our way of doing campaigns, contributions and lobbying? Is it quality of leadership or a flaw in the system itself?

We can’t control offshore factors like terrorism and bad storms. But we can and must deal with liabilities that affect tourism, our state’s primary industry, like upgrading the airports, fixing the sewers, beaches, roads and traffic and, of course, caring for the thousands of homeless.

Do we really have to go further with rail? Why not redirect the rail money to these things? Six-plus billion dollars could help us deal with at least some of the unfunded liabilities on the list. The irony is that the rail, if not stopped, could be the biggest unfunded liability of all.

If we assume the items on the list will cost $40 billion, the burden on every man, woman and child in the state will be around $40,000. Since many people cannot pay that, the burden on those who can pay will be that much greater.

So we will need to raise state money to deal with these liabilities. There are four logical ways to do that.

First, avoid wasting money; second, raise taxes; third, expand the economy; and fourth, redirect money from the rail. We should do these things deliberately, in combination and over time, even if it’s painful and unpopular.

It’s not just balancing the budget. It’s doing whatever we have to do to keep going over the long term. If we have to raise taxes or redirect funds, let’s do that. If we have to re-engineer the economy, let’s do that, just as so many other places do. For that matter, if we have to change the state constitution, let’s do that, too. We have to think out of the box and get the job done.

Expanding the economy through diversification is the most appealing but requires investment. Incentives involve cost and risk but can give us the best outcome. Per the old adage, it’s better to teach people to fish than just give them a fish.

At this point we need to identify our unfunded liabilities, examine the size and scope of each and then prioritize and deal with them. Single-minded single-mindedness is what we need.

Recognizing the immediacy of this need, ThinkTech and the Grassroot Institute are presenting "Hawaii, the State of Unfunded Liabilities" at the Lani­akea on Feb. 26.

Attendees can pose questions with Live­Sift.com. The program organizers are seeking candor and public engagement. After all, these liabilities will affect every one of us, and many generations to follow. What kind of legacy do we want to leave?

You can check it out at thinktechhawaii.com.

———
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.