Hawai'i residents could receive a more than $400 million windfall starting in May, thanks to the recently passed Economic Stimulus Act of 2008.

That's the rough calculation of Hawai'i's portion of the tax rebate included in the stimulus package that was signed into law earlier this month.

Most individuals will receive checks for $600, and most couples will get $1,200. Families could get even more depending on how many children they have who qualify for the tax credit.

Economists and retailers say the cash infusion will be a welcome injection into Hawai'i's economy, which has faced slowing growth and worries about how talk of a possible recession will affect its tourism markets. Nationwide, $106 billion of the $152 billion stimulus package will be devoted to the tax rebates.

Locally, mall managers and shop owners are looking forward to the checks arriving. Economists believe the stimulus program should have its desired effect if people go out and spend the checks. Retailers said many people use their tax refund checks to pay for purchases.

"We do notice when people are spending their tax refunds," said Marge Funasaki, general manager of Disco Mart, a 12,000-square-foot furniture and appliance store in Waipahu. She said some people will use refunds to get items they wouldn't normally purchase, or items they've had their eye on, such as a sideboard, flat-screen television or decorative furnishing.

"It's something they've always wanted and 'Now, I'm going to get it,' " said Funasaki, who noted that she's had people endorse refund checks over to her to make purchases. She said others will come in knowing they're getting a refund and use financing that features no payments for six months.

TOURISTS MAY SPEND

Bank of Hawaii chief economist Paul Brewbaker said the rebates could be much higher than $400 million, given that people are equating the stimulus package to 1 percent of the nation's gross domestic product. If the same formula is applied to Hawai'i's $60 billion gross domestic product, the figure would be around $600 million.

"That's not a small number," he said. "I don't think there's anyone that believes these things don't matter.

"Many people will spend the whole thing or displace an expenditure that needed to occur anyway, like paying bills."

Moreover, the rebates may give people who typically vacation in Hawai'i another reason to take a trip here at a time when tourism may be taking a hit from two of NCL America's cruise ships being redeployed elsewhere.

"That (more trips here) also could be a very positive thing," said Pearl Imada Iboshi, state economist.

She said how much of a lift Hawai'i's economy gets from the rebates will depend on this and how much of the rebates residents choose to spend rather than save.

This isn't the first time the Internal Revenue Service has issued tax rebates, with smaller distributions occurring in 2003 and 2001. A Princeton University paper on the 2001 rebates found that the $38 billion distributed to taxpayers helped boost people's expenditures nationwide and that a recession lingering over the economy during the first half of the year dissipated by November of that year.

The potential spending binge by consumers is such that Fred Paine, general manager of Pearlridge Center, the state's second-largest shopping center, plans to sit down this week and come up with some marketing ideas surrounding the rebates. Paine said he was a manager of a mall in Washington, D.C., when the 2001 rebate checks arrived and that tenants reported seeing a bump up in sales.

INDULGING OURSELVES

Among the increased sales were jewelry and high-end women's clothing. Paine said it seemed that people used the checks to buy fun things and make purchases that were a little outside their normal pattern.

"Hopefully, people will spend these and we'll get a little jump," Paine said.

There are other studies that debate the effectiveness of the rebates on economic growth and note that some people stick the money into savings or pay off debt.

"It really depends on what people do with the money," Iboshi said. "To the degree that they actually spend the money on goods and services within our state then that's a very positive thing."

Car sales could rise with the distribution and come at a time when local dealers are forecast to have a decline in sales. Dave Rolf, executive director of the Hawai'i Auto Dealers Association, said the checks could provide the impetus to buy.

"People generally tend to spend these types of windfalls," he said. "If (rebates are) equivalent to two or three car payments it would indeed help car sales."

"I think you're going to see a lot of purchases that will enrich people's lives and provide a boost to the economy."

Funasaki said she also is starting to give thought to how she might attract customers looking to spend the rebate checks.

"It does help," she said.

Reach Greg Wiles at gwiles@honoluluadvertiser.com.