On Politics: Pandemic wipes out Hawaii’s economy, but lack of recovery game plan will worsen poverty

Once, we could worry about king tides and whether we should build a 30-meter telescope on Mauna Kea. We fretted over the city’s much-fumbled rail project or if the city and state could mash up some coherent COVID-19 crisis plans.

As it turns out, the only problem we face is paying the rent.

For a while it looked like Hawaii’s catastrophic economic collapse would be averted with federal help. That extra $600 a week in unemployment pay was saving the day as the state struggled with the massive layoffs caused by the COVID-19 virus.

Hawaii had access to more than $1 billion in federal money. Much of that was used to fund programs like health screening at airports or rent assistance for workers who were laid off.

The catch is Hawaii needs an extra billion to keep the lights on, the workers paid, the insurance payments made and gas for the state cars — because with no one working, no one is spending, so no taxes are being collected.

All that came into focus last week as the state Council On Revenues (COR) tallied up the bad news. Economic growth or regression?

The state’s ups and downs used to be measured in twitches as the state’s budget maestros and the experts in the Legislature would nod knowingly to a quarter percentage point change in projected tax collections.

An Associated Press report after last week’s COR meeting said tax revenues “will likely decline 11% this fiscal year if tourists begin to return to the islands by mid-November.”

The discussion centered on whether the drop would be 11% or 12%. If you are a government official trying to figure out how you are going to cut 11% or 12% from your budget, it wouldn’t be surprising if you just gave up and walked out of the meeting.

Weeks before the meeting, Gov. David Ige has already called it a “looming financial crisis.”

Civil Beat reported from the meeting that “annual state tax collections may not reach $7 billion again until fiscal year 2024. By comparison, the state collected $7.1 billion in taxes in the year that ended June 30, 2019.”

All this comes as Hawaii is planning to borrow between $700 million to $1 billion to stave off the fiscal crisis. Many payments that aren’t being borrowed are just being delayed.

The lack of resources is a serious problem, says state Rep. Sylvia Luke, House finance chairwoman.

“It’s bad. Things were supposed to be pre-COVID in two years but now looks like we won’t get there until four years,” she said in an interview.

At the 30,000-foot level, the view is of a relenting crisis that may not right itself for years, but close up, it is a bleak future with no jobs or money.

“Hotels and their workers are struggling; don’t know how much more of the shutdown they can endure,” said Luke.

The state has put together a rent subsidy program with money provided through legislative appropriations, but that is not enough.

Obviously a tourist- based economy without tourists is soon to become a poverty-based disaster. If Hawaii can’t come up with a real plan that is not changed every quarter- hour, the state will just become an economic ghetto.

Richard Borreca writes on politics on Sundays. Reach him at 808onpolitics@gmail.com.