The Pentagon’s Office of Local Defense Community Cooperation’s recently released annual Defense Spending by State report shows military spending continues to maintain a prominent role in Hawaii’s economy.

Overall, the military spent $7.9 billion in the islands during the 2021 fiscal year, making up 8.3% of Hawaii’s gross domestic product — an increase from 7.7% in 2019. That makes it No. 2 in terms of how significant military spending is to a state’s overall economy. Virginia tops that list with defense spending making up 10.2% of its GDP. According to the figures released by the Pentagon, the spending in Hawaii accounts for 1.4% of all defense spending.

Hawaii is home to U.S. Indo­-Pacific Command at Camp Smith, which oversees the military’s largest theater of operations. Hawaii serves as the nerve center for all operations in the Pacific, much of the Indian Ocean, East Asia, Australia and parts of the Arctic.

Also, Hawaii is unique in that it’s one of few states to have installations and troops from each military branch. About half of military spending here goes to the Navy and Marine Corps.

Among the top companies cashing in on Pentagon spending in Hawaii, according to the OLDCC report, were Hensel Phelps Construction, at $212.7 million; Smartronix, $107.8 million; and Vigor Industrial, $81.1 million.

Policymakers have described Hawaii’s economy as a “three-legged stool” propped up by tourism, construction and defense spending. When the COVID- 19 pandemic essentially shut down tourism in 2020, state officials began looking to the military to help make up for losses.

Analysts at the state Department of Business, Economic Development and Tourism found that while businesses in towns and communities more reliant on tourism suffered, those next to military bases more easily weathered the pandemic as spending continued. The OLDCC report found that Hawaii ranked No. 9 among states in military personnel spending at $5.3 billion.

But the state’s reliance on the defense spending has also been a source of controversy, with critics arguing it breeds dependency. Additionally, there are ongoing concerns about loud training on neighboring communities, training in areas Native Hawaiian cultural practitioners hold as sacred, and the environmental impact of the military’s footprint.

Hawaii’s relationship with the military has become strained, particularly in the aftermath of the contamination of the Navy’s drinking water system that serves 93,000 users, including civilians living in former military housing areas, by fuel from the service’s underground Red Hill Bulk Fuel Storage Facility.

The military is currently working toward defueling and shutting down the facility after originally resisting a state order to drain its massive underground tanks, which sit just 100 feet above a critical aquifer that most of Honolulu relies on for clean drinking water.

The Honolulu Board of Water Supply has shut down wells in an effort to contain potential further contamination after the Navy shut down its Red Hill well. In March, the BWS called on Oahu residents and businesses to voluntarily reduce water use by 10% to prepare for the summer season, citing less-than-normal rainfall that had contributed to drought concern and the Red Hill crisis.

In January, Honolulu City Council Chairman Tommy Waters and Vice Chairwoman Esther Kia‘aina wrote a letter to President Joe Biden warning that the water contamination crisis could have long- lasting consequences for the relationship between Hawaii and the Pentagon.

“We believe the Navy’s mishandling of the Red Hill crisis is jeopardizing national security interests and the overall relationship between the U.S. military and the people of Hawai‘i,” the Council members wrote. “(Hawaii has) historically supported the United States military’s strategic positions and assets in our communities for dec­ades. This support, however, is not unconditional.”