How to rescue Maui from the coronavirus recession
Maui County’s economy is in trouble because of the coronavirus recession, but there are ways to turn that around, if only our state and county lawmakers would get out of the way.
On a per capita basis, Hawaii has suffered the worst job losses in the nation, with unemployment claims on Maui alone spiking in March by 6,000 percent to 11,000 people.
To his credit, Mayor Michael Victorino cut property taxes in his recently released budget for fiscal 2021, by 10 percent for owner-occupied properties, 12 percent for apartment properties, 14.8 percent for commercial properties, 4.9 percent for industrial properties and 14.8 percent for hotel and resort properties — a good first step. But his budget still calls for a 5 percent increase in spending, up from $823 million in fiscal 2020.
This likely is not sustainable, especially when the county is seeing a drastic falloff in revenues and Maui residents are clearly less able to afford any tax increases. Instead, county leaders need to liberate the private sector while reducing their own expenses.
How can they reduce their expenses? Options include:
• Cutting nonemergency spending and requiring each department to reduce its spending by 10 percent or more. Nonessential public construction projects should be deferred.
• Delaying scheduled salary increases for elected officials and public employees and possibly furloughing “nonessential” civil servants.
• Selling county assets such as unused lands, golf courses and county pools to qualified businesses or nonprofits.
• Hiring private contractors to deliver certain public services. Hawaii state law would need to be changed for this to happen, but there’s no time like now to set the wheels in motion.
• Creating a county spending cap with teeth, protected by a vote of the people, so taxpayers can have more control over lawmakers who will invariably push for higher taxes to make up for their budget shortfalls.
• Opposing new taxes and fees for at least five years.
• Declaring a tax holiday for companies heavily affected by the coronavirus.
County lawmakers also could:
• Allow more home-based businesses.
• Relax vendor licensing laws, which restrict businesses such as food trucks.
• Streamline permitting and open up more land for housing, which would both help reduce home prices and provide more construction jobs.
State-level actions to help Maui County could include:
• Exempting food and medicine from the general excise tax.
• Waiving online purchases from the GET.
• Lifting regulations on job licensing.
• Introducing new pension plan options and disallowing pension spiking to help reduce the unfunded liabilities of the state employees retirement system.
• Making it easier for private contractors to help deliver public services.
There are many other recommendations that could help Maui get back on its feet. The point is to let county residents get back to work. Don’t hamstring them with high taxes and superfluous regulations. Free them to pursue prosperity that will benefit all of us, as well as produce taxes for our lawmakers who, until better times return, should shelve any nonessential spending.
Removing government barriers is the best and quickest way to expand opportunities, encourage innovation and make it easier for Maui residents to recover from the coronavirus recession and eventually live long and prosper.
* Joe Kent is executive vice president of the Grassroot Institute of Hawaii.