# 1 Growing & Diversifying Our Economy
Work In Progress
Infrastructure Capacity for Commerce
Provided funding for the construction of projects such as the Hilo Harbor Barge Terminal Improvements, Hilo International Airport Cargo & Ramp Facilities Expansion, Hilo Judiciary Complex, Yukio Okutsu Veterans Home, and Hilo Medical Center Emergency Room Renovation and Expansion.
University of Hawai'i at Hilo and Hawai‘i Community College
Secured funding for the expansion and renovation of the Big Island’s higher education campuses and economic growth engines.
Small Business Incubator
Secured funding to renovate the former vacant downtown Bank of Hawaii Building and establish the Hawaii Innovation Center at Hilo (HICH) under the University of Hawai‘i at Hilo to serve as a general-purpose small business incubator.
Special Purpose Revenue Bonds
Authorized the issuance of special purpose revenue bonds for numerous projects including processing and manufacturing plants in East and North Hawai‘i.
Workforce Development
Secured funding to improve employer outreach and services, labor force pool expansion, capacity building, and to fund some shared costs for the operations of the one-stop career centers within each county.
Agribusiness Development
Supported the Agribusiness Development Corporation to develop, assist, and promote crops for local and export markets.
Diversified Agriculture
Provided funding for the formulation and implementation of an agricultural and economic diversification plan for the Hamakua Coast. Worked continuously to gain resources for this purpose and coordinated efforts to realize this goal.
High Technology
Provided funding for improvements to the Mauna Kea access road leading to the observatory, and provided additional funding for the construction of housing for observatory personnel.
By The Numbers
Workforce Development (2008) $2,000,00
Funding to improve employer outreach and services, labor force pool expansion, capacity building, and to fund some shared costs for the operations of the one-stop career centers
University of Hawai‘i at Hilo (1998 – 2008)
Student Services Building Addition and Renovation $32,750,000
Science and Technology Building Plans, Design and Construction $28,500,000
College of Pharmacy Modular Buildings for Research and Classrooms $6,000,000
Pacific Aquaculture and Coastal Resources Center $4,350,000
Student Life and Event Complex Plans, Design and Construction $18,200,000
Campus Center Addition and Renovation $2,900,000
University Park Phase III $2,750,000
Roadway and Infrastructure Improvements for USDA facilities $2,500,000
Hawaiian Language Building Plans and Design $3,500,000
Panaewa Agricultural Farm - Aquaculture Feed Laboratory $804,000
North Hawai‘i Education & Research Center (NHERC) (2004 – 2008)
Phase IIB $2,932,000
Phase II $3,700,000
Phase I $1,750,000
UH West Hawai‘i Education Center, infrastructure (1999) $1,400,000
UHH Small Business Incubator in Downtown Hilo (2000) $1,625,000
Hilo Harbor (2000 - 2008)
Barge Terminal Improvements (2007) $45,000,000
Harbor Improvements (2002 & 2006) $4,550,000
Navigational Improvements (2006 & 2008) $1,400,000
Container Facility Improvements (2001) $2,100,000
Barge Terminal Improvements (2000-2001) $2,600,000
Hilo International Airport (2002 - 2008)
Cargo Building & Ramp Facilities Expansion (2008) $20,850,000
Parking Lot Expansion (2008-2009) $3,235,000
Taxiway F Improvements (2008-2009) $405,000
Reconstruct T-Hangers (2007) $1,250,000
Hold Cargo Building (2002) $17,540,000
Helicopter Lease Lot and Facilities (2002-2003) $1,650,000
Saddle Road Improvement and Puainako Street Extension (2002-2007) $59,575,000
Mauna Kea Observatory Access Road, Phase I & II (1986-88) $13,923,000
Hilo Judiciary Complex
Funding for purchase of land and construction of facility (2001-2003) $37,025,000
Yukio Okutsu Veterans Home
Funding for construction of facility (2005-2007) $37,025,000
Hilo Medical Center Emergency Room
Funding for renovation and expansion of facility (2005-2007) $2,500,000
Talk Story: Looking Ahead
Economic Snapshot
As we move through the summer months, it is clear that our country, state and island have entered a period of challenging economic circumstances. The recently released June report of the University of Hawai‘i Economic Research Organization (UHERO) reduced the 2008 forecast for the state to an inflation-adjusted growth of minus 0.1 percent. Employment is expected to fall by about half a percentage point this year and next, with the annual state unemployment rate peaking at 4.2 percent in the fourth quarter of 2009.
