Priced out of paradise

By Keli'i Akina, Ph.D., President/CEO Grassroot Institute, February 26, 2023

You shouldn’t have to win on “American Idol” to afford to move back home to Hawaii.

But that’s the way it’s looking for more and more former Hawaii residents who felt they had to leave the state because of its high taxes and high cost of basic necessities such as housing, utilities and groceries.

This week, our hearts were touched by the story of 18-year-old Iam Tongi, a former Kahuku resident whose singing and guitar-playing on the national talent-search program brought tears to the eyes of the judges.

Now living in Seattle, Tongi was asked by judge Lionel Richie, “Why on Earth would you leave Hawaii?”

Without missing a beat, Tongi responded: “Priced out of paradise.”

It’s the same answer given by nearly everyone who participates in the Grassroot Institute of Hawaii’s “Why we left Hawaii” series. It’s also the leading answer pollsters hear when they research why Hawaii’s population has been declining for the past six years.

But now that we know why so many people leave this wonderful place, the next question is, “Why is Hawaii so expensive?”

My answer is that it’s mostly because of Hawaii’s excessive regulations, big budgets and high taxes.

Sure, many things we need have to be shipped here from afar, so that adds to our costs — and all the more so because of the federal Jones Act, which restricts shipping competition to Hawaii.

But fundamentally, Hawaii’s cost of living is the highest in the nation because our state and county governments keep growing in size.

They have continually added regulations that stifle economic growth and limit job opportunities, and continually expanded their budgets that must be paid for by taxes.

At some point, this all becomes too much to afford for many of Hawaii’s struggling residents, so they leave.

When they do, the number of people left behind who pay taxes shrinks, but our state and county government budgets don’t. The result is a downward spiral that leads to more spending, more taxes, more spending, more taxes — and an increasingly weaker and unsustainable economy.

At what point will our policymakers step up to stop this? I can only hope that it’s soon.

Instead, even now, with a big budget surplus and residents struggling to make ends meet due to inflation, many of our leaders are embracing tax hikes and continued high levels of spending.

In the 2023 Legislature, many bills are being considered that would increase our tax load — all of which I hope will be rejected.

As for spending, Gov. Josh Green informed the Legislature last week that he wants funding for a wide variety of projects — nearly $1 billion for infrastructure and housing projects, more than $50 million for healthcare programs, more than $73 million for environment and agriculture projects, more than $62 million for education and $50 million for “government efficiency.”

Those are all worthy causes. But is this really the right time to increase spending?

To his credit, the governor is also proposing to reduce taxes through some tax credits, higher personal exemptions and standard deductions for the state income tax, and indexing the state income tax brackets to inflation — actually pretty radical stuff in the current political climate.

This prompted some observers to urge that the Legislature not cut taxes too much because the state budget might suffer. But I say the household budgets of Hawaii residents are already suffering, and what our families, friends and neighbors need now more than anything else is a break.

If policymakers want to make the state more affordable, they cannot afford to not cut taxes. Tongi himself said that his family moved to Washington state because it was “cheaper.”

I’ll be rooting for Tongi to do well on “American Idol,” so one day he and the rest of his family can move back to Kahuku.

In the meantime, we need to work together to make our state more affordable so families like Tongi’s don’t have to leave in the first place.