Gov. David Ige is calling for the economy to turn to technology

Gov. David Ige wants Hawaii to develop a more resilient digital economy — “a linchpin for Hawaii 2.0” that would expand broadband connectivity to rural communities in response to the COVID-19 pandemic that has choked tourism.

COVID-19 exposed Hawaii‘s tourism-based weaknesses as the state surged from the country’s lowest unemployment rate to one of the highest in 2020, Ige told lawmakers Monday in his annual state of the state address.

“Literally overnight, our expectations were shattered by the coronavirus pandemic,” Ige said.

In the long run, Ige acknowledged that diversifying Hawaii’s tourism-based economy into one with a more robust technology sector won’t be easy.

“In the 1970s, agriculture alone could not free us from our addiction to tourism,” said Ige. “Nor will technology do it in the 21st century – not by itself. But it can be used to support a multi-pronged approach to greater diversification even as we strive to get tourism back on its feet.”

A digital economy would allow island workers to compete globally while earning higher wages and enjoying a higher quality of life, Ige said.

“More importantly, we can keep our kamaaina here to reverse the brain drain,” he said, “because in a digital economy, our kids don’t have to move to the mainland to secure good jobs.

“But we have to create the right framework for this. Every government, business and non-profit organization needs to embrace digital technology to thrive,” he said. “We need to develop a clear vision for a more diversified and sustainable economy that is compatible with our culture and way of life. And that vision must be based on solid economic analysis.”

On short notice, Ige said the state plans to make interest payments on $700 million that the state Department of Labor and Industrial Relations borrowed to provide unemployment benefits to more than 580,500 island workers who filed for unemployment last year.

Covering the interest payments on the loan “is over $165 million that our companies would otherwise have to raise over the next six years,” Ige said.

The state is expected to borrow an additional $600 million in the coming months to cover additional and ongoing claims.

Regarding the ongoing spread of COVID-19, Ige said, “We will continue to take the strict measures needed to protect our community, including the Safe Travels airport screening program. Hawaii was among the first to mandate pre-trip testing and quarantine procedures. It’s one of the reasons we lead the nation with the lowest COVID infection and death rates.

“We are also implementing a comprehensive strategy for vaccine distribution in each county. We take care of people where they live and where they can get it. And we will work with the Biden administration to expedite vaccine distribution to everyone.”

After Ige’s speech, key lawmakers said they were disappointed with the lack of details and timelines.

Senate Speaker Ron Kouchi said the Ige administration provided little information at budget hearings earlier this month.

“I expected that they would try to keep the big news for the state of the state and that we would get much more specific detail about where to go and the speech clearly didn’t have very much detail,” Kouchi told reporters. “Did they consider tax initiatives, and if we didn’t consider tax initiatives, then where was the expectation of where the revenue would come from?”

House Speaker Sylvia Luke expressed similar frustrations.

“I think right now, part of the biggest criticism of the Ige administration over the past nine months is the lack of communication,” she said. “Right now, people need clarity and people need direction, and even if it’s bad news, we need to figure out how to deal with it together.”

The state’s budget deficit is estimated at $1.4 billion to $1.8 billion out of a total budget of $15.4 billion.

A clearer picture of Ige’s policy plans is set to be detailed in some 200 bills that will be introduced to lawmakers this week. Ige said during a press conference after his speech that he did not expect broad-based tax increases to be necessary to balance the state budget. He is also attempting to retake about 150 government positions he had earmarked for elimination. Ige said he didn’t know what percentage of those proposed job cuts would affect current employees. Some positions are vacant.

State Assemblyman Gene Ward (R, Hawaii Kai-Kalama Valley) said in a statement: “Unfortunately, although Hawaii’s integration into the digital economy has been positive and encouraging, details and creative proposals for economic recovery have been scarce. However, I have not heard any timetables for when any of our major problems with our economy, the pandemic and our huge budget deficit should/should be contained or ended.”

On his digital economy plan, Ige said he is working with Kouchi, House Speaker Scott Saiki, and business, labor and community leaders to develop “an action plan for Hawaii’s future.”

“I reached out to the Hawaii Business Roundtable, the Hawaii Executive Conference, the Hawaii Chamber of Commerce and the Hawaii Community Foundation to bring together stakeholders and communities from across the state.

“I also sought the advice of the governors. (George) Ariyoshi, (John) Waihee, (Ben) Cayetano, (Linda) Lingle and (Neil) Abercrombie for their thoughts on economic recovery. I asked them all by April for recommendations that will be translated into concrete action by the third quarter of this year.

“The Legislature will then have an opportunity to respond to these initiatives in its 2022 session.”

Ige said he also directed Ed Sniffen, the state Department of Transportation’s assistant director of highways, to “speed up” Sniffen’s pilot project to connect rural communities to broadband services. The project focuses on Puna, Kau, Hana, Nanakuli, Wai-anae, Waimanalo, Kalihi and Kapaa.

“The pandemic has clearly highlighted digital inequality in Hawaii,” Ige said. “Part of our job is to ensure that a student in Nanakuli can access an online lesson plan just as easily as a student in Kahala, and that everyone is connected in a digital Hawaii. Likewise, with a Federal Communications Commission (FCC) grant, we will support a telemedicine initiative to connect low-income patients at high medical risk with healthcare providers. The DHHL (Department of Hawaiian Home Lands) will receive at least $30 million in federal funding that will benefit native Hawaiians.

“Additionally, my legislative package this year includes a bill to establish a broadband and digital equity bureau to oversee these efforts. This office will also allow us to identify and secure Hawaii’s share of $7 billion in new federal funding for broadband infrastructure and digital stock programs.”

Saiki has been reluctant to support Ige’s proposed Broadband and Digital Equity Office if it involves new costs. Saiki said the House of Representatives is trying to streamline government, not expand it.

Ige also said, “We expect to invest $1.1 billion in government capital improvement projects. Federal transportation projects — like airports, ports, and highways — will add another $1.1 billion. And the private sector is expected to contribute another $10 billion and thousands of jobs to restart our economy.”

He said his government is cutting the current budget by $402 million, transferring $345 million from the Rainy Day Fund, cutting $350 million from state programs and borrowing $750 million for the first time in state history US dollars to support payroll.

“The government needs to tighten its belt; our citizens are challenged to do more with less; and we all have to help each other,” said Ige. “Unlike in previous years, our main budgetary initiative will be to find ways to cover historic deficits.”

“The latest report from the State Council on Revenue predicts that our economy will outperform previous dire predictions,” he said. “The council now expects the state to generate nearly $6.3 billion in tax revenue for this fiscal year. Because of this, we were able to adjust the cuts proposed by the DOE (Department of Education) and now have about $123 million to give back to our classrooms. In a sea of ​​bad news, this is good news indeed.”

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