It is unmistakable that Hawaii is feeling the pinch from the sub-prime mortgaged induced credit crunch and the precipitous rise in the price for a barrel of oil, but with national unemployment numbers running at 5.5 percent we are fairing better than most . Hawaii’s foreclosure rate has also fared better than most of the nation with one out of 3,087 homes in the state filing, ranking No. 42 among the 50 states – a stretch better than the one out of 118 that puts Nevada at the top of May’s RealtyTrac report . While we should be thankful that we remain on the outside edges of this downturn, it does not make the pain any less painful for those caught in the strongest part of our state’s downdraft.
Stemming The Tide
The UHERO report projects the visitor industry will be the hardest hit by the demise of ATA and Aloha airlines, as well as the loss of a second cruise ship and the surge in oil prices. In taking our next step forward, this marks our starting point. We will make every effort to bridge those hit by these unfortunate turn of events through their initial turmoil of the loss of income to their re-entry back into the workforce in areas where opportunities exist. Under the recently revised unemployment compensation law, which eased the burden on businesses as well as enhanced benefits for jobless workers, there is an existing safety net in place to provide income through this transition.
Displaced workers will also benefit from the Workforce Development measure we sponsored in the last legislative session. This Workforce Development initiative will allocate monies from the State unemployment trust fund and federal Reed Act funds to improve employer outreach and services, labor force pool expansion, capacity building, and to fund some shared costs for the operations of the one-stop career center. . Once in place, this program will help train those looking for a job with the right skills and provide growing businesses with qualified employees.
Energy
The headline issue for today and the foreseeable future is to develop and implement a sensible energy policy, focused on lowering our dependence on imported oil and grounded in local sustainability. With predictions ranging from the specter of $200-per-barrel oil and $6-a-gallon gasoline by the end of the year to a much more manageable $83- per-barrel for 2009, the one reasonable conclusion is that the days of $40-per-barrel oil and $1.50-a-gallon gasoline are probably things of past – just like 25 cent matinee movies.
While it is conceivable that oil could spike to $200-per-barrel, it should also be pointed out that with oil currently above $130-per-barrel, there is incentive for others to bring more production and refining capacity on line. In fact, Saudi Arabia has embarked on an ambitious expansion program that should see more than 2 million barrels of new production capacity come on stream by the middle of next year. Additionally, with oil discoveries in the sands of Canada and US shale deposits, or offshore in the Gulf of Mexico and Brazil, a reasonable argument can be made that as supply equals demand a measure of price stability could be found below current levels of crude oil and gasoline prices.
Whether relief from the upward spiral comes sooner rather than later, increased energy costs are the reality of the present and the future. With electricity rates up from 29 cents in 2007 to 41 cents in 2008 and rising, our average electric bill on the Big Island now is $260 a month and the hit to our pocketbooks means no stone can be left unturned. The first place we should look is where we can exert control – our own homes, backyards and garages.
Among the many helpful things, we can use energy efficient light bulbs, use fans instead of air conditioners, spend less time in the shower, use cold water to wash clothes, put a timer on the water heater, combine errands and properly maintain automobiles. These efforts may seem inconsequential, but HELCO estimates that if two fans were used for four hours a day instead of an 8,000 BTU room air conditioner, showers were cut by two minutes and cold water replaced hot water for two loads of laundry per week, 2,908 kilowatt hours or $722 could be saved per year for a family. Incremental changes can add-up to significant savings.
In fact, on a slightly larger scale, we managed to get ahead of the curve with the design and construction of the Kohala Library by employing sustainable green building and development practices based on the Leadership in Energy and Environmental Design (LEED) criteria. Beyond just efficiency and conservation, we will need to adapt and develop renewable energy from alternate sources such as wind, hydro, wave, ocean thermal, geothermal and solar. We supported legislation to provide financial assistance for farmers, including loans for photovoltaic energy and wind power projects, and others that improve the viability of the farming operation.
Utility power generation on the Big Island is also slightly ahead of the curve, with 30.9 percent of the electricity generated in 2007 coming from renewable energy sources (18.3 geothermal, 9.2 wind and 3.4 hydro). A recent report also stated that work was underway on an eight-megawatt expansion of geothermal production and three proposals using biomass to produce energy were under consideration.
State Democratic lawmakers are studying various ways to reduce short-term demand for fuel by considering alternatives such as staggered working hours, a four-day work week, incentives for telecommuting and driving more fuel efficient cars. Nationally, Congressional Democrats are pushing legislation, H.R. 6 and H.R. 5351, seeking to end the massive tax breaks awarded to oil companies, support alternative energy investments and developments, as well as extending and expanding incentives for renewable electricity, energy, and fuel, plug-in hybrid cars, energy efficient homes, buildings and appliances.
