On politics: Don’t rely on the golden goose of tourism, as Hawaii’s economy will take years to recover

The state’s top economists seem to agree: Billions of dollars in federal aid have bailed out Hawaii’s economy, and while some aid is expected to continue to flow, Hawaii’s old, seething, tourist-based economy is still shaky.

That’s the consensus after last week’s meeting of the State Revenue Council.

The council took a short-term and a long-term view of Hawaii‘s economy.

Tax revenue projected for the period ended June 30 is expected to rise 5% as residents continue to spend and tourists return as the global pandemic lockdown eases.

Panel member Marilyn Niwao, a Maui attorney and CPA, said the recovery was due to the billions the federal government has pumped into the state through special programs.

“It meant quite a lot for the companies, it allowed them to stay open,” she said during last week’s meeting. The state estimates that federal funds allocated to the entire state totaled $18.6 billion.

The report shows the economy is up from the 2.5% contraction the council estimated at its last meeting in March, according to the Associated Press.

That doesn’t mean Hawaii is doing well, however; Revenue is still expected to be below pre-pandemic levels.

Late last week, the Honolulu Star-Advertiser reported that “April visitor arrivals were more than 10,000 times better than April 2020, the worst travel month of the pandemic.

“But despite the gains, last month was still 43% below April 2019, a time before the pandemic when 849,397 visitors came to Hawaii.”

Mike McCartney, state director for business, economic development and tourism, said Hawaii’s economy is years away from pre-pandemic times.

“Due to the delayed recovery of tourism from the international market, we expect the full recovery of our tourism industry to last beyond 2024. This is because international visitors accounted for a third of total visitors and their daily spend is higher than that of US visitors,” McCartney said in the DBEDT publication.

IGE and legislative leaders have cut government spending and, in some cases, halted programs. For example, the University of Hawaii system’s operating budget was cut by $90 million over the next two fiscal years. In response, UH President David Lassner said his government was looking at ways to avoid furloughs and downsizing but was still evaluating what could be done with the reduced budget.

What is clear is that Hawaii did not enter this financial crisis voluntarily and would not come out of it without help from the federal government. So the question remains unanswered: where are Hawaii’s leaders in position to find concrete ways to expand an economy now based on the sale of hotel rooms and zip lines?

Richard Borreca writes about politics on Sundays. Reach him at [email protected].