COVID-19 crisis a wake-up call for policymakers

After over two months of compulsory lockdowns, Hawaii’s state and county governments in May finally started reopening the economy.

At the time, Hawaii had among the lowest number of total coronavirus infections and fatalities nationwide, and it still does. The state’s public health status appeared to be mostly in the clear.

Halfway into June, however, the same cannot be said for its economy.

Even the most zealous lockdown advocates agree that Hawaii’s tourism-dependent economy has taken an unprecedented hit, and likely will be suffering for much longer than the rest of the nation.

As made clear by the many testimonials provided to the Grassroot Institute of Hawaii’s “Let Hawaii Work” campaign, businesses that haven’t already gone under have had to make tough decisions in order to cut costs and remain in operation, including furloughing or laying off workers. To reopen, many of those businesses also have had to observe new “social distancing” guidelines. Adjusting their operations to fit these often-changing and often-confusing guidelines means they are facing reduced revenues, since they no longer can operate at full capacity.

Meanwhile, the drastic decrease in tax revenue has created a troubling situation for the state and counties. They have been struggling with how best to deal with this new challenge, even as special-interest groups and misguided policy wonks urge them to continue spending and taxing like it was 2019.

To the extent that our legislators go along with this unfortunate advice, taxpayers will take the hit, because unlike the private sector, which relies on voluntary transactions with consumers to keep their businesses afloat, that’s whom the state and county governments rely on bear the burden of their overspending.

Already state legislators have decided to borrow extensively to help balance the budget. A better option, however, would be to significantly cut costs and following the many guideposts outlined in the institute’s new “Road map to prosperity: How Hawaii can recover and even excel after the coronavirus lockdown.” Just as businesses and individuals have been sacrificing to keep themselves afloat, so should the state.

The coronavirus crisis has been a harsh reminder that the state and county governments, just like regular citizens, need to live within their means.

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