Isle business costs
worst in the U.S.

Hawaii tops a research firm's
survey for the third year in a row
with costs that are 23% above
the national average

By Rob Perez
Star-Bulletin

We're No. 1 again.

Unfortunately.

For the third consecutive year, Hawaii is rated as the most expensive state in the country to do business, according to a newly released survey by a Pennsylvania economic research firm.

Hawaii easily outpaced Connecticut as the most costly state in the nation -- the same dubious distinction the islands have held the three years Regional Financial Associates has done the survey.

"What that says is you're in trouble," said Patrick Howie, a Regional Financial economist.

Areas with high business costs are much more likely to have below-average job growth -- if they're growing at all, Howie said.

Indeed, Hawaii has been losing jobs for almost four years. It is reeling from the longest economic slump in state history.

Regional Financial analyzed labor, energy and tax costs over a three-year period to compile an index ranking the states. Hawaii had the highest labor and energy expenses among the 50 states and was ranked No. 2 for state and local taxes.

In a similar survey the company did last year of 100 U.S. metro markets, Honolulu was the second most expensive place for businesses, following New York.

Hawaii's costs in the most recent survey were more than 23 percent above the national average.

The state's dismal rankings come as no surprise to business owners like Bill Green, who runs a Kahala service station employing 37 people.

Green said the bum economy is the main reason his business is struggling financially, but Hawaii's high costs are a big factor, too. "We haven't been profitable for the last year," he said.

Small Business Hawaii executive Sam Slom, also a Republican senator, says Hawaii's poor business climate is largely due to excesses of state government.

"How many bankruptcies, foreclosures, job losses will it take before they get it?" Slom asked.

But Becky Winters, director of a small business development center on the Big Island, said the high costs, while putting a damper on bottom lines, aren't preventing industrious entrepreneurs from succeeding.

"If you're going to use an excuse, that's a pretty good one to use," Winters said of the costs. "But there are people out there who are doing OK and who are not complaining."