Mister Speaker, President Kouchi, former governors, distinguished justices of the courts, representatives of our congressional delegation, members of the Hawaii State Legislature, elected officials, military leaders, honored guests, family and friends,
Last December, I had the privilege of participating in ceremonies marking the 75th anniversary of Pearl Harbor—the day when all that was personal and intimate here in the islands collided head-on with history.
In 1941, my late father was about the same age as my children are today. He was young and just starting to plan out his life.
We know how those events dramatically changed those plans for him and his entire generation.
Life has a way of doing that, no matter how well our plans are laid out.
It made me think deeply about both where we’ve been and where we’re headed as a state.
While we cannot predict the future, it’s clear to me that we are living in very challenging and exciting times.
And we face these times standing on solid ground.
This year, as in previous years, our people are among the healthiest in the nation.
Our unemployment rate is the third lowest in the country. Our personal income growth is ranked 17th, and in 2016, we added 14,000 new jobs.
Our biggest industry, tourism, has had five successive record setting years and is moving toward yet another.
In many ways, the state of the State of Hawaii is sound and full of possibilities.
Having said that, we all know there is still much work to be done.
There are families out there that continue to struggle despite the overall state of our economy.
I know there are those who are concerned about health care, child care and rent payments. That’s why we need to press on with the progress we’ve made over the last two years:
- Transforming our schools;
- Reshaping our economy;
- Addressing homelessness and building more affordable homes; and
- Making government more efficient so that it can continue to work for the people.
All of these goals are inextricably linked to each other.
To transform our economy, we need to transform our schools, so our children can provide the brain power and fill the jobs required in a knowledge-based industry.
To keep them here, we need to ensure that our economy provides challenging and satisfying careers and homes they can afford.
And we need to protect our lands and natural resources, which underpin everything.
These are tough challenges.
What sets Hawaii apart from the rest of the world is that we have the ingenuity, the determination and the heart – values from our island culture – that built this great state.
I truly believe our people can overcome any roadblock, and not just succeed, but do so in outstanding fashion.
And for those who feel that I may have my head in the clouds, let me remind you about where we all came from:
About how our great grandparents took a far-flung, Pacific outpost and transformed it into the leading provider of sugar in the world, through innovation, new technology and hard work;
And how they did the same with pine.
For those old enough to have worked summers in the cannery as teens, you may remember, like I do, the Ginaca machines that could peel and core a pineapple in seconds.
That technology allowed Hawaii to completely dominate global markets and transformed the industry.
We did not wait for someone to show us how to grow and harvest sugar and pineapple better. We did it ourselves by being innovative and entrepreneurial.
As we know, global competition, fueled by our own innovations, eventually contributed to both of their demise.
So we set out to create a new industry and to take advantage of new technologies in air travel.
We invested in infrastructure and attracted investment capital. And guess what?
We proceeded to create the most desired and successful travel destination in the world and hundreds of thousands of jobs.
So where do we go from here? How do we once again respond to a changing world?
For me, the answer is very clear.
We shape our own destiny. I’m a problem solver and I’m excited about what we’ve accomplished and what we can continue to achieve.
Together, we must pursue our own self-made opportunities through education, innovation and entrepreneurship.
We must tap our greatest resource, our people, to find our way to the next great economic transformation: the development of an innovation sector.
We have done much in the last two years to move us down that path.
We have a blueprint for schools that will prepare our children to fill the jobs that the new economic sector will require.
A strong university also plays a key role in creating a new economy.
The University of Hawaii has embraced innovation and has successfully launched a number of creative initiatives.
We are already expanding the economy, focusing on areas such as energy, ocean and earth science, and astronomy, where we have expertise.
And we are transforming the culture within state government to embrace change and drive innovation in every part of the economy.
We have adapted to meet a changing world many times before and we can do it again—beginning with the most important part of this transformation: our public schools.
Transforming our Schools
I believe that education reform in Hawaii starts with changing the current top down bureaucracy of the DOE to a school-centered one.
Our blueprint for Hawaii’s schools is based on input from over 3,000 parents, teachers and community members from a statewide summit to dozens of meetings across the state, including on Molokai and Lanai.
Some of the volunteers who worked so hard on that blueprint are here with us today. I’d like them to stand and be recognized.
