Hawaii has been in a funk. A huge swath of locals are talking about it, from drivers to barkeeps to wonks to business owners to clergy, the Washington Examiner found early this year while visiting the most populous of the state’s eight main islands, Oahu, home of capital city of Honolulu.
Throughout the island chain, the locals are being priced out of paradise, through higher housing, higher food prices, higher insurance premiums, the high cost of cleanup and rebuilding after fire and high winds destroyed the town of Lahaina in August 2023, higher everything.
“We have to import everything here, and the cost is ridiculous,” Wanda Shipp, resident of Oahu, dual American-Canadian citizen, and for many years the business partner of local comedian Bo Irvine, told the Washington Examiner. She said this on the grounds of the Hale Koa Hotel. Irvine did a popular show for many years before coronavirus lockdowns shuttered it.
Even when things can be made locally, the shipping of ingredients adds up. Hawaii had the highest price of a loaf of bread in all 50 states in 2023, at $5.98 a loaf, according to Zippia. Its closest competitor was California, at $4.03 a loaf. The average price nationally that year was $2.50.
“It’s just too expensive. That’s the short answer,” said Alika Seki, owner of Maui Comics and Collectables, on why residents are leaving the state in significant numbers, and this was particularly true of housing.
“The rent and housing situation has become untenable in Hawaii,” Seki wrote in an email. “This was true before the fires, but the situation since then on Maui has become even more strained. Many property owners are showing their greed, with some very rare exceptions.”
By some measures, the state has been losing population since at least 2016, and the post-COVID-19 economic recovery doesn’t seem to be helping matters. The latest U.S. census numbers from July 2023 still showed losses. The losses aren’t huge — a net of 5,000 to 10,000 or so a year; sometimes a little more, sometimes a little less — but Hawaii’s population, with two representatives in the U.S. House, was not that high to begin with.
Decline is a major theme of how Hawaii talks about itself publicly these days. The popular Honolulu magazine carries a cover story about what can be done in the face of high housing costs, the Lahaina fires that “broke our hearts,” and “record numbers leaving the state.” It asks, “What can we do to bring back our soul?”
A bulletin of Waikiki Beach’s St. Augustine by the Sea Church gives the number of people who have taken in Christmas services there in recent years: 1,445 people in 2021, 2,676 in 2022, and 2,665 in 2023. A graph would show an uptick, then a plateau. The Rev. Lane Akiona gives some historical context: “Pre-pandemic, our numbers would exceed well over 5,000. How times have changed.”
Hawaiians shared different and competing theories for the cause of the decline: COVID-19, the coronavirus lockdowns, spotty tourism, greedy landlords, climate change, foreign investors, taxation, and regulation were a few mentioned. Paradise was in trouble, with little likely relief in sight.
Big Island optimist
Joe Kent, however, wasn’t buying into the overall decline narrative. The Grassroot Institute executive vice president of about a decade was buying in instead.
When he met with the Washington Examiner for lunch in January close to the think tank’s downtown Honolulu offices, he revealed he had just bought a modest but suitable house for his family. Interest rates are high, but that worked to create a little bit more of a buyer’s market, albeit a temporary one, Kent said. That meant they could take their time, find the right place, and not get outspent in a bidding war over it.
Kent, who grew up on the “Big Island” (technically Hawaii, but locals don’t call it that) in Hilo, is no Pollyanna. He can rattle off the problems that his state faces with the best of them and add numbers to back those up. For instance, “We restrict our housing supply to about 5% of the land” and “only build on about half of that,” he said, in framing the islands’ housing problems.
Also, he is under no illusions that Republicans can help out much. The GOP in many states can capitalize on such decline to push for ballot box-driven change. In the Hawaiian legislature, the party is almost a nonentity.
The 51-member Hawaiian state House has six Republicans. The 25-member state Senate has two. “In the Senate, they can’t even figure out who’s going to be the minority leader there between the two of them,” he said. Those House and Senate numbers represent actual small gains from the 2022 midterm elections.
It isn’t so much one-party control of the legislature that Kent objects to but how it tends to wield that control. Either social mores or cynical posturing makes it really hard to get legislators on the record.
“They never vote no on a bill,” he said. “They only vote yes. They way they kill it is the committee chair will shelve the bill. It’s almost like the word ‘no’ has been banned from the legislature.”
Still, Kent had seen some progress in pushing Grassroot Institute issues, and he liked their odds going forward. In 2023, the legislature passed an interstate medical licensure compact that the think tank advocated. The compact makes it easier for physicians who practice elsewhere to come to Hawaii and also facilitates more telehealth from elsewhere.
Gov. Josh Green (D-HI) had something to do with that as well. “Our governor was an ER doctor” who now takes a keen interest in health issues, Shipp told the Washington Examiner. In his post-medical career, Green also served as lieutenant governor from 2019 to 2022.
