When it comes to using taxpayer money to stimulate the economy, much of the attention has been on the federal government, which has steered some $20 billion to the state in response to the Covid-9 pandemic. And there’s good reason for that.
In the cash-strapped state of Hawaii, public money has been tight – so tight that even the $602 million in state funds released recently by Gov. David Ige for infrastructure spending seemed underwhelming to people who follow the local economy.
Ige put out a news release heralding the administration’s release of the money between April and August for a wide range of capital improvement projects.
And the stimulative impact of that kind of money?
“I hate to say, this doesn’t strike me as very much,” said Sumner La Croix, an economist with the University of Hawaii Economic Research Organization.
Jill Tokuda, a former chair Hawaii’s Senate Ways and Means Committee, was also underwhelmed.
“Honestly, it’s somewhat normal,” said Tokuda, who now serves on the board of directors of the Hawaii Data Collaborative, whose initiatives include tracking state and federal money. Tokuda explained the state normally spends $1 billion or more annually on capital projects, so $600 million isn’t unusual.
“It’s a big number but not necessarily out of the ordinary,” she said.
Ige’s office referred calls to Mike McCartney, director of the Department of Business, Economic Development and Tourism, who referred calls to Eugene Tian, the Hawaii State Economist.
Tian agreed the $600 million figure, which covers money allocated — but not necessarily spent — for capital improvement projects over five months, is pretty average.
In fact, he said between 2018 and 2020, annual CIP spending averaged $1.5 billion annually and peaked in 2018 at $1.6 billion.
Tian stressed the $602 million included money merely allocated or “released” for spending, and not necessarily money that will be spent immediately. Meanwhile, some money spent this year was allocated in previous years and is not part of the $602 million mentioned in Ige’s press release, Tian said.
Ultimately, Tian said, the $602 million figure is hard to compare to another period because it covered five months straddling two fiscal years.
“It’s not a fiscal year, and it’s not a calendar year,” he said. “It’s hard to compare to anything.”
Tokuda, who has long tried to make Hawaii’s opaque budget process easier for the public to understand, was more blunt about the press release, which she said was confusing.
“This is a horrible document,” she said. “They should never be allowed to do this.”
Still, Tokuda said the press release generally did show the state’s priorities.
The amounts allocated by Ige between April and August ranged from big sums, like $110 million for school repair and maintenance, to small ones, like a $75,000 grant to help improve beach access at Maui’s Napili Beach. In between, there were things like $71 million released to help pay for a new $468 million shipping container terminal at Honolulu Harbor; $38 million for a new, $670 million rental car facility at Honolulu’s Daniel K. Inouye International Airport and $25 million to plan the state’s broadband improvements.
“These monies reflect the priorities that the Legislature established and reflects the need for us to continue to repair and maintain our state facilities to ensure health and safety,” Tokuda said.
And Tian noted that capital improvement projects generally have big economic impacts.
One dollar spent on direct construction spending in Hawaii generally ripples through the economy resulting in direct and indirect impacts totaling $2.13, he said. Meanwhile, improving infrastructure like roads, harbors and airports is not only a long-term investment but also stimulates economic activity.
“It has a long-term impact,” he said.
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