Workers in Hawaii will start 2025 with a little extra take-home pay starting this month as their state tax withholdings begin to shrink.
In 2024, the state legislature passed the first of seven years of historic tax cuts designed to make Hawaii increasingly affordable as the tax cuts progress.
Gov. Josh Green expects Hawaii will eventually go from the second-highest state in taxes to the fourth-lowest.
This month's economic forecast from the Hawaii Council on Revenues will help Green and lawmakers determine exactly how much the state can actually spend.
The next session of the state legislature begins Jan. 15 with the same goals as the previous session: reducing homelessness, increasing affordable housing and finding ways to make living in Hawaii more affordable to slow the migration of residents to cheaper states .
The big unknown in 2025 will be how President Donald Trump's campaign promises, including cutting federal spending and reducing federal staff, will affect Hawaii.
According to officials, cuts to federal social programs during Trump's first term cost Hawaii $300 million a year to maintain the programs.
Green has said he will not support Trump's anti-immigrant policies of sending Hawaii National Guard troops to the mainland to deport immigrants if it means separating families.
Some Republican governors won't do that either, said Green, who recently attended the Western Governors' Association winter meeting, which included Republican and Democratic governors.
He and 2024 Attorney General Anne Lopez were already working with coalitions of governors and attorneys general from blue states to prepare to roll back any Trump policies they disagree with.
In his two-year budget, Green proposed increasing Lopez's budget by $10 million each of the next two years to challenge possible Trump policies in court, along with other attorneys general.
U.S. Sen. Brian Schatz and U.S. Rep. Jill Tokuda said federal spending cuts would affect both red and blue states.
And the eleventh-hour bipartisan votes in the House and Senate in 2024 to keep the government running – ignoring Trump's demand to raise the debt ceiling for two years – showed that Republicans and Democrats can agree if it's about representing her constituents, Schatz told the Honolulu Star-Advertiser at the time.
In Congress' final week of December, the budget proposal included $1.6 billion for housing for survivors of the 2023 Maui wildfires who lost their homes, as well as billions more to help states rebuild from their own disasters to help.
So it remains to be seen how new faces in the coming Congress will react to pressure from Trump.
His selection to lead the military promised to roll back “woke” policies such as acknowledging climate change, environmental concerns and diversity issues, all of which are priorities on the islands.
It is also unknown how the Trump administration will respond to criticism of the military's impact on Hawaii's fragile ecosystem and environment, particularly after the Red Hill fuel leaks and damage to Hawaiian cultural sites.
Leases for military land on the islands are due to expire in 2029, and discussions are already underway over some of them.
Green wants to use some of the revenue from future military leases to offset the military's impact on the environment and help the state respond to climate change, especially after the Maui wildfires killed 102 people.
Others in Hawaii are concerned about the future of federal marine protected areas, including the Papahanaumokuakea Marine National Monument, created under former Republican President George W. Bush.
The Western Pacific Regional Fishery Management Council wants to allow commercial fishing in Papahanaumokuakea, citing the need to compete with Chinese fishing fleets.
But Trump has a mixed relationship with China.
Trump has threatened 10% tariffs on all countries except China, which would be hit by a 60% tariff.
At the same time, he invited Chinese President Xi Jinping to his inauguration on January 20th.
Uncertainty about what Trump will actually do makes predicting what comes next for Hawaii's economy unclear, the University of Hawaii Economic Research Organization said in its year-end economic outlook in December.
Hawaii's red-hot construction industry, for example, could be slowed by the higher cost of importing building materials like lumber and steel if Trump imposes tariffs.
Tariffs on other products such as electronics will likely be passed on to consumers, further increasing the already high cost of living in Hawaii.
Currently, UHERO expects tourism to grow by 3% this year, driven by visitors from the mainland.
January also represents a new era for the University of Hawaii as Wendy Hensel replaces recently retired President David Lassner, who will return to the UH Manoa campus in his former role as an information technology specialist.
Hensel takes over the 10-campus system after serving as vice chancellor and university provost of the City University of New York, where CUNY says it has day-to-day responsibility for the 25 campuses and 240,000 students.
Asked about criticism that she was a Malihini, or Hawaii freshman, Hensel said she would repeat what she did before at CUNY and at Georgia State University, where she served as provost.
Hensel told the Star-Advertiser that she plans to wear her shoes and walk around all UH campuses to meet faculty, staff and students to learn how the system works so she can build on it.
In the August primary election, Honolulu voters overwhelmingly re-elected Mayor Rick Blangiardi to a second term. The former broadcast executive will be inaugurated Thursday at an invitation-only event at the city's Mission Memorial Auditorium next to Honolulu Hale.
Blangiardi played four seasons for the UH football team and later served as an assistant coach. He is looking forward to meeting Hensel.
When asked if meeting the university system's next president was personal for him as a UH alum, Blangiardi said, “It's personal. We need them to be successful here. I'm going to put on a cheerleader outfit. It is one of the top leadership positions in the state. As proud alumni, we want the university to continue to thrive.”
Both he and Green have a goal of reducing homelessness and increasing affordable housing, and the annual point-in-time count of Honolulu's homeless population in January will provide an important indicator of whether progress has been made since January 2023.
Last year's Point in Time count recorded a 12% increase, meaning Honolulu's homeless population increased from 4,028 to 4,494.