They’ve told us that we need to go beyond test scores and a one-size-fits-all approach.
We need a school system that truly prepares students to think creatively and to be problem solvers and innovators.
Most importantly, I believe that those closest to the students best understand how they learn and what motivates them.
I want a system that empowers schools and trusts teachers and principals to make meaningful decisions on curriculum and instruction, and the expenditure of school funds.
Schools need to be able to design their own programs, implement their plans, and be accountable for the results.
And they need to be encouraged to take risks and be creative.
That’s why in the executive budget before you, we increased funds that go directly to schools.
To further drive school-based changes, we will be proposing a new Innovation Grant Program to support school-level innovations that will help us meet priorities of the Board of Education, such as closing the achievement gap for special needs, immigrants and low-income students.
We know that programs focused on classrooms and schools pave the way to desired student outcomes. And we also know that the physical environment in which our students learn plays a role in their success.
Last year I pledged to cool our schools. No one is more disappointed than I that implementation has lagged. But we haven’t lowered our sights. We continue to press on. The capital budget before you includes $61.7 million to continue this effort.
My budget includes more than $700 million in new schools, classrooms, science facilities, and repair and maintenance. I am also asking for $150 million for university facilities, statewide.
These are big numbers, but we must not let them obscure the real objective to improve the learning environment to support students as they work toward their dreams of success.
One national study predicts that 70 percent of Hawaii’s jobs will require some postsecondary education by 2020.
That’s why I am proposing to expand the Early College Program. The University of Hawaii and the DOE are working together to dramatically increase the Early College Program that allows high school students to earn college credits.
Imagine having a semester or more of credits under your belt when you start college, at no cost to you? I can see parents already calculating the savings in time and money.
Studies show that this may be one of the most powerful tools to advance college enrollment and success among our public high school graduates—especially for lower-income and first-generation college students.
I believe it is a great strategic advantage to keep the best students in our public schools.
When Rovy Dipaysa immigrated to Hawaii in 2012, she barely spoke English. She threw herself into her studies with a passion, learning English in a class at Waipahu Intermediate.
Rovy began her college career with a group of other rising freshmen in the summer of 2014 – before she and her classmates took a single class at Waipahu High School.
This group of students became known as the first Early College high school “Olympians” in the state.
Today, Rovy and 13 of her Olympian classmates anticipate being the first to complete all requirements for an Associate of Arts degree from Leeward Community College by May 2018.
If all goes according to plan, they will receive their AA degree before they graduate from Waipahu High School.
Rovy and her mom, Victoria, are here with us today. Please help me recognize their hard work and determination.
That kind of success is the reason why I want to expand the Early College Program to eventually include every public high school in the state.
I am also proposing to establish the Hawaii Promise Program that will fill the gap between what a qualifying family can afford and the cost of community college, without taking out a loan to cover tuition, fees, and books.
With students like Rovy and her cohorts, how can we not succeed in building a workforce more than equal to the challenges of the 21st century?
And so we arm them with math and science, teach them to think critically and creatively, and anchor them with the social sciences and art, so they will know who they are, where they came from, and the beauty of it all.
The Next Great Economic Transformation
I’ve said it before: I strongly believe that the long-term sustainability of our economy must center on innovation.
Innovation means developing new clean energy technologies that will create engineering and other high paying jobs, while reducing our dependence on fossil fuels and protecting the aina.
Innovation means remaining on the cutting edge of healthcare. That’s why I’m proposing $5 million in each of the next two years to support the Cancer Center of Hawaii. Our families deserve access to the latest research and treatment for cancer.
Innovation means new agricultural technologies, new local fashions, new apps for your computers and phones, and locally-created digital media for multiple platforms.
More importantly, the innovation sector offers the best promise of high-quality, high-wage jobs for our children.
And it’s not just the stuff of dreams.
A recent report, sponsored by the Hawaii Business Roundtable, found that innovation jobs already make up over seven percent of Hawaii’s economy.
A Kauffmann Foundation report ranked Hawaii 13th in the nation for startup growth.
Among those many local success stories is the start-up of Shaka Tea, owned by Bella Hughes and her husband Harrison Rice.
Bella and Harrison have taken mamaki leaves, grown in Pahala on Hawaii Island, and used them to grow an exciting new local company.
