Hawaiʻi still needs federal relief funds

The COVID-19 pandemic and resulting recession continue to wreak havoc across Hawaiʻi. As unemployment persists and depressed spending reduces excise tax revenue, the state and counties are facing massive revenue shortfalls. This matters because we rely on the state and local governments to provide crucial services, such as public education, health insurance, emergency responders, and other essential services. Hawaiʻi needs the infusion of additional federal funding just to make sure government functions effectively.  

The picture is already bleak; Hawaiʻi had 14,100 fewer state jobs in May 2020 compared to May 2019, and 400 fewer county positions. The economic gravity of the shortfall cannot be stressed enough; without further federal aid to state and local governments, Hawaiʻi is projected to lose 23,700 private and public jobs by the end of 2021. The recent resurgence of the virus and uncertainty about reopening to tourism only compound the urgency.

The Coronavirus Pandemic Decimated Hawaiʻi’s Economy

In May, Hawaiʻi had an unemployment rate of 22.6 percent, one of the highest rates ever recorded, with nearly 131,000 fewer jobs in May 2020 compared to the previous year.  Some estimates are projecting a double-digit unemployment rate well into 2021.

On July 13, Governor Ige announced that he would postpone the reopening of tourism from August 1–September 1. Considering tourism is one of Hawaiʻi’s primary industries, it will take even longer for the local economy to recover.

Hawaiʻi’s Tax Revenues Are Plummeting

The Hawaiʻi Council on Revenues reduced the state’s revenue forecast by $793 million for FY 2020 and downgraded projections by $1.9 billion and $1.4 billion for FY 2021 and FY 2022, respectively. Those numbers represent overall revenue declines of 11 percent, 24 percent, and 18 percent for 2020, 2021, and 2022, creating a severe funding crisis for schools, health care, and other critical services 

Counties Are Facing Serious Revenue Shortfalls As Well

Honolulu, home to 69 percent of Hawaiʻi’s population, has recently projected a budget shortfall of $130 million, according to reporting by KHON2. The National League of Cities estimates that cities will experience $360 billion in revenue loss through fiscal year 2022, which will force them to significantly cut spending on crucial services or raise taxes on already recession-battered residents. Implementing massive budget cuts is the worst thing that state and local governments can do. Studies on the Great Recession have found that forcing states to deal with severe budget constraints through austerity dampen long-term gross domestic product (GDP), prolong spells of high unemployment, and extend recessions.

Education Is Essential to Rebuilding Our Economy

Unfortunately, the National Education Association has estimated that Hawaiʻi could lose roughly 9,100 education jobs by the end of FY 2022 as a result of the decline in the state general revenues that fund education.

Healthcare in Hawaiʻi Is Also in Jeopardy

The Urban Institute has projected that the Med-QUEST caseload could increase by as much as 64,000, or 21.3 percent, through FY 2021—a massive spike. Hawaiʻi needs help to cover those who are newly unemployed and expected to enroll in Med-QUEST and offset extra costs related to coronavirus. Without proper funding, the state will be unable to treat at-risk patients, keep families healthy, or provide life-saving care. Funding Med-QUEST is critical to ensuring that Hawaiʻi can respond effectively to the coronavirus public health crisis and the current economic recession.

Looking Forward

The Health and Economic Recovery Omnibus Emergency Solutions (HEROES) Act, which passed the House of Representatives on May 15 with bipartisan support, includes provisions that would help Hawaiʻi avoid additional layoffs and devastating cuts to services. Specifically, it would:

• Allocate $3.3 billion to the state government of Hawaiʻi and $1.4 billion to the counties over the span of two years, which would save thousands of jobs, and help maintain the uninterrupted delivery of public services like health care, emergency medical response, and safe drinking water.

• Increase Hawaiʻi’s Federal Medical Assistance Percentage (FMAP) and provide an additional $620 million in Medicaid dollars to Hawaiʻi’s Med-QUEST program over an 18-month period.

• Provide $303 million for education in Hawaiʻi, including $197 million for public K–12 schools and $91 million to public colleges and universities, which would save 1,900 jobs supporting K–12 education and 400 supporting higher education. This funding would help strengthen distance learning and teaching strategies to keep students and teachers healthy.

As the recession stretches into the second half of 2020, it is becoming increasingly clear that states and counties are at the forefront of combating the pandemic and its economic fallout. It is likely that both the coronavirus pandemic and the recession it led to are far from over. The state and counties of Hawaiʻi will not be able to meet their ever-more critical missions without help. Now is the time for the federal government to pass proposed legislation to do just that.