HILO — Close swimming pools on weekends. Shutter gyms and other county facilities two days a week. Suspend the county recycling program. Stop funding community events such as the Cherry Blossom Festival.
Those are among county administration recommendations to plug a $5 million volcano-blasted hole in the budget, now that the County Council on Tuesday voted against instituting a temporary quarter-percent general excise tax surcharge that would have expired Dec. 31, 2020.
The council voted 4-5 on Bill 159, a compromise after a half-percent measure seemed doomed to failure. Some council members voted no because they wanted the full half-percent allowed by the state Legislature, with a 2030 expiration date.
“This was never intended to be some stopgap measure which it has become,” said Hilo Councilman Aaron Chung, a consistent supporter who voted yes.
Others voted no because they think the county can find the money without raising taxes. And some wanted more details on how the money would be spent.
The $5 million shortfall is attributed to a loss of property tax revenues in Puna, where lava has swallowed almost 6,000 acres and more than 500 homes.
Finance Director Deanna Sako said she’d soon be submitting an amended budget to cover the shortfall. Much of the budget is out of county control, such as salaries and wages, which account for more than 60 percent of operating revenues, retirement programs dictated by the state and payments of outstanding debts.
That means the cuts must come from expenditures not mandated by the law, such as $270,000 from council members’ contingency funds, $500,000 from grants to nonprofits, $254,917 by unfunding vacant positions and $240,000 by suspending summer fun programs.
Managing Director Wil Okabe said the council needs to show leadership.
“This is not a game; this is a situation that we’re asking for leadership in this county,” Okabe said. “It is time for government to increase services and especially for those who need it most.”
Sako also urged the council to pass the tax increase, saying Mayor Harry Kim even called her from his hospital bed to remind her of several important points. Kim is recovering from a heart attack and is expected to be released today.
“We’ll have to meet with each and every department again,” Sako said. “To cut $5 million is not going to be easy.”
Suspending recycling programs such as for cardboard, glass, plastic and paper, will save $1.4 million, operating pools just three days a week would save $218,000 and closing gyms and other county facilities two days a week will save $336,000, according to a Finance Department list.
The vote came despite warnings from two Puna state lawmakers that it’s unlikely the Legislature will give the county another chance if it continues to reject the surcharge. Currently, all of the general excise tax goes into state coffers. A surcharge would give the county a piece of taxes collected within its borders.
“Our county was facing a financial crisis before the Puna lava flow,” said Sen. Russell Ruderman, D-Puna. “If this were a family facing this budget, we’d have to take granny off her medications. … We’d have to tell junior to quit playing soccer.”
Ruderman and Rep. Joy San Buenaventura, D-Puna, said the county needs to also help itself when asking the Legislature for assistance.
“We’re giving you folks an opportunity to help your constituents by doing this,” said San Buenaventura. “It’s highly unlikely we’re going to give you this opportunity again. … We are facing an unprecedented disaster and before this you were already broke.”
The county does get one more chance to pass a GET surcharge, but if passed, it won’t go into effect until Jan. 1, 2020, too late for the current budget crisis. That’s if the council passes a bill by March 31.
Puna Councilwoman Jen Ruggles and Kona Councilman Dru Kanuha have been the two consistent no votes during all iterations of the GET surcharge. Others voting no Tuesday were Hilo Councilwoman Sue Lee Loy, Puna Councilwoman Eileen O’Hara and Kohala Councilman Tim Richards.
Lee Loy and O’Hara had previously supported a GET surcharge.
“I had asked from day 1 for a plan for how the money was being spent for the taxpayers and it never materialized,” Lee Loy said after the meeting.
O’Hara pushed for the full tax, saying the surcharge is a good way to diversify revenue streams.
Ruggles said the county has other options, such as borrowing from the geothermal fund and the Public Access, Open Space and Natural Resources Preservation fund. The county can also raise property taxes on the second homes of the wealthy, she said.
“We will not help the poorest of the poor by taxing them,” Ruggles said. “We have great wealth on this island and amazing wealth disparity. … tax those who can afford it, (such as those) competing for who can put the most helicopter pads on their yacht … let’s tax them.”
Ruggles said even a small GET surcharge would hurt the poor the most.
Because the tax is itself taxed, the tax on a $100 purchase would have increased by 26 cents, raising the purchase from $104.17 to $104.43, once the 4 percent state GET is also taken into account.
Kanuha said his district already pays some of the highest taxes on the island.
“Previous to the eruption, I was against the GET. … During it, I was against the GET. … I’m still against it,” Kanuha said. “A lot of my constituents are saying they’re overtaxed.”