The benefits of the mamaki plant, native to and found only in Hawaii, are well known among native Hawaiians.
Recent studies by the University of Hawaii have confirmed its health properties.
But to make mamaki commercially viable as a “ready to drink” beverage, Bella and Harrison had to find a way to extend its shelf life so that it could be marketed beyond the islands.
It took them over a year. But, working with R&D partners in Hawaii and on the mainland, they overcame that obstacle.
Today, they are not only well established in local markets, but are looking to expand to the West and East Coast, Japan, and on the Internet.
Bella and Harrison are with us today, and I’d like them to stand and be recognized for their innovation and hard work.
That kind of local success is the reason why I’m so excited about HI Growth, the state program to foster entrepreneurism in Hawaii. And I know the Senate President also recognizes the value of this program.
From virtually nothing four years ago, local entrepreneurs today are supported by six start-up accelerator programs, with three of them nationally recognized.
In fact, about 145 start-ups have gone through the accelerator programs. With a $10 million investment, the start-ups have generated over $250 million in total capital.
That’s why the budget includes additional funds for the Hi Growth program. It is a good investment in Hawaii’s economy and I hope you will support us in this endeavor.
Innovation also creates a bigger tax base. That means resources to pay for government programs that address issues like homelessness and affordable housing.
Clean Energy Mandate
In addition to HI Growth, the state has undertaken other initiatives that utilize innovation to grow the bottom line.
A good example is Hawaii’s Clean Energy Mandate.
Our goal of generating 100 percent of our electricity from renewable sources by 2045 is good for both our economy and the environment.
The mandate has stimulated demand for clean tech innovations, many of them running through our Hawaii Energy Excelerator.
Because of the Legislature’s actions, we lead the nation in moving toward clean energy in many areas.
Together, Oahu, Maui and Hawaii Island, currently obtains 25 percent of our electricity from renewable sources. On Kauai the figure is 40 percent.
With 65 renewable energy projects across the state, we are on schedule to meet our 2020 target for increasing renewable energy use.
Earlier this month, the state’s largest operating solar facility in Waianae successfully placed 28 megawatts into commercial operation.
On Kauai, the nation’s first closed-loop, bio-mass to electricity plant began operations near Koloa, fueled by albizia and eucalyptus trees.
The plant is putting out enough electricity to power 8,500 homes on Kauai and replace 3.7 million gallons of oil annually.
I’m sure Mayor Carvalho appreciates this and the millions of dollars that stay in the local economy rather than going to purchase offshore fuel.
On Oahu, new agreements promise an additional 61 megawatts from two solar facilities, enough electricity to power more than 22,000 homes for a year.
Reducing our reliance on fossil fuels in transportation is also a key component of our renewable energy goal.
The fuel cost for an electric vehicle is 30 percent cheaper than that of a gas-powered car. That can mean as much as $500 in annual fuel savings per household for each electric vehicle.
That’s why my administration is participating in the Drive Electric Hawaii initiative. We will be using funds from the state’s portion of the Volkswagen settlement to support the changeover to state owned electric cars.
Self Sufficiency through Agriculture
Agriculture and our visitor industry are also experiencing significant transformations, aided by the same kind of technology and innovations utilized by the knowledge-based sector.
In fact, agriculture has expanded statewide. Nowhere has our partnership with the Legislature been more productive than in making the state more self-sufficient and food secure.
We have a goal to double local food production by 2020, with the purchase of farm lands, programs that support and encourage local farmers, incentives to grow organic, and incubators to help entrepreneurs create new food products and businesses.
With your help, we purchased the Galbraith lands on Oahu adding more acreage and employing 50 new farmers.
We completed the purchase of the Turtle Bay mauka agricultural lands to preserve it for future ag use.
We also worked with you to secure $1 million each for the livestock revitalization and feed development programs and for feed subsidy for qualified ranchers.
All of these efforts move us closer to self-sufficiency and a more sustainable economy.
Combating invasive species is a big part of protecting and expanding agriculture.
That’s why we developed the state’s first interagency bio-security plan, a 10-year blueprint to protect the state from invasive plants and animals.
That’s also why we are proposing the creation of an invasive species authority to direct these and future efforts.
And the state and our community partners will continue to work together to coordinate our efforts, which include new challenges due to climate change.
