‘This is the last resort’: General excise tax community meetings underway

  • NANCY COOK LAUER/West Hawaii Today Deputy Finance Director Nancy Crawford explains the county's budget straits during a community meeting Tuesday evening in Hilo.

With a do-or-die hearing of a bill raising the general excise tax scheduled for next week, the administration and County Council are hosting a bevy of community meetings to get feedback and explain their budget straits.

The bill puts a one-half percent local surcharge — a half-penny on the dollar — on the state general excise tax, which is 4 percent. The county has until March 31 to approve the tax, under the state law.

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“When people want to have more police, more firefighters and more services, we need to have revenues for that,” said Managing Director Wil Okabe.

“This is the last resort. … If that doesn’t pass, the administration will have to look at expenses,” Okabe said. “But, it’s going to come down to services. … As long as people understand, no revenue, the services are not going to be same old, same old. There are going to be cuts.”

Okabe said the county already cut hours at some county pools and days when transfer stations are open, as cost-saving measures.

Most council members are still dubious. The Finance Committee, comprising all nine council members, voted 3-6 against Bill 102 last week. Only Hilo council members Aaron Chung and Sue Lee Loy and Puna Councilwoman Eileen O’Hara voted for it.

The bill gets its first reading at the council level Feb. 21, where it needs five “yes” votes to pass. If it’s voted down, the council can’t bring it back until next year, under council rules. If it passes, it goes for a second reading.

In the Hilo council chambers Tuesday, most of the two dozen or so in the crowd politely offered suggestions to raise revenue, from increasing bus fares to increasing fees on cruise ships and tour companies. Several wanted to see a plan on how the money will be spent.

“I want to see it to the penny,” said Mary Begier.

It’s estimated tourists would pay anywhere from 30 to 40 percent, or maybe even more, of the tax. Adding the surcharge would raise about $25 million or more annually, under county estimates.

“We talk about the visitors carrying a larger share, but that share won’t be so much,” said Scott Anderson. “Is it preferable to think about a differential fare for visitors versus residents?”

Others asked if the money could be used, if the tax passes, for sidewalks, invasive tree removal and operating expenses.

Staff wrote down the suggestions and questions for future action.

Arthur Sampaga wasn’t satisfied with how the county decided on a tax hike. He said the community meetings should come before the bill is drafted, taking the public into account. Mayor Harry Kim should have been more clear that he was proposing the tax, Sampaga said.

“What we’re doing today is backward,” Sampaga said.

Proponents favored the tax as a way to diversify the county’s revenue sources and put some of the tax burden on tourists. Opponents pointed out the county last year raised property taxes and fuel taxes, and said the county should find ways to trim expenses before raising another tax.

Most of the county budget is outside the county’s control. Employee wages and benefits, negotiated statewide, now account for 62.5 percent of the $491 million county budget. A voter-mandated public land-buying program costs about $6 million annually.

Payments on bond issues from prior years account for 12.5 percent. A state-mandated increase in post-retirement benefits other than pensions will bring next year’s county contribution to 15.35 percent of the general fund, compared to about 6 percent in 2006.

The Salary Commission raised top officials’ pay by about $1.3 million for the new budget year. Elected officials and department leaders will see raises as high as 39.7 percent. But that figure is eclipsed by $12.9 million in raises awarded to rank-and-file workers in the four major unions during state-level collective bargaining sessions last year.

Property taxes account for about 74.5 percent of this year’s general fund revenues, compared to 4.3 percent for the transient accommodations tax on hotels and short-term rentals. An additional 5 percent was drawn from the fund balance, and licenses and charges for services accounted for 6.1 percent.

The GET surcharge can be used only for operating or capital costs for public transportation systems, including public roadways or highways, public buses, trains, ferries, pedestrian paths or sidewalks or bicycle paths. But because the county pays for some of those projects partially through its general fund — paid by property taxes — the extra money could free up money in the general fund for other expenses.

The proposed GET hike is heading to a required public hearing at 5 p.m. Tuesday (Feb. 20) at the West Hawaii Civic Center in Kailua-Kona, with videoconferencing from Hilo council chambers, Waimea and Pahoa council offices, old Kohala courthouse and Naalehu state office building.

A community meeting about the increase was also hosted Tuesday night in Kailua-Kona. Additional meetings are scheduled for:

• 6 p.m. Thursday at Naalehu Community Center, 95-5635 Mamalahoa Highway in Naalehu with Maile David.

• 6 p.m. Friday, Volcano Cooper Center, 19-4030 Wright Road, Volcano with Maile David.

• 11 a.m. Saturday, Kohala Intergenerational Center, 54-3853 Akoni Pule Highway, Kapaau with Tim Richards.

• 2 p.m. Feb. 18, Kulaimano Community Center, 28-2892 Alia St., Pepeekeo with Val Poindexter.

• 11 a.m. Feb. 19, Waikoloa Middle School cafeteria, 68-1730 Hooko St., Waikoloa with Tim Richards.

• 6 p.m. Feb. 19, Pahoa Community Center, 15-3022 Kauhale St., Pahoa with Eileen O’Hara, Jen Ruggles.

• 2 p.m. March 4, North Hawaii Education and Research Center, 45-539 Plumeria St., Honokaa with Val Poindexter.

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• March 12, Waimea Elementary School cafeteria, 67-1225 Hawaii Belt Road, Kamuela with Tim Richards.

Email Nancy Cook Lauer at ncook-lauer@westhawaiitoday.com.