Fiscal: Cut spending on sanitation and sewerage, parks and recreation, public buildings, health and hospitals, and “miscellaneous” areas where local government looks quite inefficient and the state spends far more than the national average. Also cut local taxes.

Regulatory: Relax the state’s extreme land-use regulations. Allow residential uses on land deemed “agricultural,” and eliminate either state or county review, which are duplicative.

Personal: Adopt a shall-issue concealed-carry license rather than continue to waste taxpayers’ money on the futile appeal of a current court ruling. Federal courts are almost certain to strike down the state’s de facto ban on carrying firearms in public.

  *   *   *   *   *

Analysis

Hawaii has long had one of the lowest levels of economic freedom in the country, but it now also has fallen behind on personal freedom, despite the enactment of same-sex marriage in 2013. Even with its huge locational rents, Hawaii has experienced net outflow of residents to the rest of the United States since at least the beginning of the past decade.

Hawaii’s fiscal policy is decidedly tax and spend. State-level taxes rose from an already-high 7.8 percent of personal income in FY 2009 to 9.3 percent in FY 2013. Local government also taxes at a very high level given how little it has to do. Local taxes were 3.0 percent of personal income in FY 2012, only slightly below the national average, even though there are no local schools (education is a state government responsibility). Government subsidies and debt are much higher than the national average. Government employment is at about the national average.

Hawaii does badly in almost every area of regulatory policy, but its two worst categories are land-use and labor-market freedom. It has among the strictest restrictions on residential building in the country. Eminent domain abuse is unchecked by law. The state has a minimum wage, but it was fairly modest in 2014 ($7.75 per hour), though it is scheduled to rise to $10.10 per hour at the end of 2017. It has no right-to-work law, strict workers’ comp mandates, a short-term disability insurance mandate, and a stricter-than-federal anti-discrimination law. Hawaii is also one of the most “cronyist” states, with occupational entry much more regulated than the national average according to multiple sources, very little scope-of-practice freedom for second-line health care professionals, a hospital certificate-of-need requirement, strict insurance regulations, a price-gouging law, and a general “unfair sales” law (you are not allowed to sell at prices that are “too low”). However, we do show a sustained and substantial improvement in the quality of Hawaii’s civil liability system, which rose from about average in 2000 to well above average by 2014. That result came about because of increasing scores in the Chamber of Commerce survey of businesses and shrinkage in the size of the legal sector relative to the economy, whether measured by number of lawyers or legal services share of GDP.

Hawaii does better than the national average on incarceration rates, but we see a doubling of the drug enforcement rate from the 2000–2010 average to the post-2010 average. Other victimless crime arrests have also increased. Tobacco freedom is among the lowest in the country, with extremely high cigarette taxes and draconian smoking bans on private property. The state has virtually no legal gambling, other than home social games. Hawaii has a long-standing and permissive medical cannabis law, but it has made no further moves to liberalize cannabis in the past decade. Alcohol freedom is better than average, especially with grocery store sales of wine and spirits and no state involvement in distribution, but beer taxes are high, and there is a “happy hour” ban. Gun rights are among the lowest in the country. It is virtually impossible to get a concealed-carry license, all Class III weapons are banned, registration and purchase permitting of firearms are comprehensive, dealers are licensed, “assault weapons” are banned, large-capacity magazines are banned, and so on.