Growing our Visitor Industry
Building on record visitor arrivals, we worked with our congressional delegation and the U.S. Customs and Border Protection to reestablish international flights at Kona International Airport.
There are some who doubted we could meet the deadline before the first scheduled flight last December.
But we did.
It’s estimated that one daily international flight to Kona will result in more than $160 million in annual visitor spending.
And we are in discussions with other airlines who are looking at Kona as a potential travel destination.
International visitors will also spend tens of millions of dollars at local businesses and attractions, further boosting the economy and generating jobs.
That’s why I am requesting $50 million in CIP funding to build a permanent international facility in Kona.
Protecting our Natural Resources
Tourism, like all of our industries, depends directly or indirectly on the good stewardship of our lands and natural resources.
Certainly, both the Senate and the House have been consistent stewards of our environment, and our collaboration over the last two years has been very fruitful.
We have set ambitious goals for the state.
Last September at the World Conservation Congress, we unveiled our Sustainable Hawaii Initiative to:
- Protect our watershed forests,
- Better manage our oceans,
- Create a bio-security plan,
- Double our food production, and
- Achieve 100 percent renewable energy by 2045.
My budget includes $31 million in CIP funds for these sustainability initiatives.
I am also proposing that we invest $18.4 million in general funds to protect natural resources, watersheds, forests and oceans in our fight against harmful invasive species.
I’m proud that we’ve been able to protect tens of thousands of acres of watershed forests on Kauai, Oahu, Maui, Molokai and Hawaii Island, and help preserve precious shoreline along Turtle Bay and other iconic Hawaii lands.
I’m proud of the work of the departments of Agriculture and Land and Natural Resources, who are working closely with private and public partners, to combat the spread of rapid ohia death.
Last Fall, when President Obama created the world’s largest marine sanctuary in the Northwestern Hawaiian Islands, we asked him to make OHA a co-trustee of the Papahanaumokuakea Marine National Monument.
The monument is world renowned for both its natural and cultural attributes.
OHA’s trustee role will ensure the protection of native Hawaiian cultural features and provide critical cultural sensitivity to decisions made to protect this unique natural treasure.
I’m pleased that our request was granted. As the ocean thrives, so do we.
The Need for Affordable Homes
Providing enough affordable homes has been a longstanding problem. Given our cost of living and limited available land, some say it can’t be done.
As governor, I just don’t buy that. And I don’t believe the housing chairs of both chambers do either.
That’s why I’ve asked the state housing agencies to focus on producing more rental units, because that’s where we have an enormous need.
As a result, we’ve produced a total of 1,050 units in the past two years with over 4,000 more in the pipeline, 80 percent of which will be rentals.
To build on that momentum, I convened a group of affordable home developers and advocates to listen to their suggestions to maximize state financing tools and provide the infrastructure needed.
Last year, we worked together to expand the application of state funding for roadways and other infrastructure—a prerequisite for the development of new communities.
The Legislature infused the state’s Dwelling Unit Revolving Fund with $25 million to finance regional infrastructure in conjunction with the counties and private home builders.
And as Mayor Kim knows, we put that money to work on Hawaii Island for the construction of the Manawalea Street extension to help ease traffic congestion in Kona. The construction of this connector road was required before any new homes could be built.
As a result, last October, ground was broken for Kamakana Villages, which includes 170 rental units for seniors and low-income families.
And thanks to your support, we’ve also added $75 million in gap financing for more affordable rentals throughout the state.
My budget for the next two years proposes to invest $123.4 million to promote new housing starts.
The Department of Hawaiian Home Land also plays a part in our affordable housing solution.
Recently, DHHL conducted lot selection for Kakaina Hawaiian homestead in Waimanalo for qualified native Hawaiian beneficiaries. Kakaina is one of two parcels being developed by DHHL to build homes for native Hawaiians.
The first 70 families in the homestead community of Maluohai in Kapolei signed their leases recently and fulfilled their dreams of becoming homeowners.
In addition, Ka Makana Alii in Kapolei, which will be Oahu’s second largest shopping center will generate substantial revenues for DHHL’s homestead development and sustain its home building programs far into the future.
