State facing $2.3B in lost tax revenue due to coronavirus pandemic
HONOLULU, Hawaii (HawaiiNewsNow) - The financial impact of the coronavirus pandemic on Hawaii is beginning to come into focus, Gov. David Ige said Monday ― and the picture isn’t pretty.
In a press conference from the state Capitol less than a week after the end of the 2019 fiscal year, the governor laid out the early signs of what he called a “looming financial crisis,” including a nearly half-billion dollar loss in projected tax revenues when compared to the year $7 billion collected the year before.
The number includes a roughly $160 million loss in June tax revenues alone, attributable to the impact that the coronavirus pandemic has already had on Hawaii’s economy.
“A record year to a significant financial loss in a manner of three months,” Gov. Ige said.
And the shortfall is expected to continue to worsen, ballooning all the way to a $2.3 billon loss in the 2020-2021 fiscal year, according to financial projections released by the state on Monday.
“As difficult as it has been, we haven’t felt the full financial pain yet. Our finances have been kept afloat by an infusion of 4 billion in federal money,” said Gov. Ige. “You have a right to know, and I have to give you the facts and keep you informed.”
The projected shortfall is expected to force the state to consider cuts to the budget in the upcoming fiscal year, Gov. Ige admitted, and the state is already putting some of those belt-tightening measures into place.
A hiring freeze has already been implemented on all vacancies and potential vacancies, so that as state employees retire ― as many as 2,000 in any given year, the governor said ― the state can save money by temporarily declining to rehire an employee for that position.
The state is also considering municipal loans through the U.S. Department of the Treasury, and some government expenditures have been temporarily frozen. Payroll-saving measures ― thigns like salary reductions, furloughs or layoffs ― will only be considered as a last resort.
“We are facing a challenging future, and we will attack it head on. There are no easy answers, and tough decisions will be needed to be made in the next weeks and months ahead,” Gov. Ige said.
The grim financial projections come as the state nears a critical juncture in the reopening process. Gov. Ige is set to modify the state’s travel restrictions on August 1, allowing anyone who has received a negative coronavirus test within three days of traveling to visit Hawaii without needing to quarantine for 14 days, as visitors are presently required to do.
Tourism officials hope the change in protocol will help usher in the return of visitors to the islands, but as the number of new cases explode across the mainland United States ― more than 50,000 per day ― some question whether the reopening plans remain viable.
“I am concerned about opening up on August 1. I think there’s risk involved because we’re inviting people back to our shores from major markets like California, where we see huge spikes in cases,” Honolulu mayor Kirk Caldwell said earlier Monday, in an interview on Hawaii News Now Sunrise.
“Our big problem is the mainland, what’s going on over there,” said Lt. Gov. Josh Green, in response to a question about the growing number of cases outside of Hawaii.
Confirmed cases are on the rise in at least 41 states, and the Associated Press reported Monday that the percentage of tests coming back positive for the virus is increasing in 39 states.
And that rise, should it continue in Hawaii as it has in other parts of the country, could force Governor Ige to shut down high-risk sectors of our economy ― like bars, gyms and social gatherings ― once again.
“We are being thoughtful in the sense that going to stay-at-home orders again would be very impactful on our economy, and we certainly want to avoid that at all costs, but we are considering a targeted rollback in those areas that are creating the copportunity to spread the virus,” said Gov. Ige.
This story will be updated.
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