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With tourism on a hastening decline since the global coronavirus outbreak, Hawaii will look to the construction industry to help bridge the economy until visitor numbers rebound.
A new panel of business leaders, government officials and House lawmakers met for the first time Thursday to find ways to mitigate against COVID-19’s impact on the economy. The discussion was wide-ranging and included looking at health care and expanding unemployment benefits.
But the group seemed to find consensus on speeding up building projects to both improve infrastructure and pump dollars into the local economy.
The Council on Revenues expects the state to collect about $300 million less in taxes next year. Carl Bonham, executive director of the University of Hawaii Economic Research Organization, said that a forecast on Tuesday showing a 10% drop in visitor spending is already too rosy an outlook.
House Speaker Scott Saiki said in a press conference after the meeting Thursday that the state should look to accelerate projects that have already gotten off the ground. He didn’t have a dollar figure for those projects immediately available but said that many are minor school repair projects.
The focus would be on projects that have already gone through the planning process and are ready to break ground, so that wouldn’t include the more than $2 billion worth of capital improvement projects that Gov. David Ige included in his supplemental budget request.
Ige said during the meeting that his administration would work to speed up the projects that are ready to begin.
Still, building industry representatives also used the panel as an opportunity to lobby for construction funding.
“Let’s not waste an opportunity to invest in the two things we’ll need no matter what,” said Nathaniel Kinney, executive director of the Hawaii Construction Alliance, referring to more affordable housing and infrastructure improvements statewide.
Kinney later suggested retrofitting aging facilities, such as state hospitals, to prepare for any possible outbreak.
Hawaii has two confirmed cases of COVID-19; meanwhile state health officials are considering the possibility of limiting public gatherings and conventions to stop spread of the virus.
Lawmakers already have plans to invest $200 million in bond funding for affordable housing developments in west Oahu. The proposal is part of a joint package of bills the Legislature unveiled in January.
“Construction will probably be one of the only things to keep the economy going,” said Gino Soquena, executive director of the Hawaii Building and Construction Trades Council.
Besides pumping money into building projects, the committee also spitballed other ideas to help stimulate the economy and help mitigate against any financial losses from COVID-19.
Saiki floated the idea of extending coverage for unemployment, an idea supported by Scott Murakami, director of the state Department of Labor and Industrial Relations.
Robert Yu, deputy director of the Department of Budget and Finance, suggested eliminating the 26-week cap on unemployment benefits and having the law just say whatever is financially feasible.
Unemployment claims are already up from this time last year, according to Murukami. He didn’t know if that increase was tied directly to layoffs related to the virus or possibly a shortening of work hours.
Mufi Hanneman, president of the Hawaii Lodging and Tourism Association, suggested marketing staycations to locals to bring business to hotels and companies that typically rely on visitor spending.
Peter Ingram, president of Hawaiian Airlines, agreed that the state should launch a strong marketing campaign once the virus is dealt with to tell tourists that Hawaii is still safe to visit.
Ingram said bookings for March are down 7% to 8% over last year and the airline is “losing ground by the day.” Ingram is hopeful demand will eventually return, but like state economists, he can’t predict when that might happen.
“Until then, the damage will be absorbed by large and small businesses. The entire state will suffer economic pain,” he said.
However, Saiki said it’s not likely the Legislature would be able to give the Hawaii Tourism Authority additional funds to conduct such a campaign since state tax collections are expected to be about $300 million lower than initially expected.
The economic outlook worries the business associations. Retail Merchants of Hawaii President Tina Yamaki warned lawmakers that some businesses are already cutting hours or even considering cutting back on salaries.
Mark Perriello, president of the Kauai Chamber of Commerce, said some legislative proposals like a carbon tax, paid family leave programs and the minimum wage increase would add costs to businesses and should be considered in light of COVID-19.
While the business community supports minimum wage increases of $13 an hour this session, they have opposed higher increases in past sessions. That proposal is part of lawmakers’ joint package that includes $70 million worth of tax relief for the working poor.
Saiki said the Legislature is still committed to passing that set of bills.
The Chamber of Commerce Hawaii, as well as its chambers on Maui and Kauai, opposed Senate Bill 3150 this session. The bill is intended to get people to reduce their carbon emissions by taxing fossil fuels in an effort to fight climate change.
The chambers opposed it due to a possible increase in shipping costs as a result of added carbon taxes, and because state lawmakers are still waiting on a study that looks at the tax effects.
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