Transit Oriented Development remains one of the biggest game changers, and will allow us to build affordable homes, direct growth, protect open space and agriculture, and reinvigorate older neighborhoods such as Kakaako.
In fact, the transformation of Kakaako can already be seen, with new affordable units for seniors and for middle and low-income families.
At the same time, perhaps, no district is more representative of the plight of those who are homeless than Kakaako. The individual stories and the efforts on their behalf have been well documented.
Let me be clear about this: We have a crisis and we are working urgently to fix it in a humane and compassionate manner. That is why my budget proposes $20.9 million each year for rent subsidies, supportive services, outreach services and enforcement.
And we are making inroads.
With the help of the Legislature, our congressional delegation, the counties, federal agencies, business and community service organizations, we have made significant strides in addressing homelessness in Hawaii.
On Maui, Mayor Arakawa supported our statewide efforts to address homelessness and maximize existing housing inventory.
When we put out a call to action, he stepped forward and convened a landlord summit that generated much-needed housing units, while forging new relationships with realtors, homeless service providers, and the business community.
On Oahu, we’ve worked closely with Mayor Caldwell and his team to use state land, city funding for infrastructure, and private-sector participation to convert a 13-acre paintball facility off Nimitz Highway into affordable rentals for homeless families.
And I would be remiss if I also didn’t thank Duane Kurisu whose AIO Foundation is building the plantation style neighborhood. Duane, could you stand and be recognized for your part in our homeless efforts.
In Kakaako, we have reduced homelessness by two-thirds. Over a year ago, there were 300 individuals camped near the waterfront park. Since then, over 290 homeless individuals from this area have transitioned into shelters or permanent housing.
Statewide, we increased funding for homelessness prevention. This has contributed to a 25-percent reduction in the eviction rate. It’s kept nearly 4,200 people from joining the ranks of the homeless.
Working together, the state and our partners have assisted over 5,000 people in the past year. And more need our help.
The Department of Human Services also recently announced the awarding of contracts to 33 homeless shelters, totaling $13 million over the next 12 months to serve the state’s homeless population.
Together, those awardees have pledged to add nearly 200 beds, increasing the total to 3,761, and to double the number of individuals they place in permanent housing from about 3,000 to 6,200.
For the same taxpayer investment as last year, we’re doubling the number of people getting housed. We are finding better solutions, becoming more efficient, and creating better cooperation.
A new family assessment center was opened last September to connect homeless individuals and families to services and help them transition into permanent housing.
And that’s always been our ultimate goal. This is about more than increasing shelter beds, but finding people permanent housing.
That’s why the budget before you includes $59 million for public housing improvements.
And that’s why public housing repairs and renovations have been expedited. Our public servants were enthusiastic about aiding people who need homes.
These civil service employees helped develop a team approach that uses the broad talents of those in the Hawaii Public Housing Authority.
I’m proud to report that the team members of the Multi-Skilled Worker Pilot Program have reduced the turnaround time for an empty unit from over seven months to just a week.
As a result, over 400 units have been made available to families in record time.
Two representatives from the team are here today.
Let’s thank Gregory Cuadra, who leads the DHS team of the year, and Andrew Medeiros, DHS Employee of the Year, for their remarkable service to the people of Hawaii.
In fact, the Multi-Skilled Worker Pilot program is just one example of how we are finding ways to tap into the talents of our public employees across departments to leverage their many skills.
Changing the Culture in Government
Three years ago, we set out to make government more efficient, effective and accountable to the people.
One of the more exciting ways we’re doing this is through a program with the Office of Enterprise Technology Services.
To engage the local tech community in the modernization of state government, we began a code challenge. We brought local talent together to develop modern tools and applications to provide enhanced government services to the public.
The challenge is based on a Hackathon, a problem-solving event that brings together creative individuals to explore new technologies or programming language.
One winning team converted visitor scheduling at OCCC, which was being done manually, to a web-based, self-service process.
In the past, visitor scheduling was done by phone and Post-its, resulting in visits not being scheduled and families not being able to see their loved ones.
The new concept created by a group of Honolulu Community College students is far more efficient and is being developed into an application that works better for the staff, inmates and their visitors.
Two of the 19 members of the Hawaii Advanced Technology Society Team are with us today. I would like to ask Gerome Catbagan and Jayson Hayworth to stand and be recognized.
