Executive Summary

Effective policy making is grounded in respect for all people, open dialogue, and evidence-based decisions. These principles promote social cohesion and ensure policies are based on facts, designed to achieve shared, long-term prosperity. In recent years, Hawaiʻi has seen successful examples of this approach. 

In 2022, a collaboration between public and private sector leaders helped address the economic struggles of many Hawaiʻi residents. This resulted in historic investments in affordable housing, a tax credit for working families, and progress toward universal preschool. Similarly, when the COVID-19 pandemic threatened mass evictions, Hawaiʻi brought together diverse housing stakeholders to craft solutions, creating one of the nation’s most effective responses.

However, in 2024, the state legislature took a different approach and enacted the largest tax cut in the state’s history without a single public hearing or any input from the public.

Initially designed to provide equitable tax relief at a cost of $150 million annually, the bill was drastically altered behind closed doors in the final days of the legislative session. The overhauled bill emerged from the conference committee with a price tag that will cost the state $656 million in 2025, before growing to $1.4 billion annually by 2031—nearly 10 percent of Hawaiʻi’s general fund tax revenues.

When Hawaiʻi faced a similar-sized budget deficit during the Great Recession (a 10 percent loss between 2008–09, amounting to $525 million at the time) the state implemented “Furlough Fridays,” closing all state offices including public schools one day a week, and slashing behavioral health and social services. Those cuts wreaked havoc on Hawaiʻi’s families and the public education system, and we still have yet to truly recover.

While the bill provides a helpful boost to struggling families, it gives high earners a much larger tax cut—one that our state likely cannot afford. While the bottom 20 percent of earners would receive $440 on average, the top 1 percent will stand to gain nearly $12,800 each year. 

This is the bill that was signed into law as Act 046 (2024), representing a sweeping decision that was made by fewer than 10 legislators in the conference committee, excluding public engagement and independent expert analysis.

Not only that, it happened at the end of a legislative session that began with lawmakers publicly fretting over the state budget and asking state department heads to prepare for the possibility of 10–15 percent cuts in spending on education and human services. While some lawmakers hailed the tax cut as “historic,” the process eroded public trust by excluding input from the very people the decision will impact.

A thoughtful discussion on tax policy would acknowledge that tax cuts can help struggling families, but should also consider more effective ways to allocate resources. For example:

• Directing $84 million toward a $650-per-child tax credit would benefit 176,000 children in Hawaiʻi working families.

• A $23 million investment could provide free school meals to all public school students.

• And $13 million could fund rent relief and mediation to prevent 2,500 evictions each year.

These alternatives reflect more equitable and efficient ways to support those in need.

Hawaiʻi’s tax policy should aim to improve economic security for all residents. This requires a return to transparent, inclusive governance that values equity. Progressive tax reforms that foster a shared prosperity, alongside investments in affordable housing and essential services, will help Hawaiʻi address its most pressing challenges.

Lack of affordable housing continues to drive houselessness and outmigration, straining the local economy and diminishing community cohesion. Yet, although 2024 saw progress in zoning reforms and infrastructure financing, many proposals aimed at alleviating the current housing crisis were sidelined. 

Similarly, food insecurity continues to present another urgent problem for a growing number of working families in Hawaiʻi. Yet, while the legislature did invest in food access policies like DA BUX and summer-EBT, it failed to pass Universal Free School Meals, one of the most effective ways to increase educational attainment while combating childhood hunger, which has lasting detrimental effects on keiki.

On the transportation equity front, Hawaiʻi Appleseed launched its forray into the issue with a bill to decriminalize “jaywalking,” an archaic enforcement policy that shifts the blame for traffic violence onto pedestrians without actually keeping them any safer. Ending this practice would actually save the government money that could be invested into better multimodal infrastructure to help meet transportation  goals, yet the Hawaiʻi State Department of Transportation opposed the policy.

Trust plays a critical role in effective governance. Societies with high levels of trust experience stronger economic growth, lower transaction costs, and greater civic engagement. Trust fosters social capital and leads to better outcomes in areas like public health, education, and infrastructure. Conversely, the erosion of trust—through closed-door decisions and inequitable policies—undermines social cohesion and deepens divisions.

When we build trust, we lay the foundation for a stronger Hawaiʻi. Building trust in our public institutions and within our community requires embracing past examples of successful, inclusive, and collaborative problem-solving. By committing to transparency, public engagement and accountability, we can create a shared prosperity and a thriving, united Hawaiʻi.