Hawaii‘s Council on Revenues plans to bring more bad news to Governor David Ige: Hawaii’s total personal income is projected to decrease 7% in 2020 and remain unchanged for all of next year.
“We will remain in the 2020 doldrums until 2021,” said Jack Suyderhoud, a member of the Council on Revenues.
Last year at that time, during another stellar year for tourism, the Council on Revenues predicted that total personal income would rise 2% to $ 81.2 million.
This year, a 7% decline forecast for the year would translate total personal income down to $ 75.7 million.
Thursday’s revenue forecast by the council, which is responsible for the state’s economic forecasting, comes amid tremendous uncertainty for a tourism-based economy, where 10.4 million visitors to the islands spent nearly $ 18 billion in 2019.
Some members of the Council on Revenues debated whether Hawaii’s total personal income could drop anywhere from 6.5% to a whopping 10%.
Council member Kristi Maynard said she was ready to support the 7% decline forecast.
“It’s shocking,” Maynard said, “but it’s reasonable, given where we are.”
The economic projections were based on more economic unknowns than certainties, including the lack of an extension of Congress for so-called plus-up unemployment benefits of $ 600 a week, which complemented government benefits before the end of this week; the impact of a surge in COVID-19 cases locally and across the country, which will further affect island tourism; Efforts by Maui Mayor Michael Victorino to ban inter-island arrivals in his county; a call from Mayor Kirk Caldwell on shutters for three weeks; and a postponement in the start of the school year affecting the ability of some parents to have affordable childcare that enables them to find employment, amid a number of interrelated issues that affect personal income.
“The impact on the workforce is pretty strong,” said Carl Bonham, executive director of the University of Hawaii Economic Research Organization, who sits on both the Council of Revenues and the House Select Committee for COVID-19, due to meet Monday morning.
Of all the economic unknowns, Bonham said “the million dollar question” is when tourism will fully reopen without a 14-day quarantine on arrivals, what those numbers will be, and what impact they will have on the state’s economy will.
“I don’t know how likely we are to open on September 1st,” said Bonham. “Of course we should be a bit skeptical about that. And the fact that we still don’t have an announced plan giving all the details to the public and the tourism industry is worrying to say the least. … The longer that takes, the less likely we will open on September 1st. “
Meanwhile, Bonham said, “We are aware that there will be business failures and the uncertainties due to these openings and closings are very detrimental. I fully anticipate further business closings. So if we close all of the bars on Oahu for three weeks … many of them won’t reopen. “
Members of the Council on Revenues discussed whether there is a “backlog” – and how much – there is for travel to Hawaii in the traditionally slow months between summer and public holidays.
However, Bonham said all expectations – including the possibility of a Japanese-Asian “travel bubble” – are based on visitors’ confidence in Hawaii’s ability to control the spread of COVID-19.
“Of course, if we don’t get our own outbreak under control, no one will want to travel with us,” said Bonham. “And if we don’t get our own outbreak under control, the community won’t be ready to open up to tourism.”
