On March 1, my administration sent to the Honolulu City Council a proposed budget that includes a 5-cent per gallon increase in the city’s fuel tax.
Before pronouncing it dead, I hope the public will hear the arguments on why this is needed, the true impact for drivers, and its importance for Honolulu’s transportation system, including maintaining city roads and restoring bus service.
Every time we fill up, we pay federal, state and city fuel taxes at the pump. The city has not raised its fuel tax in 24 years; we are proposing to raise it now from 16.5 cents to 21.5 cents per gallon, less than the annual rate of inflation.
The bulk of the taxes we pay for fuel will still go to the state and federal governments, despite the fact that on Oahu the city owns the majority of roads. The state collects about 38 cents per gallon (17 cents a gallon in gas tax and about 19 cents a gallon in general excise tax, depending on the current gas price). The federal government collects 18.3 cents per gallon.
The city gas tax goes exclusively to the highway fund, which is used only for transportation costs like road repairs and bus service. It cannot be used for non-transportation purposes. It does not go into the general fund. The 5-cent increase will raise about $15 million per year, to be used for two important purposes.
One is to continue restoring critical bus service on routes that were cut last year. We budgeted $3.5 million for bus service restoration around the island. On March 23, we will start with restored weekend service to the CountryExpress Route C from Makaha to Ala Moana Center and Route 14, which serves St. Louis Heights and Maunalani Heights. In May, we will restore weekday service for CountryExpress Route C, as well as service for Route 55 from Ala Moana to Haleiwa, Route 1L from Kalihi to Hawaii Kai, Route 2L from Kalihi to Waikiki, and Route 5 from Manoa to Ala Moana Center. In August, we plan to restore Route 13 from Liliha to UH-Manoa via Waikiki.
The other important use of the fuel tax increase will be to cover a portion of the debt service on the bond funding for road repaving. We are embarking on an ambitious plan to repave all city roads that are in poor condition over the next five years, spending $150 million per year to reach satisfactory road conditions across the island.
For the average driver, the additional 5 cents per gallon will add up to about $21 dollars per driver a year. (According to the Hawaii Data Book 2011, the average Honolulu County driver used 429 gallons to travel 8,726 miles per year. At 5 cents per gallon, that adds up to $21.45.)
There is a much bigger cost to drivers if roads are left in poor condition. According to national transportation research group TRIP, vehicle damage caused by poor road conditions costs each Honolulu driver an average of $701 a year. Smoother roads also allow for better gas mileage. Finally, every person who gets out of a car and rides a city bus because of restored bus service means less congestion and less gas wasted in traffic.
We are confident that we can commit these funds and that our local contractors are able to do the road repaving work on time and on budget. I have already set up a city team that will be meeting weekly to monitor our progress and to make sure that these projects go forward and are completed as scheduled. These projects will create many more jobs for local people while taking advantage of low-interest rates for bond financing.
My priority as mayor is to upgrade and maintain the city’s infrastructure. We can’t support our businesses, our economy or our quality of life with infrastructure that is falling apart. Just as we maintain our homes to pass on to the next generation, so, too, must we keep our city infrastructure healthy to ensure future growth.
