Double the impact: Mayor lobbies council to pass half-cent GET surcharge

HILO — Bolstered by a state recalculation that shows a half-cent general excise tax surcharge would give the county twice what was originally thought, Mayor Harry Kim has resumed lobbying the County Council to pass it.

Kim announced Wednesday the surcharge would bring in $50 million annually, rather than the previously forecast $25 million. The difference is due to more accurate calculations by the state Department of Taxation stemming from new software that better tracks the source of the taxes, said county Finance Director Deanna Sako.

Kim wrote a letter to the council asking it to support the surcharge. He pledged the administration “commits to the County Council a fully cooperative approach in setting priorities on the expenditures of these additional revenues.”

“I consider this a gift to the people of Hawaii Island,” Kim said in an interview. “It’s a tremendous gift to help us catch up.”

A half-cent GET surcharge would add 54 cents in tax to a $100 expenditure. Currently, all the GET collected, 4 cents on the dollar, goes to state, not county, coffers.

Kim said the $515.7 million budget currently proposed allows only the bare minimum for maintenance of existing roads, parks and other projects. That budget is based on no new property taxes and the continuation of previously approved gas tax increases.

Kim is scheduled to address the council Tuesday when he kicks off three days of its department-by-department review of programs and the budget.

The council, with an apparent majority opposed to the GET measure, in February postponed consideration of Bill 102 until no later than May 5. This allowed the March 31 deadline imposed by the state Legislature to run out.

But a bill making its way through the Legislature would extend the deadline to enact a GET surcharge until June 30. In addition, House Bill 2587 allows up to 40 percent of the money to be used for non-transportation projects and up to 2 percent for private roadways that are used by the public.

Puna Councilwoman Jen Ruggles, whose district includes many of the private roads used by the public, has been asking for more resources for her district since she took office in 2016. But she still opposes a GET increase, she said.

“Considering taking care of our private roads is long overdue,” Ruggles said. “However, this tax is still regressive, still taxes food and medicine, and still hurts those can least afford it.”

Ruggles said taxes should target those who can afford to pay more.

The Senate approved HB 2587 with a minor change Tuesday. All the pieces could come together at the last minute, with the Legislature set to conclude its business May 3 and the mayor required to submit his final proposed budget by May 5.

Kim said the changes to the bill would allow the county to focus on, in addition to roads and Mass Transit, needed improvements such as increased police and fire protection, homeless programs and other services.

About 25 percent of the tax would be paid by visitors, lessening the burden on residents and property owners.

Currently, property taxes generate about 75 percent of the money going into the general fund. To raise the same revenue as the half-cent GET, the county would have to raise property taxes by 16.5 percent, the administration said.