Public hearing Monday on general excise tax increase

  • Deputy Finance Director Nancy Crawford explains the county budget shortfall to the Cost of Government Commission on Thursday in Hilo. (Nancy Cook Lauer/West Hawaii Today)

HILO — The public will have two opportunities to weigh in on a proposed quarter-percent increase to the general excise tax before the County Council takes its final vote Tuesday.

Administration officials say there’s a twofold reason for instituting the tax: to patch an estimated $5 million hole in the current budget and to diversify county revenues, to spare property owners future tax hikes.

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About 30 percent to 40 percent of the GET is paid by tourists, they say, while property taxes currently account for more than 70 percent of the county’s operating revenues.

“Putting all your eggs in one basket, which is real property tax, isn’t really smart,” Deputy Finance Director Nancy Crawford told the Cost of Government Commission on Thursday, adding the GET means “visitors will have an opportunity to contribute to our infrastructure as they certainly reap the benefits of it.”

A divided council, by a 5-4 vote last week, barely passed Bill 159, a downsized version of the mayor’s GET surcharge attempt. The new bill trims the tax from one-half percent to one-quarter, and curtails the length of the tax to Dec. 31, 2020, rather than the Dec. 31, 2030 deadline allowed by the state Legislature.

But passage is by no means guaranteed, with several council members saying they voted yes only to move the bill forward to a public hearing. Input from their constituents will determine how they ultimately vote, they said.

Council Chairwoman Valerie Poindexter was one of the ‘no’ votes. She was still on the fence Friday, and seeking reassurances from both the public and the administration.

“Some are OK with the increase to help with the shortfall because that’s what we do in emergency situations,” Poindexter said about members of the public who’ve weighed in. “A lot are skeptical about any future improvements in services and are still saying no. Feeling that throwing more money into the county’s coffers will not change departments’ priorities and management of programs.”

Poindexter said she’d be asking probing questions before deciding how to vote.

“My question to administration is — what assurances do we have that county government will become more efficient,” she said. “Should the GET pass, we need to put some safeguards in place, that is within our jurisdiction, to hold administration accountable. “

The county has scheduled a public hearing for 5 p.m. Monday, when council members will listen to the public but will not discuss or debate the bill. Then, at 9 a.m. Tuesday, the council will take one last round of testimony before taking its final vote.

The public hearing and the council meeting will be held at the West Hawaii Civic Center in Kailua-Kona, with public testimony also taken by videoconference at Hilo council chambers, the Waimea and Pahoa council offices, the Naalehu state office building and the old Kohala courthouse.

Because the tax is itself taxed, the tax on a $100 purchase would increase by 26 cents, raising the purchase from $104.17 to $104.43, once the 4 percent state GET is also taken into account.

The county administration attributes the $5 million loss to the loss of property tax revenues from property destroyed, isolated or otherwise devalued because of the lava flow through lower Puna. Although the county is getting at least $12 million from the state, and the Federal Emergency Management Agency is expected to reimburse the county for most of the disaster relief efforts, that money can’t be used to patch the property tax revenue hole, they say.

“That loss never gets made up by FEMA or the state,” Crawford said.

If passed, the tax goes into effect Jan. 1, raising about $10 million for the 2018-19 budget year, and $20 million the year after that. The money can be used only for transportation improvements, mass transit, sidewalks and trails, under the state law that allowed the optional tax.

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But, because the county currently uses almost $5 million from its general fund to finance mass transit, the tax revenues could free up that amount in the general fund.

The county currently doesn’t get any of the GET, which is collected by the state. The tax is collected on almost all transactions in the state, but doesn’t apply to most prescription drugs or federal food assistance programs such as SNAP or WIC, Crawford said.

  1. LOL in Kona June 17, 2018 5:40 am

    And remember:
    It is sooo stressful to deal with the impudent Pele/volcano
    …they need to augment their raises!
    …..and have more more money to give away to 501(c)(3)s
    ……..without limit or requirements (buy votes, pay friends, etc)
    But then, they are soooo wonderful, they deserve YOUR money,
    …so pay your taxes today!!


