New year begins with lower state taxes for all
Hawaii workers will begin 2025 with a little extra take-home pay starting this month when their state tax withholdings begin shrinking.
The state Legislature in 2024 passed the first of what’s intended to be seven years of historic tax cuts designed to make Hawaii increasingly more affordable over the course of the cuts.
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Gov. Josh Green expects Hawaii to eventually move from the second-highest state in terms of taxes to the fourth lowest.
This month’s economic forecast by the Hawaii Council on Revenues will help Green and the Legislature pinpoint how much the state can actually spend.
The next session of the state Legislature opens Jan. 15 with the same goals of the previous session: reducing homelessness, increasing affordable housing and finding ways to make living in Hawaii less expensive to help slow the exodus of residents leaving for more affordable states.
The great unknown in 2025 will be how President Donald Trump’s campaign promises, including cutting federal spending and reducing the federal workforce, will effect Hawaii.
During Trump’s first term, cuts to federal social service programs ended up costing Hawaii $300 million a year to maintain programs, according to officials.
Green has said he will not support any of Trump’s anti-immigrant policies by sending Hawaii National Guard troops to the mainland to deport immigrants if it means separating families.
Neither will some Republican governors, said Green, who recently attended the Western Governors’ Association winter meeting, which includes Republican and Democratic governors.
He and state Attorney General Anne Lopez in 2024 were already working with coalitions of governors and attorneys general from blue states to prepare to push back on any Trump policies they disagree with.
In his biennium budget, Green has proposed increasing Lopez’s budget by $10 million over each of the next two years to challenge any potential Trump policies in court, joined by other attorneys general.
U.S. Sen. Brian Schatz and U.S. Rep. Jill Tokuda said cuts in federal spending will effect both red and blue states.
And 2024’s 11th-hour bipartisan votes in the House and Senate to keep the government running — while ignoring Trump’s demand to raise the debt ceiling for two years — showed that Republicans and Democrats can agree when it comes to representing their constituents, Schatz told the Honolulu Star- Advertiser at the time.
In Congress’ final week in December, the budget bill included $1.6 billion for housing for survivors of the 2023 Maui wildfires who lost their homes, along with billions more to help states rebuild from their own disasters.
So it remains to be seen how new faces in the incoming Congress will respond to pressure from Trump.
His picks to lead the military have promised to dial back on “woke” policies, like acknowledging climate change, environmental concerns and diversity issues, which are all priorities in the islands.
It’s also unknown how the Trump administration will respond to criticisms about the military’s impact on Hawaii’s fragile ecosystem and environment, especially following the Red Hill fuel leaks, along with damage to Hawaiian cultural sites.
Military land leases across the islands are set to expire in 2029, and talks are already underway on some of them.
Green wants to use some of the income from future military leases to offset the military’s impact on the environment and help the state respond to climate change, especially after the wildfires killed 102 people on Maui.
Others in Hawaii are concerned about the future of federal marine life sanctuaries, including the Papahanaumokuakea Marine National Monument, which was created under former Republican President George W. Bush.
The Western Pacific Regional Fishery Management Council wants to allow commercial fishing in Papahanaumokuakea, citing a need to compete with Chinese fishing fleets.
But Trump has a mixed relationship with China.
Trump has threatened 10% tariffs on all countries except for China, which would be hit with a 60% tariff.
At the same time, he has invited Chinese President Xi Jinping to his Jan. 20 inauguration.
Uncertainty over what Trump will actually do makes predicting what comes next for Hawaii’s economy murky, the University of Hawaii Economic Research Organization said in its December end-of-the-year economic outlook.
Hawaii’s red-hot construction industry, for example, could be slowed by the higher cost to import building materials such as lumber and steel if Trump imposes tariffs.
Tariffs on other products such as electronics are likely to get passed down to consumers, adding to the already high cost of living in Hawaii.
For now, UHERO expects tourism to grow by 3% this year, driven by mainland visitors.
January also represents a new era for the University of Hawaii when Wendy Hensel replaces newly retired President David Lassner, who will return to the UH Manoa campus in his previous role specializing in information technology.
Hensel takes over the 10-campus system after serving as executive vice chancellor and university provost for the City University of New York, where CUNY said she had day-to-day responsibility for its 25 campuses and 240,000 students.
When asked about criticism that she’s a malihini, or Hawaii newcomer, Hensel said she will replicate what she did at CUNY and at Georgia State University before, where she had served as provost.
Hensel told the Star- Advertiser that she plans to wear out her shoes walking across all UH campuses meeting faculty, staff and students to learn how the system works so she can build on it.
In the August primary election, Honolulu voters overwhelmingly reelected Mayor Rick Blangiardi to a second term. The former broadcasting executive will be inaugurated Thursday in an invitation-only event at the city’s Mission Memorial Auditorium next to Honolulu Hale.
Blangiardi played four seasons for the UH football team and later served as an assistant coach, and looks forward to meeting Hensel.
Asked whether meeting the university system’s next president is personal for him as a UH alum, Blangiardi said, “It is personal. We need her to be successful here. I’ll put on a cheerleading outfit. It is one of the top leadership jobs in the state. As a proud alum, we want to see the university continue to prosper.”
Both he and Green share the goals of reducing homelessness and increasing affordable housing, and January’s annual Point in Time Count census of Honolulu’s homeless population will provide a key indicator of whether progress has been made since January 2023.
Last year’s Point-in-Time Count saw a 12% increase, meaning Honolulu’s homeless population grew to 4,494 from 4,028.
