Council takes up proposed GET hike Tuesday

Are smoother roads and better buses worth an extra half-penny at the register? Or can the county accomplish it without having to raise taxes again?

That’s the question the County Council Finance Committee will try to answer Tuesday, giving the public its first chance to weigh in on the latest tax hike proposal — a one-half cent surcharge on the general excise tax.

The Finance Committee takes up Bill 102, proposed by Mayor Harry Kim, at 10 a.m. Tuesday in council chambers in Hilo. The public also can participate by videoconference from the West Hawaii Civic Center, the Pahoa and Waimea council offices, the Naalehu state office building and the old Kohala courthouse.

Kim has appeared reluctant to support the tax. But after discussions with his top administrators, he’s reaching the point where he sees the need for the discussion, Managing Director Wil Okabe said Friday.

“He really wants to give the opportunity for options for the council to look at, and this is one of the options,” Okabe said.

Okabe said he, Kim and Finance Director Deanna Sako have a PowerPoint presentation to help explain the issue to the council and the public. The bottom line, he said, is the county needs money to fix its deteriorated roads and bus system.

“We realize we have to diversify our revenues,” Okabe said.

If approved after a public hearing and two council hearings, the tax hike would go into effect Jan. 1 and continue until it automatically expires Dec. 31, 2030.

The state Legislature allowed the county tax option during a special legislative session last summer, when it was approving a bill to bail out Honolulu’s troubled rail project.

Estimated to raise anywhere from $25 million to as much as $40 million for the county annually, the extra half-penny must be passed by the council and approved by the mayor by March 31, or the county loses its opportunity, at least until the Legislature gives it another chance.

Resolution 488 on the same agenda asks the Legislature to extend the deadline until Sept. 30.

The council struggled with raising the tax in the past. A similar bill was postponed indefinitely in 2016, when it became clear it was headed for a 7-2 negative vote. Council members seem equally hesitant this year, an election year following a year when the council and mayor raised both property taxes and the fuel tax.

Kohala Councilman Tim Richards had submitted a similar bill last month, but withdrew it when Kim introduced his own. Richards isn’t pushing for the measure; he just thought it needed discussion.

“I think we should at least have the conversation,” Richards said Thursday.

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 currently 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.

Kim has generally said he opposes raising the GET because it disproportionately hits poor people.

“At this point, I don’t know whether I will push for it, or support it, but I will leave it open,” Kim told a legislative panel last month. “The excise tax is the worst regressive tax. We’re taxing again the people who can least afford to pay taxes … they pay more.”

Kim did not return a phone message for further comment Friday.

But some council members, at a recent presentation of a plan to fix the broken Hele-On public bus system, seemed heartened that the GET money could go for improvements ranging from more routes to better buses. That would help the less advantaged, who rely on public transportation, they said.

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