From compact to taxes
“We’re seeing positive trends that we’re trying to ride,” Kent told the Washington Examiner. The goal was to “use that momentum to lean in to our government affairs lobbying efforts.” He said optimistically, “So far, they have been receptive at least to Grassroot Institute ideas.”
He thought they might make some progress because there is broad agreement in Hawaiian society that something has gone wrong and ought to be righted, if that is possible.
“The economy right now in Hawaii is weak. It’s recovering after the pandemic and the Lahaina wildfires,” he said.
One reason for the outflow of people and the soft economy was that “we have among the highest taxes in the nation,” Kent said. Hawaii had a high income tax and an excise tax that is “very similar to a value-added tax.”
Both the Grassroot Institute and Green wanted to change the tax system, though they didn’t agree on all the particulars of how to do that. Heading into this year’s legislative session, Green wanted to hit tourists with a climate impact tax that he called a “Green fee.”
“He’s naming it after himself,” Kent said in late January. “He’s also trying to put together tax relief at the same time, which is ironic.” At that point, the legislature had passed some requested tax credits. Kent was hoping for greater tax relief and some housing and regulatory reforms.
He was not, however, expecting to run the table. Technically, Grassroot didn’t get everything it wanted, but it got a big helping of win.
The biggest bill that made it through the legislature was a whopping $5 billion tax cut. It took the state income tax down from the second highest to the 40th, out of the 42 states that tax income.
More broadly, “We’re seeing a lot of traction and recognition of the viewpoint that Hawaii’s cost of living can be dealt with by reducing taxation and regulation,” Kent said in a follow-up email after the session wrapped.
A housing bill that would have allowed significant innovation on residential property was scaled back until it only allowed homes to have two accessory dwelling units, but it still passed.
An estate tax cut for family-owned businesses died, which was a loss from the Grassroot Institute’s perspective, but a bill that would have hiked taxes to pay for Hawaii’s regulation-related “insurance meltdown” died, too.
“In general, it was a terrific year at the legislature, and I never say that,” Kent said.
One-party, multiwinged politics
States that are thoroughly dominated by one party, though with free and fair elections, can produce a politics that is not what you might expect in today’s polarized, nearly 50-50 national politics.
Hawaii’s politics has developed into a dominant Democratic Party with different “wings.” It raises standard progressives to positions of power but also elevates somewhat idiosyncratic figures such as Green and former Democratic representative-turned-Trump surrogate Tulsi Gabbard.
When public sentiment shifts, is it easier for such a party to shift with it? This year’s output from the Hawaiian legislature is a point in favor of that theory.
An incident that happened literally in passing may also explain the success of the Grassroot Institute in driving change that the Hawaii Republican Party has failed to deliver.
“Hey, mister video man!” one driver yelled out at Kent when he was beside a well-trafficked street at lunchtime.
“We put out a series of explainer videos, and one of them went viral,” Kent explained, somewhat sheepishly.
Through social media, the think tank had taken many of the worries that are widespread in Hawaiian society and channeled those into brief explanations for how to bring about positive change.
It doesn’t pitch such things as partisan solutions but rather as practical Hawaiian solutions. That appears to have resonated with the broader public and now with the legislature.
Kent said of the housing measure, “Thousands of people wrote in to support the bill, and that’s a big reason why it passed.”
They heart Hawaii
Hawaiians’ assessment of their own home as paradise on Earth, or at least pretty darn close, likely figures in as well. California often says goodbye to many more people every year and meets their exodus with the institutional equivalent of “Don’t let the door hit you on the way out.”
Hawaiians, native-born or emigres, tend to love where they live and want to find a way to ensure that their neighbors and children can afford to stick around, the Washington Examiner learned.
“The history of Hawaii is so rich, and each island has its unique portion to contribute to that history,” said Seki, the comic store owner. “The food is incredible. Nowhere else is there such a mixing of cultures where each contributing culture is distinct and also blended with the others. I often find myself telling people that Hawaii is more American than America ever was in its promise of being a true melting pot.”
Shipp has family in California, and she recently visited there.
“I’m grateful that my granddaughters are getting the education they’re getting” in California, she said. But at the same time, she was “really looking forward to getting home.”
California made her appreciate the island’s “slower pace,” and she said she feels safer in Oahu as well.
“There are more criminal activities, which have been going on, which is disturbing, but in general, it is a very safe state to live in,” she said, and by the numbers, that is mostly true. Hawaii has slightly higher rates of property crime than the mainland but lower rates of violent crime.
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When the legislature reconvenes next year, with growing state costs of Lahaina reconstruction putting pressure on the budget, the political project that Grassroot Institute will be pursuing might be called keeping paradise affordable.
It is a message with some resonance. But, as always, the serpent is in the details.
Jeremy Lott is a contributor to the Washington Examiner.
