As expected, Mayor Kirk Caldwell’s proposed assortment of tax hikes and fee increases is turning out to be a tough sell.
Two problematic proposals — a fee for residential curbside trash pickup and a bump in “per-gallon” automotive fuel tax — are already slipping off the City Council’s Budget Committee roster. However, given that Honolulu Hale has gone without an increase in taxes or fees for four years, residents could view much of the remaining lineup as the cost of doing city business.
Among the revenue raisers still under consideration are increases to the city’s motor vehicle weight tax; parking meter rates in Waikiki; nonresident admission to Honolulu Zoo; and increasing golf course fees on nonresidents only. Also, Caldwell’s proposed $2.45 billion operating budget for fiscal 2018 calls for tax rate increases for the hotel-resort and Residential A tax classifications, but holds the standard residential rate at $3.50 per $1,000 of assessed value.
All of this adds up to generating cash for basic services as well as the growing cost of salaries, pensions and other benefits for employees, which make up about one-fifth of the operating budget. Increases are expected in pay and benefits because most of the city’s employee union contracts are up for negotiation.
Last week, the Budget Committee rightly shelved a bill that would have created a $10-a-month fee for residential curbside trash pickup.
The bill was thorny in that trash pickup is thought of as a core service covered by property taxes, as are police, fire, road and parks maintenance services. A trash pickup fee could serve as a slippery slope to other assorted fees for everything from pothole patches to beach cleanups.
Also stalled is a measure to raise the city’s automotive gas tax to
20 cents per gallon from 16.5 cents. That’s a good move as it would hit commuters living in rural areas particularly hard. The tax has stayed put since 1989. However, when county, federal and state fuel taxes are combined, Hawaii residents pay a total of 53 cents per gallon in fuel tax — the third-highest tax on gas among states nationwide, according to tax policy research.
Among the bills still moving is one that would lift the vehicle weight tax to 6 cents per pound from 5 cents by 2018, then to 7 cents by 2019. The penny hike on passenger vehicles would give city coffers an additional $25 million annually.
The vehicle weight tax, along with the gas tax and parking fees, are being eyed as money-makers for Honolulu’s Highway Fund, which is used to maintain roads and support public transportation, such as the bus system. Since it may be tapped for future rail operations and maintenance, it’s reasonable that Council members are looking at building a funding stream for that purpose.
The full Council will send its final budget plan to the mayor, who is grappling with another tough sell: paying for ballooning rail costs. Three years ago, construction of the 20-mile elevated rail transit system was estimated at $5.2 billion. It now hovers between $6 billion and $10 billion, including interest.
In January, Caldwell presented some of the proposed revenue raisers to state lawmakers as “skin-in-the-game” possibilities to help pay for rail’s construction, operation and maintenance. But they cannot be tapped for construction costs unless the city tweaks a law that now limits that category of
rail funding to two streams: an
Oahu-only half-percent surcharge on the state general excise tax (GET) and federal grants.
The GET levy currently brings in about $300 million annually but is due to sunset in 2027. Caldwell wants the Legislature to extend it for two decades.
But pointing to the city’s history of offering low-ball figures and inaccurate rail cost projections, lawmakers understandably are balking at his request. Even so, they should extend the GET surcharge to complete construction, as the rail system will likely bring long-term benefits for the state in way of alleviating traffic problems and revitalizing various neighborhoods.
Last week, the House Finance Committee gave tentative approval to a bill that would extend the excise surcharge by just two years — to 2029 — and reduce the state’s “skim” from 10 percent to 1 percent. In response, Caldwell said: “It’s nowhere near what we need … so we’d have to make up the difference at the city level.”
With rail costs and the city’s increasing operating budget, Oahu residents are slated for plenty of skin in the game.
