Here are three storylines to keep an eye on in 2023.
Guns, housing, cannabis are on legislative agenda
The upcoming legislative session, which opens Jan. 18, should see more details emerge on how to increase Hawaii’s inventory of affordable housing, along with a range of issues including new fees on tourists to offset their effects on the environment.
Other key topics to that will face plenty of debate include how to proceed on a new Aloha Stadium; whether to legalize recreational marijuana as many states have done; and creating statewide laws on concealed-carry firearms instead of a patchwork of county regulations, following the U.S. Supreme Court’s ruling overturning New York gun restrictions.
“I expect we will see several bills related to how we deal with firearms,” Senate President Ron Kouchi told the Honolulu Star-Advertiser’s “Spotlight Hawaii” livestream program Wednesday.
The first test of the new relationship between the Legislature and Gov. Josh Green will come during the Senate’s confirmation of Green’s cabinet appointees. Kouchi made it clear on “Spotlight” that he will not rubber-stamp the governor’s picks when they come up for Senate confirmation.
Both Kouchi and House Speaker Scott Saiki voted to approve $350 million for a new Aloha Stadium but worry that an additional $75 million in projected costs will lead to another inflated budget following the city’s troubled rail project and its history of blown deadlines.
Green’s idea for new visitor fees of $50 to $100, to offset their damage to the environment and discourage tourists from over-using the state’s natural attractions, is already under scrutiny.
Kouchi said he would like to see the development of an online reservation system that connects tourists to local vendors to help boost sales of Hawaii products.
During his 2022 gubernatorial campaign, Green said he supports recreational marijuana for adults over age 21 and using the resulting tax revenues to fund programs aimed at substance abuse. At least 21 states, two territories and the District of Columbia have enacted measures to regulate cannabis for nonmedical adult use, according to the National Conference of State Legislatures.
But Saiki and Kouchi are cautious, with the House leader noting that marijuana use remains illegal under federal law.
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Dan Nakaso, dnakaso @staradvertiser.com
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Inflation to drag down home sales, job growth, tourism
Global inflation is expected to continue to hinder Hawaii’s economy in 2023, softening tourism, dampening residential real estate and halting island job growth.
Many economists now predict the looming U.S. recession will materialize in the second quarter. Among them is Carl Bonham, executive director of the University of Hawaii Economic Research Organization, who said the forecast for uncertainty is increasing.
The Federal Reserve Board raised its key interest rate for the seventh time in December and has signaled more rate increases are in store. Bonham said much of UHERO’s forecast depends on how Fed policy affects the U.S. economy.
If the U.S. enters a mild recession, Bonham said it’s plausible Hawaii could avoid following suit, given the belated recovery of tourism from Japan and the surge in public-sector construction.
But he added, “rising interest rates, dwindling pandemic-era savings and the coming U.S. downturn will cause a pause in growth” for Hawaii this year.
A pause in island job growth and an uptick in unemployment is expected in 2023 before changing course in 2024.
Higher mortgage rates have caused new applications for home loans in Hawaii to fall by half since the start of the year, triggering a tumble in resale prices.
Economic uncertainty also is softening U.S. visitor arrivals, the core market for Hawaii’s tourism-dependent economy. Rate hikes have been the primary reason the yen has weakened against the dollar, causing a steep rise in the cost of a Hawaii vacation.
Preliminary data released Thursday by the state Department of Economic Development, Business and Tourism showed that visitor arrivals through the first 11 months of 2022 were down a little more than 11%, or 8.37 million versus 9.4 million for the same period in 2019, before the onset of COVID-19.
State Economist Eugene Tian’s forecast shows arrivals finishing 2022 at 9.27 million and rising to 9.82 million in 2023.
Tian said he shares UHERO’s view that visitor arrivals from the U.S. will slow down. But he’s “very optimistic” about visitor arrivals from Japan, which he expects could begin a major recovery in 2023.
The UHERO forecast expects almost 9.28 million visitors by the end of 2022; that number would jump to 9.65 million in 2023 and hit 10.5 million in 2027, surpassing the record 10.4 million visitors that came to the islands in 2019.
Tian shows real visitor expenditures finishing 2022 at $19.46 billion and reaching $20.91 billion in 2023. But UHERO’s baseline forecast expects about a $700 million drop in visitor spending in real dollars over the next two years.
“It’s completely plausible that it could be substantially worse,” Bonham said.
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Allison Schaefers, aschaefers @staradvertiser.com
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Rail system gets ready to pull into the station
Barring unforeseen setbacks, 2023 should be a big year for Honolulu’s troubled rail system.
The Honolulu Authority for Rapid Transportation hopes to finally turn the system over to the city in March or April for the Department of Transportation Services to operate paid ridership along the initial leg from East Kapolei to Aloha Stadium.
But several things have to happen first.
Plans continue to fix cracks in 21 T-shaped “hammerheads” that sit atop rail pillars and support stations. Cracks in the hammerheads will be coated with epoxy that’s designed to fill the cracks and prevent further expansion.
Eight of the largest cracks — which are no wider than .08 inches — will have to be retrofitted with rebar to close the gaps.
Because the hammerheads support stations and not trains, “trial running” can continue to identify and solve bugs in the system. So far, 70% of 144 scenarios have been satisfied, according to HART, with the most challenging to come.
The current problem involves a software glitch that restricts communication to one automated train and one station at a time, rather than to the entire system.
And construction along the so-called Dillingham Corridor in December uncovered ancient underground cast-iron pipes that have to be replaced.
Because of global supply-chain issues that would delay construction two to three months, HART borrowed pipes from the city’s Department of Environmental Services with the provision that the rail authority resupply the city when more materials becomes available.
The previous plan was to build a 20-mile, 21-station route from East Kapolei to Ala Moana, but HART lacked the money to get there.
Instead, HART built in “conservative” estimates for inflationary costs and supply-chain problems in its latest financial plan that was approved by the Federal Transit Administration. The new plan stops construction in Kakaako, 1.25 miles and two stations short of Ala Moana Center.
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Dan Nakaso, dnakaso @staradvertiser.com
