Gov. David Ige wants Hawaii to develop a more robust digital economy — “a Hawai’i 2.0” pivot — that would spread broadband connectivity to rural communities in response to the COVID-19 pandemic that has strangled tourism.

COVID-19 exposed Hawaii’s tourism-based weaknesses as the state went from the lowest unemployment rate in the nation to one of the highest in 2020, Ige told lawmakers today in his annual State of the State address.

“Literally overnight, our expectations were crushed by the coronavirus pandemic,” Ige said.

In the short term, Ige said that the state plans to pay for interest payments on $700 million that the state Department of Labor and Industrial Relations borrowed to provide unemployment insurance for more than 580,500 island workers who filed unemployment claims last year.

Covering the interest payments on the loan “amounts to over $165 million that our businesses would otherwise have to make up over the next six years,” Ige said.

Regarding the on-going spread of COVID-19, Ige said: “We will continue to take the tough actions necessary to keep our community safe, including the Safe Travels airport screening program. Hawaii was among the first to demand pre-travel testing and quarantine procedures. That’s one of the reasons we lead the nation with the lowest COVID infection and death rates.

“We are also implementing a comprehensive strategy for the distribution of vaccines in every county. We are getting vaccine to people where they live and where they are able to receive it. And we will be working with the Biden administration to expedite the distribution of vaccines to everyone.”

For the long term, Ige acknowledged that diversifying Hawaii’s tourism-based economy to one with a more resilient technology sector will not be easy.

“In the 1970s, agriculture by itself couldn’t relieve us of our addiction to tourism,” Ige said. “Neither will technology in the 21st century —not by itself. But it can be used to support a multi-pronged approach toward greater diversification — even as we move to get tourism back on its feet.”

A digital economy would allow island workers to compete globally while earning higher wages and enjoying a higher quality of life, Ige said.

“More importantly, we can keep our kamaʻaina here to reverse the brain drain,” he said. “Because, in a digital economy, our children won’t have to move to the mainland to secure good jobs.

“But to do that, we will need to provide the right environment. Every government, business and nonprofit organization must embrace digital technology to thrive,” he said. “We need to develop a clear vision for a more diversified and sustainable economy that is compatible with our culture and way of life. And that vision must be based on solid economic analyses.”

Ige said he is working with Senate President Ron Kouchi and House Speaker Scott Saiki and business, labor and community leaders to develop “a plan of action for Hawaii’s future.”

“I have reached out to the Hawaiʻi Business Roundtable, the Hawaiʻi Executive Conference, the Chamber of Commerce of Hawaii, and the Hawaiʻi Community Foundation to convene stakeholders and communities from across the state.

“I have also sought the counsel of governors Ariyoshi, Waihee, Cayetano, Lingle and Abercrombie for their thoughts on economic recovery. I have asked all of them for recommendations by April, which will be folded into specific actions by the third quarter of this year.

“The Legislature will then have an opportunity to act upon these initiatives in their 2022 session.”

Ige said he also has directed Ed Sniffen, the state Department of Transportation’s deputy director of highways, to “accelerate” Sniffen’s pilot project to connect rural communities to broadband service. The project will focus on Puna, Kaʻu, Hana, Nanakuli, Waiʻanae, Waimanalo, Kalihi and Kapaʻa.

“Clearly, the pandemic has highlighted the digital inequity in Hawaii,” Ige said. “Part of our task is to make sure that a student in Nanakuli can access an online lesson plan as easily as a student in Kahala—and that, in a digital Hawaii, everyone’s connected. Likewise, with an FCC (Federal Communications Commission) grant, we will support a telehealth initiative to connect low-income patients with high medical risks to healthcare providers. DHHL (Department of Hawaiian Home Lands) will receive at least $30 million in federal funds to benefit Native Hawaiians.

“In addition, my legislative package this year includes a bill to create a Broadband and Digital Equity Office to oversee these efforts. This office will also enable us to identify and secure Hawaiʻi’s share of $7 billion in new federal funds for broadband infrastructure and digital equity programs.”

Ige also said:

>> “We also spent more than $71 million in housing assistance to about 13,700 households who would have otherwise faced eviction. This program was cited by Forbes Magazine as a model for the nation in getting rent checks to landlords faster than any other state.

“Moreover, the pandemic underscored why having a steady supply of affordable housing is so important for our families’ well-being. We achieved our initial goal of building 10,000 new homes by 2020. But we need to do more. I am setting a new goal of 3,000 more units by the end of 2022.

“We also want to make lands available to build affordable leasehold homes, particularly around the rail line. As I outlined last year, if we can reduce the cost of land, we could dramatically lower the overall cost of affordable housing in Hawaii. I will be asking you to consider a bill to do just that. More importantly, the initiative would keep this supply of housing affordable forever.”

>> “I am asking my administration to take a sweeping look at how we generate affordable housing — from financing through construction. There are at least four agencies involved in housing that could benefit from better coordination and economies of scale.

“…We expect to see investments of $1.1 billion in state capital improvement projects. Federal transportation projects—such as airports, harbors and highways — will add another $1.1 billion. And the private sector is expected to contribute another $10 billion and thousands of jobs to help restart our economy.”

>> Reducing budget shortfalls by:

Reducing the current budget by $402 million; Transferring $345 million from the rainy-day fund; Eliminating $350 million from state programs.

“Government will have to tighten its belt; our citizens will be asked to do more with less; and we will all need to help each other,” Ige said. “Unlike past years, our main budget initiative will be to find ways to cover the historic shortfalls.”

“… The latest report from the state’s Council on Revenues projects our economy will outperform earlier dire predictions,” he said. “The council now expects the state to generate nearly $6.3 billion in tax revenues for this fiscal year. That’s why we were able to adjust the DOE’s (Department of Education’s) proposed reductions and now have about $123 million to restore to our classrooms. In a sea of bad news, that is good news indeed.”