Community and business organizations are applauding Gov. Josh Green’s plan to address Hawaii’s cost of living but say they would like to see more details on it, which he has described as “the largest tax reduction in the history of the state.”

“It’s a very ambitious and bold plan, visionary – and that’s what we want to hear,” said Sherry Menor-McNamara, president and chief executive of the Chamber of Commerce Hawaii. “It’s heading in the right direction, but as you know, it’s all in the details.”

Suzanne Skjold, chief operating officer of the Aloha United Way, echoed Menor-McNamara’s praise for Green’s plan, saying it represented “bold action” and was “very much aligned” with the Aloha United Way’s goal of enhancing health, education, and financial stability in the community.

Green’s envisioned relief – which he calls the “Green Affordability Plan,” or GAP – aims to put more cash into the hands of households struggling to get by in a state with the nation’s highest cost of living. This entails tax credits to reduce living costs for not just the lowest income households but also for teachers, families who need child care and people barely making ends meet.

Perhaps most notable in Green’s plan was its focus on households deemed ALICE, an acronym that stands for “asset-limited, income-constrained, employed:” essentially, working families who are either just above the poverty level or, at the upper end, living paycheck to paycheck without much wiggle room.

A November study by the Aloha United Way with the Hawaii Community Foundation found that 44% of Hawaii households were living below the ALICE threshold, up from 42% in 2018. Those living in poverty also rose, to 15% in 2022 from 9% in 2018. For some counties, the numbers are worse: on Maui and the Big Island, more than half the households were below the ALICE level.

By focusing on the ALICE population, Green aligned his message with the Hawaii Community Foundation and Aloha United Way, two of the state’s largest private charitable organizations, which have popularized the use of the ALICE term over the past several years.

Micah Kane, the Hawaii Community Foundation’s chief executive, said others are now using ALICE to describe people struggling to make it in Hawaii.

“I think the community overall, including the private sector, have adopted this metric as a measure of the well-being of people,” Kane said. 

Green’s GAP plan proposes boosting support to families earning less than $45,000 per year by doing things like increasing a tax credit for low-income renters and a tax credit on earned income. For ALICE families, it calls for additional tax credits, as well as up to $10,000 annually to pay for things like child care, babysitting, summer camps and adult daycare. Teachers would get a $500 annual tax credit to help cover out-of-pocket school supply expenses.

The Green administration estimates the fiscal impact will be $312.7 million in 2024, rising incrementally to $416.5 million in 2029.

Carl Bonham, executive director of the University of Hawaii Economic Research Organization, notes these proposed tax expenditures are aimed at addressing critical issues.

“The purpose really is to address what I think has needed to be addressed for a long time,” Bonham said.

Still, Bonham said, the program’s success in relieving financial stress will depend in part on how easy it will be for people to take advantage of the tax credits. If the credits are too complicated for people to claim, Bonham said, only the more well-off taxpayers will do so. That could lessen the impact of the credits in mitigating poverty.

The credit for low-income renters, for instance, would be available for joint tax filers earning up to $60,000. But Bonham said the program requires taxpayers to get their landlord’s general excise tax number, which can be a challenge for some renters. Other tax credits might have similar challenges.

“If that’s not changed then those things would not have the effect you’d like,” he said.

Childcare Tax Credit Could Help Families And Businesses

The credit of up to $10,000 annually for child care is especially important, Bonham said. The cost of care is so high now that some people choose not to work because it’s more affordable to stay home, Bonham said. That’s contributing to the problem of employers finding workers.

Menor-McNamara agreed. Child care is such an important issue that the Chamber is supporting legislation that would provide tax credits to businesses that offer child care for employees. Regardless of whether lawmakers support one or both proposals, Menor-McNamara said it shows Green and the business community share at least some common goals.

“That’s the good part,” she said, “that we’re collectively addressing this and realizing this is an urgent issue.”

The Hawaii Community Foundation’s Kane agreed supporting child care is important. 

“I think it’s critical in defining Hawaii’s ability to reach some kind of economic prosperity as a state,” he said.

Green’s affordability plan was far from the only proposal designed to make the state more affordable for working households. Even more important is a pledge to invest $1 billion into affordable housing through agencies like the Hawaii Public Housing Authority  and Hawaii Housing Finance Development Corp. Also proposed are a dozen kauhale, or tiny home villages, for homeless people across the state.

But it all speaks to the same goal, which Green said on Tuesday is “to invest in our people and our communities.”

“Here’s how we’re going to start caring for people,” he said.

All of this requires buy-in from lawmakers, and in a statement, Green spokeswoman Erika Engle said the governor “is actively meeting with stakeholders, sharing his plan, and is open to further discussions to improve it. 

“It is a landmark piece of legislation that would really provide immense relief to many of Hawaii’s ALICE families and Governor Green believes that the Legislature understands the importance of serving this group,” Engle said.

Sen. Donovan Dela Cruz, who plays a key role in money matters as chairman of the Senate Ways and Means Committee, did not respond to requests for comment.

“Hawaii’s Changing Economy” is supported by a grant from the Hawaii Community Foundation as part of its CHANGE Framework project.