Hawaii's Tourism Industry Has Ground To A Halt, Taking State Revenue Down With It
This story is part of an NPR nationwide analysis of states' revenue and budgets during the pandemic.
Hawaii is facing a potential budget shortfall of more than $2 billion. In the span of two months, the state's economy went from having the lowest unemployment rate in the country to one of the highest.
The tourism industry, fueled by 10 million annual visitors, is the largest employer in Hawaii and brings in a substantial portion of tax revenue. A precipitous drop in arriving tourists has put fiscal pressure on the state government, from both falling revenue and a rapid increase in unemployment claims.
In April, Democratic Gov. David Ige warned that the state's precarious finances could necessitate an across-the-board 20% pay cut for public workers. Ige walked that back when leaders in the Legislature expressed a preference for borrowing funds needed to fill the budget hole.
Lawmakers were able to free up $1.3 billion by reallocating funds previously budgeted but unspent as of yet. They also authorized the governor to borrow up to $2.1 billion from the Federal Reserve's Municipal Liquidity Facility to cover the remaining gap.
As coronavirus cases surge on the U.S. mainland, which makes up nearly three-quarters of Hawaii's tourism market, prospects for the state's economy are uncertain and the governor is once again warning of potential furloughs to the state workforce.
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