New Federal Relief Bill Will Help Hawaii. But It’s Still Not Enough For A Full Recovery
At the end of the day, vaccinations are what will help get tourists back to the islands, economists say, although it will likely take several years before the economy looks like it did before the pandemic.
WASHINGTON — Democrats in the House passed a $1.9 trillion COVID-19 relief package Wednesday that is expected to bring billions of dollars to Hawaii, which is suffering from one of the highest unemployment rates in the country largely due to travel restrictions that have shut down the state’s tourism economy.
Hawaii Sen. Brian Schatz, who sits on the Appropriations Committee, estimated that Hawaii stands to receive at least $6 billion in stimulus spending through the American Rescue Plan. President Joe Biden is expected to sign the measure by the end of the week.
Billions more will go toward direct cash payments to eligible Hawaii residents, unemployment benefits, schools and transportation projects, including $70 million that was carved out to help build Honolulu’s beleaguered $11 billion rail project.
An expanded child tax credit, which proponents say will cut child poverty nearly in half, would help an estimated 300,000 children in Hawaii. Native Hawaiians, too, will benefit under the bill, with millions of dollars allocated to specific health care, education and housing programs.
“Billions of dollars are coming to Hawai‘i to help families and small businesses,” Schatz said in a statement issued just after the House voted 220-211 to pass the spending plan. “This new package will deliver immediate help to people who have lost their job or can’t make their rent. It provides funding for schools and health care and will give our state more resources to get people vaccinated.”
Sumner La Croix, research fellow at the University of Hawaii Economic Research Organization, described the nearly $2 trillion spending package as a life raft for Hawaii, especially considering the high rate of unemployment.
Still, La Croix doesn’t expect the federal money alone to get Hawaii through the worst of the pandemic at least when it comes to reviving the state’s tourism-based economy. A recent economic forecast from UHERO estimated that it will take until at least 2025 for tourism spending to get back to pre-pandemic levels.
“For us, putting shots in arms to vaccinate people is the key to economic recovery,” La Croix said.
Vaccinations are the key to opening up businesses, lifting travel restrictions and inviting tourists back to Hawaii, he said. He added that he anticipates there’s a lot of pent up demand for those who wanted to travel over the past year, but couldn’t.
“If this bill didn’t pass we’d be in a really bad situation here in large part because there are still so many people unemployed,” La Croix said.
Instead, the money coming to the islands will be used by Hawaii residents to shop at local businesses, buy groceries and pay their rents or mortgages.
“There’s a whole array of expenses that will end up in the pockets of local workers,” he said.
Beth Giesting, executive director of the Hawaii Budget and Policy Center, said she’s optimistic about having billions more in federal aid coming to the islands.
She does worry, however, about what will happen when those funds run out.
Home prices, which were already out of reach for many, have only increased during the pandemic as out-of-staters snatch up properties, sometimes sight unseen, so that they can work remotely from paradise.
The influx of cash for state and county governments, Giesting said, could also hurt the prospects of Hawaii lawmakers passing progressive legislation that would tax the state’s highest earners.
“I want to look on the bright side of things,” Giesting said. “The federal relief isn’t going to take care of all of our problems, but it will buy us some time to figure out the next step.”
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