In the longer term, promising research points to possible advances in developing a path to converting algae, jatropha and sugar cane into biofuel. By looking at solutions for Hawai‘i in Hawai‘i and making long-term investments in Big Island based solutions, we can not only lower our dependence on imported petroleum products and lower our energy costs, but we can create thousands of new jobs.
Keeping People Working – Putting Things In Place For The Next Upturn
One way that state government can play a constructive role is to cushion against the sharpness of a downturn by making wise capital investments that keep people working and build projects whose functions further stimulate economic activity and growth. From 2002 through 2007, we worked to help secure almost $60 million in funding to fund the Puainako Street Bypass and the Saddle Road Improvement infrastructure projects, furthering the effort to enhance commerce by more effectively linking Eastside to Westside.
More than $71 million in capital spending that we helped to secure in the previous two legislative sessions is scheduled to begin in 2008 with $45 million directed towards the improvement of the Hilo Harbor Barge Terminal and $21 million for the expansion and addition of the Hilo International Airport Cargo Building and Ramp. Not only will these projects put money back into the economy, but they also set the stage for state of the art handling of inter-island cargo and the benefits derived for years to come.
Engines Of Growth
Recent statistics show that small firms account for more than 95 percent of the state’s employer businesses. Small businesses foster innovation, opportunity and growth. In the past, we have helped to provide support for financial assistance to small businesses. We also helped secure funding to establish the Hawai‘i Innovation Center at Hilo (HICH) under the UHH to provide resources to help incubate and nurture small business. We were fortunate to add another piece in 2008 with the workforce development initiative that would provide growing businesses with qualified employees by training job seekers with the necessary skills.
Hawai‘i Community College (HawCC) plays a significant role in the local economy and is a sound investment from multiple perspectives. Students benefit from improved lifestyles and increased earnings. Taxpayers benefit from a larger economy and lower social costs. Finally, the community as a whole benefits from increased job and investment opportunities, higher business revenues, greater availability of public funds, and an eased tax burden. For every $1 HawCC receives, taxpayers see a cumulative return of $2.20 over the course of students’ working careers.
Over the past 10 years we have been fortunate to be a part of securing more than $120 million in capital investments in the University of Hawai‘i at Hilo. From 1997 to 2007, UHH increased its student enrollment by 31.5% and is more than fulfilling the promise of opening doors to economic opportunities for increasing numbers through higher education. At the same time, UHH is the second largest single employer in East Hawaii and indirectly creates 3,523 jobs – or about 1 job for every student. The university generated total sales of $191.1 million in 2007, and for every $1 UH Hilo receives from the state, the university generates another $2.38 in direct expenditures.
The creativity and intellectual capital of higher education institutions form the basis for the vibrancy of North Carolina’s research triangle and Massachusetts Route 128/I95 corridor. There is no better place to look for the innovation and diversification necessary for the 21st century than the often overlooked institutions of higher education in our own back yard.
Keeping Focused On The Task At Hand
Having worked with the people from the Hamakua and Hilo coasts after the loss of the sugar industry to revitalize their communities, as well as with people of the Big Island to get the ball rolling again in the stark aftermath of 9/11 and the Kiholo Bay earthquake, the circumstances faced today are not unfamiliar challenges.
The rising price for gas, electricity and food reflect the tough economic times confronting families. Investing in capital improvement projects has the immediate effect of stimulating activity and creating jobs. Wise placement of public investment sets the stage for improved competitiveness and innovation. These projects in combination with the development of alternative and indigenous sources of energy will help us work through this current downturn and also provide the infrastructure for economic growth, diversification and sustainability in the long term.
In the past, the people of the Big Island have displayed unmatched grit and determination in the face of both trying economic times and natural disasters – that is what we have come to expect of one another – one island, one people, one family.
To The Point: Energy, Growth, & Sustainability
ENERGY
• Continuing the push to move the dial towards energy self-sufficiency through conservation, efficiency and conversion to renewable energy sources such as solar water heaters and small-scale hydroelectric generators.
• Supporting the continued transition of our utilities toward viable renewable energy sources such as geothermal, wind, hydro and solar based technologies
• Exploring the promising possibilities presented by Hawai‘i-based entities pioneering efforts to convert algae, jatropha and sugar cane into biofuel
ECONOMIC GROWTH & DIVERSIFICATION
• Securing continued investment in our island’s infrastructure and expanding the capacity for sustained growth and opportunity
• Broadening support for our engines of growth and diversification
• Continuing the efforts to strengthen East Hawaii’s visitor’s industry
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