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A new study argues that Hawaii will suffer few, if any, negative financial consequences should civil unions become law. Instead, the state is likely to see an uptick in tourism, tax revenues and fees.
The 12-page report, called “The Economic Impact of Civil Unions,” was authored by Sumner La Croix, a professor of economics at the University of Hawaii at Manoa, and Kimberly Burnett, an assistant specialist with the University of Hawaii Economic Research Organization (UHERO).
The report, expected to be released this week, is an update to an April 2009 report by La Croix titled “The Impact of Civil Unions on Hawaii’s Economy and Government.”
In essence, the 2010 report validates the findings of the 2009 report — namely, that civil unions in Hawaii will generate “small positive impacts on tourism arrivals and government revenues” but is unlikely to have a major impact on government spending, agency workloads, or employer spending on health plans.
The new report comes as Gov. Linda Lingle deliberates whether to sign House Bill 444, veto it, or let it become law without her signature. She has until June 21 to show her intentions to the Legislature, and until July 6 to act.
A national expert on the economics of sexual orientation law and public policy, however, said hopes for increased spending from civil unions may be overblown. Lee Badgett, a professor of economics at the University of Massachusetts Amherst, said that same-sex marriage has a far greater impact than civil unions, which do not have the same social status.
In a telephone interview Wednesday, La Croix agreed that marriage is the stronger status and would have significantly greater benefit for Hawaii. But he said that civil unions will still have a measurable benefit.
The new report is not comprehensive, he said. He also made clear it is confined to studying same-sex civil unions because there is little data available on heterosexual civil unions, which HB 444 would also allow.
But La Croix told Civil Beat that the report does address what he describes as key areas where civil unions could impact Hawaii.
Like the 2009 study, the latest report compares Hawaii to mainland states that allow some form of civil unions. The most appropriate comparison, says La Croix, is Vermont, because it also has a small population, is dependent on tourism, has an agricultural sector “in transition” and has “great natural beauty.” Vermont began allowing civil unions in 2000 before approving gay marriage last year.
The following are highlights of the new report:
• An estimated 1,962 couples in Hawaii are likely to seek civil union status over a six-year period. “That’s less than 1 percent of the population of a state with 1.3 million people,” said La Croix. “You may see an influx at the beginning, but the overall number will be relatively small. Most people will barely notice civil unions, except maybe downtown or in Waikiki.”
• Tourism expenditures could increase between $5 million and $7 million annually — “a small drop in the bucket,” La Croix admits. But he says the estimate is conservative and suggests spending could be larger due to multiplier effects. “It could go as high as $35 million,” he said, adding, “If this were same-sex marriage it would be a different story.”
With civil unions, visitor arrivals and spending could grow given that Hawaii is a “grand tourist destination, a place where people go to get married and to honeymoon, where they bring friends and family from the mainland to celebrate.” La Croix said there is little evidence that allowing civil unions, domestic partnerships or same-sex marriage adversely affects tourism in popular destinations.
• Because Hawaii mandates that employers provide health insurance to employees who work a minimum of 20 hours a week, and because state employees are already offered insurance coverage for domestic partnerships, civil unions are “not going to break the bank. This is maybe the most critical big issue out there in the broader community, with people irritated that this whole thing is just about doing this to get health insurance.” La Croix estimates only between 60-120 civil union couples will require new insurance plans.
• While some government offices may require new computer programs and forms to accommodate couples who apply for civil union status, the expense will be offset by registration fees, excise taxes, and state income tax. (La Croix’s 2009 study estimated that civil unions registration fees would generate between $240,000 to $480,000 over a six-year period.) “It could be a significant source of revenue,” said La Croix. “Marriage has its tax aspects, so if civil unions can claim under the state tax code, revenues will go up.”
Jack Law, owner of Hula’s Bar and Lei Stand, a popular Waikiki gay bar, is familiar with La Croix’s data and believes Hawaii is missing out on much-needed tourist dollars.
“Being a businessman who is gay and makes money from the gay market, we are such a closed market over here,” said Law. “People say to me, ‘Oh, the economy is really bad, it couldn’t affect you because most of your customers are local.’ In truth Hula’s could not exist on just the local market, and locals make money from visitors.”
But Badgett, the Massachusetts economist, cautioned that allowing civil unions may not be a financial windfall for Hawaii.
“What we have learned is that marriage is something seen as quite different from civil unions or domestic partnerships,” Badgett said. “Number one, more same-sex couples will get married than would get civil unions. It’s not so much the legal benefits as the social meaning that is seen as different.”
Badgett also said it’s “hard to say” whether Hawaii couples currently registered as reciprocal beneficiaries — a status which confers some legal rights for couples — would choose to enter a civil union.
“Some will do so because there are more rights and benefits,” she said. “But what we have also learned is that couples will not travel any more for civil unions. They did with Vermont because it was the only game in town, but since then Vermont, like Connecticut, moved to same-sex marriage.”
Law, meanwhile, pointed to a May 19 report that Iowa, which has allowed gay marriage since April 2009, is seeing more out-of-staters getting hitched than residents.
“Imagine what it would be like in Hawaii — the marriage capitol of the world,” said Law.