One of my duties as governor is to be a responsible fiscal manager, and I am proud of our combined efforts to put the state back on sound financial footing by:
Building financial reserves—as the Speaker noted in his opening day remarks—for a rainy day that helps to reduce future financial strain on taxpayers; and
Making lump sum contributions at the beginning of the year to our pension and health benefit systems to grow investment funds by millions of dollars and save future taxpayer contributions.
And while I’m on the subject of finances, let me add this:
In recent weeks there has been much discussion about this year’s budget.
Building a budget is a long and complex process, which started last May.
A month ago, the revenue forecast for the current fiscal year was a robust 5.5 percent increase. Two weeks ago it was reduced to 3 percent, resulting in an anticipated loss of more than $330 million over the biennium.
Actual revenues collected for the first half of the year grew by less than 1 percent, signaling that growth in our economy has slowed.
The economic assumptions upon which the budget was based have changed, and we will have to make adjustments.
The finance chairs of both houses understand this very well and I appreciate Senator Tokuda and Representative Luke’s hard work and diligence.
Believe me, I’ve been there, and I understand how tough their jobs really are.
So I will be submitting adjustments to our budget that reflect the changing economic forecast and ensure that we live within our means.
I will be submitting a proposal to phase-in increased payments to the retirement system to ensure that we can keep our promises to our retirees in a responsible way.
And while I will be planning for fair wage increases for all our public employees, we cannot presuppose what agreement will be reached. That would neither be fair nor appropriate.
I know we can work together to craft a responsible budget that, at the end of the day, is not my budget, not the Legislature’s budget, but the people’s budget.
As Speaker Souki noted last week, traffic congestion affects the quality of all of our lives.
The fact is we have not had sufficient funding for at least a decade now: to keep our roads well-maintained and to increase capacity to meet our community plans.
We have an aging transportation system on all the islands that is in need of significant upgrades to increase durability and dependability. And I want to work with the Legislature to find the funding to make significant upgrades to increase safety and reliability.
For the same reasons, I want to work with the City and County of Honolulu and the Legislature to generate the funds needed to complete a rail system that we can afford. This will give us a more comprehensive approach to traffic congestion on Oahu for the long term.
I mentioned at the start of this address about my summers working in the pineapple cannery.
Let me share a story about a friend of mine.
Like me, she trimmed pineapples as they came out of the Ginaca machines.
When she first started, the pineapples on her line would pile up. The experienced workers would laugh at her clumsiness in trying to keep up with “technology.”
She would go home at the end of her shift, tired, her hands and forearms red and blistering from the acid of the pine juices.
Her mom would lather on cream and wrap her arms in wet cloth and saran wrap to replenish the oils from her skin. She said she cried herself to sleep at night because they hurt so much.
But it was her first real job and she was determined to see it through. By the end of the summer, she was trimming pineapple with the expertise and speed of the best of them.
We here in Hawaii have a proud history of perseverance, hard work and overcoming great odds. Our parents and grandparents have been outstanding role models, showing us that we can be and do anything we set our minds to do.
It’s something to remember as we work our way through this important and often difficult transition to the 21st century.
And that work doesn’t begin in Washington D.C. It begins right here in our own backyards, where the foundations of nation building have always been based.
It begins in our places of worship, on our playgrounds, in our classrooms, at PTA meetings and at work.
It begins here in Hawaii, the place that I choose to call home:
where we celebrate our rich diversity and immigrant roots, the source of our strength;
where we respect working men and women and the unions that represent them, upon whose shoulders Hawaii was built;
where we honor our seniors and retirees and keep the promises we made to them;
where we understand the need for self determination and to make right the wrongs of the past regarding native Hawaiians;
where we value the importance of public education;
where we have long provided our citizens with access to health care;
where we take care of the aina because it is the life that sustains us; and
where we march, not out of fear and anger, but out of confidence in the direction we must take.
We do this, not because of new leadership or direction from Washington, but because this is what we’ve always done here in Hawaii.
Because we have always been better together than alone, identifying ourselves as part of a greater ohana, bound by the spirit of aloha.
Even as the world around us changes, I do not see that aspect of who we truly are changing.
If our past is proof that we can do anything we set out to do, then let it also be our inspiration as we shape our future.
Thank you and aloha.