  2. Big ideas June 17, 2018 6:44 am

    I assume you have SOME knowledge of finance – so you MUST know that there are TWO sides to the solution – raise taxes and reduce spending.vYou seemed singularly focused on increasing taxes….regardless of your “smoke screen “diversity of revenue” argument.

    Finance Director Nancy Crawford – What have you done to reduce the size and cost of County Government?


    1. Scooby June 17, 2018 9:23 am

      She and Sako was a recipient of a large raise and she was the one who testified the county had the money. Rescind those raises! It is NOT tied to any Collective Bargaining Unit and cant be challenged.


  3. Don Hurzeler June 17, 2018 7:15 am

    How could anyone support a raise in taxes when our elite politicians do things like give raises to the head of the water department who presides over the ongoing mismanagement of our water supply. Make a huge effort at REDUCING SPENDING before ever raising taxes. And placing much of the burden of the higher tax on visitors…shame on our politicians. This island would be financial dust without our visitors and we bleed them too much already. The way taxes get high is that elite politicians creep them up over time so we…the sheep…just don’t notice. We must stand up and say “NO!” and require our elite politicians to learn how to cut spending just like every single business and family in our state. Quit taking our money…learn a new skill…learn how to cut spending and leave us alone.


  4. onceawarrior June 17, 2018 9:15 am

    Everyone who lives, visits, or any one who has investment interests should pay production and consumption taxes.
    Exceptions or exemptions in the name of economy corrupts. Robust economy is not necessarily a health economy.
    Spending should be within the ability and means. Define, refine, and sustain.


  5. metalman808 June 17, 2018 10:04 am

    66% of the budget is for them. Not for you, me or our children. What happens when it’s a 100% for them. Those days are coming in a matter of years. It’s sad people are so blind when voting.


  6. 4whatitsworth June 17, 2018 4:55 pm

    This is not about listening to the community, it is about seeing if we are tired of fighting this yet so that they can make their 5-4 vote happen.

    I would have a hard time having any self respect if I raised property tax, gas tax, TAT, and fees in a state that has one of the highest income taxes in the united states just to hand it out in the form of raises and retirement packages while basic services are failing.


  7. Raoul Duke II June 18, 2018 12:14 pm

    Wake up people and “smell the coffee.” Taxes are going up and up and up. There is no incentive for the current grifters in the county council to reduce the workforce or eliminate useless bureaucrats since that is their power base. Besides the demand for cheap labor from the business community and the constant drumbeat from the Social Justice Warriors for open borders and free stuff for the great uneducated masses and the great unwashed (homeless drug addicts) the only thing these shiftless grifters in the county council will understand is being thrown out of office. Until the county council begins to represent the hard working stiffs and the hard working taxpayers who pay the freight on this island we will get more of the same old song and dance….from the county council…”we need to raise taxes” on YOU because we don’t have enough of your money to spend on exorbitant raises to useless bureaucrats and inefficient delinquent public employees with generous pay raises and incredibly generous benefits. Take for example, Tim Richards, the illustrious Mr. Richards who for 10 years did not claim his rental income on his financial disclosure forms even though he is clearing $100K per year on this illegal rental. He claims he was paying TAT and GET on this illegal rental, it is a short term rental in an AG zoned property…MY GOD man can’t you read the zoning laws for Hawaii county? What a shiest-er this guy is…He must be voted out of office as an example to the rest of the grifters in the county council that dishonesty is justly rewarded by booting him from his cushy county council job with his big fat raise and pension benefits. But get ready for the tax increases to come every year till you move out of the county or until we vote out this dishonest and shiftless group who can do nothing but RAISE RAISE RAISE taxes. It’s as if they can’t do the right thing…furlough useless county employees, eliminate the bogus raises just given and claw back all that funding from the worthless county elites.


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