Hawaii sixth
in federal spending

A report shows it is the large
military presence that brings
billions into the state

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By Pat Omandam
pomandam@starbulletin.com

Hawaii continues to rank among the top states when it comes to the amount of federal money it receives per capita.

Two reports released today by the U.S. Census Bureau show the Aloha State was ranked sixth in per-capita federal domestic spending in 2001, with $8,024 spent for each resident. The national average was $6,267 per person.

Hawaii's per-capita ranking has remained relatively stable over the past decade. In 1996 it ranked fifth with $6,771 in federal money per resident.

"Having federal expenditures here means income to the state -- more construction or wages are being done in the state," Pearl Imada Iboshi, state statistician and a member of the state Council on Revenues, said yesterday, "so that's a very good thing."

The council forecasts quarterly tax revenues for the state which officials and legislators use as a guide for the state budget. Imada Iboshi said 2000 estimates show about 12 percent of the gross state product of more than $40 billion is from federal spending.

Gerard Keffer, federal programs branch chief at the Census Bureau, said among states, per-capita federal spending was the highest in Alaska ($10,214), followed by Virginia ($10,067), North Dakota ($9,262), New Mexico ($9,118) and Maryland ($9,094).

He said factors affecting the amount of per-capita spending include state population, the number of federally funded programs statewide and the number of federal employees who are residents.

Specifically, the Consolidated Federal Funds Report for Fiscal Year 2001, along with a companion report on program-level grants, shows it is the huge military presence in Hawaii that brings in billions of dollars to the state.

For example, the federal government spent $1.46 billion in Hawaii last year on procurement contracts, of which $1.95 billion was for Department of Defense work. Another $2.52 billion was spent here last year on salaries and wages of federal employees. About $2.2 billion was for active-duty and inactive-duty military pay.

Imada Iboshi said an example of the impact of federal military spending here was during the Gulf War in 1991, when deployment of military personnel had a direct negative impact on the state economy.

Nationwide, the Defense Department spent $255 billion last year, up 7.2 percent from 2000. This amount included procurement contracts, payroll, military pensions and grants.

Overall, Hawaii received $9.7 billion in federal spending last year, an increase of $707 million from 2000. It received $6.6 billion a decade ago.

By county, Honolulu received $7.8 billion in federal expenditures last year; Hawaii, $730 million; Kauai, $327 million; and Maui, $475 million. Another $413 million was listed as undistributed, meaning the Census Bureau did not assign the money to a county but it was spent in the state.

Nationally, the federal government provided $1.8 trillion to the 50 states, a 9 percent increase from 2000.

California ($188.5 billion), New York ($116.3 billion), Texas ($112.5 billion), Florida ($99.9 billion) and Pennsylvania ($79.3 billion) received the most federal money last year.

"Five states combined were the recipients of one-third of all federal spending," Keffer said.

Social Security, Medicare and Medicaid accounted for $854 billion, or 47 percent of the $1.8 trillion paid to the states.