Honolulu City Council Votes to Cut $1.6M and 20 Positions from Economic Revitalization Office
The Honolulu City Council is poised to slash funding for the Office of Economic Revitalization by $1.6 million and eliminate 20 of its 25 positions, a dramatic downsizing that has sparked fierce opposition from business leaders and community advocates across Oahu.
The proposed cuts, which emerged during budget deliberations earlier this month, would effectively gut an office created just three years ago to spearhead the city’s economic recovery efforts following the pandemic’s devastating impact on tourism and local businesses.
The move comes in response to a scathing city audit released in February that criticized the office for lacking clear performance metrics and struggling to demonstrate measurable outcomes. The audit found that while the office had launched several initiatives, it failed to establish concrete benchmarks for success or show significant economic impact.
“We’re essentially pulling the rug out from under programs that are just beginning to gain traction,” said Maria Santos, executive director of the Downtown Honolulu Business Association. “This office has been instrumental in helping small businesses navigate permitting processes and access funding opportunities. Cutting it now would be devastating for our recovery efforts.”
Critical Programs at Risk
The Office of Economic Revitalization, housed in the Honolulu Hale annex building, currently oversees several key initiatives including the Small Business Support Program, the Innovation District development project, and workforce development partnerships with local universities.
Under the proposed budget cuts, only five positions would remain, primarily focused on maintaining existing contracts and winding down programs. The office’s annual budget would shrink from $2.8 million to just $1.2 million.
Council Budget Committee Chair Sarah Kim defended the cuts during last week’s hearing, arguing that taxpayers deserve better accountability for their investment. “We cannot continue funding an office that has struggled to show concrete results,” Kim said. “The audit made it clear that fundamental changes are needed.”
The audit specifically criticized the office’s management of the $15 million federal CARES Act funding it received, noting delays in program implementation and insufficient tracking of outcomes. Several promised initiatives, including a mobile business permitting unit and entrepreneur incubator space, have yet to materialize.
Business Community Pushes Back
Despite the audit’s findings, business organizations across the island are mobilizing to preserve the office’s funding. The Chamber of Commerce of Hawaii, Native Hawaiian Chamber of Commerce, and Filipino Chamber of Commerce have all submitted testimony opposing the cuts.
Local entrepreneur James Nakamura, who received assistance from the office’s small business program to expand his Kalihi-based manufacturing operation, worries about losing crucial support services. “They helped me navigate the maze of city permits and connected me with financing options I didn’t know existed,” Nakamura said. “Without that support, I probably would have given up.”
The office has processed more than 800 small business applications since 2023 and helped secure over $12 million in loans and grants for local entrepreneurs. It also partnered with the University of Hawaii to create internship programs connecting students with island businesses.
Economic Recovery at Crossroads
The timing of the proposed cuts has drawn criticism from economists who point to Oahu’s ongoing economic challenges. While tourism has largely recovered to pre-pandemic levels, other sectors continue struggling with high commercial rents, supply chain disruptions, and workforce shortages.
Recent data from the state Department of Business, Economic Development and Tourism shows Oahu’s small business formation rate remains 15% below 2019 levels. The island has also seen a net loss of locally-owned businesses, particularly in Chinatown and Kalihi-Palama, areas the economic office had targeted for revitalization efforts.
Office Director Michael Tanaka acknowledged the audit’s criticisms but argued that meaningful economic development requires sustained investment and patience. “Rome wasn’t built in a day, and neither is economic recovery,” Tanaka said in written testimony to the council. “We’re just beginning to see the fruits of our labor, and cutting funding now would waste the groundwork we’ve laid.”
The full council is expected to vote on the budget proposal by month’s end. If approved, the cuts would take effect July 1, the start of the new fiscal year. Council members have suggested they remain open to compromise solutions that might preserve some programs while addressing audit concerns.
For Honolulu’s business community, the outcome could determine whether the city maintains its commitment to diversifying beyond tourism or retreats from actively fostering economic development. With the council vote looming, both sides are making final pushes to sway undecided members in what has become one of this year’s most contentious budget battles.
