Council kills GET: Administration looking for $5M in cuts
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.”
One might feel sympathy for the programs that will end up without funding, if it wasn’t for the insane level of waste, lying and incompetence, rampant in this county over the last few years, one scandal after another. Being forced to live within their means might at least be one silver lining of having 600 homes wiped off the map, and a popular tourist destination decimated.
Maybe things are changing, this is a rare win for the people. The idea of allowing the % of taxes to increase to support an ineffective government was potentially catastrophic.
We tried increasing funding to the government and that obviously did not work. Now county administration how about getting to work? Instead of closing the swimming pool how about renegotiating some of the awful union contracts? How bout putting in place a thoughtful growth program to encourage good development to create more tax payers? How about really pushing for TMT?
They won’t do any of the things you suggest even know that’s exactly what needs to be done. They are going to come back with some other tax increase. Like one that involves people who have little or no voting power. Tax increases are coming, these people don’t know how or are unwilling willing to cut anything that involves jobs or wages within the county. They also don’t know how to grow anything other than spending and taxes.
Harry Kim doubled spending the first time he was mayor. No reason to expect any less from him this time.
Junior can keep playing soccer. He’ll just have to help a little more when he gets home because we can’t afford all three of our family’s maids.
Don’t worry, they will get that .5 percent as soon as they can figure out how. And as to Granny, well I am sure there is a COUNTY DEPARTMENT FOR THAT! There is no personal responsibility in this state.
It will happen after this 2 year election cycle is over. Case in point, Karen Eoff of county district 8 (kona) voted for this because she is running unopposed and will term limit out after this election.
the stress is soooo bad, they need anther raise!
And, of course, they still need the money to hand out.
….can’t cut that!
So, let the fire/police/medical folk, the community stuff go!
That will get money out of the riff-raff!!
After all, we voted for them to do stuff with $500,000,000
….so they will “do stuff” to YOU!
……and Pele luvs them
…….. with cushy salary, cushy medical, cushy pension, cushy, cushy, cushy!
And don’t forget their “high 3” with all this overtime to fight the scary volcano. That un-funded pension fund is going to go KABOOM!
Cut services instead of rescinding $1.6 million in raises to undeserving appointed staff? Cut services instead of furloughs and job consolidations or flat out eliminating all the deputy directors positions? Two suggestions that would save over $2million and not affect a thing.
EXACTLY! THAT WOULD BE A START!
Good for the council for standing up. Harry Kim and his band of merry men have shown no ability or desire to control a runaway budget – just keep asking for more, more, more. $5 million is only .9% of Harry’s bloated budget. What happened to all the promises made when they raised taxes last year?
you are all democrats, you should feel blessed in having higher taxes, less jobs, and huge public employee payouts for life.LOL
NOT A LIBTARD!
Cutting summer youth programs, hours at pools and gyms, and our recycling program – punishing lower-income people who rely on these programs for their keiki, and the ‘aina itself by filling our landfills with more rubbish! There are so many wealthy people in West Hawaii that spend more and will bear the brunt of this tax. But better yet, HEAVILY tax the snowbirds and other part-time residents that do nothing but take the best property, create the most trash and write everything off their federal income tax as “business expenses.”
Does not appear West Hawaii or snowbirds create the budget problems, these people play plenty based on property values. But sure tax them more, better yet, run them out with heavy taxes! Typical class warfare that has been proven not to work. They likely cannot vote other than their wallets but those that can keep electing people that do nothing but SPEND MORE MONEY. Why vote these big spenders in then cry the blues when cuts are proposed? Island has a spending problem not a revenue problem.
If the county could identify the 90% of short term rentals who are not paying any taxes on their luxurious 2nd…3rd…4th…and even more vacation homes maybe they could find the revenue to make up this shortfall. We know that 90% of these short term rentals do not pay any taxes on these residences but yet they are easily viewable on VRBO or AIRbnb yet the county can’t figure out who is not paying taxes…talk about incompetent bureaucrats in the planning and tax departments…it’s absurd when you think about these scofflaws get away with never paying any local taxes but yet write off all their expenses on thier state and fed taxes.
Why are we spending money to keep tourists out of the disaster area? The disaster is over, not much left to destroy. We could be raising money from the tourists viewing lava. Set up a roadblock and charge 50 bucks a car, and have them sign a waiver. All money goes to help the county budget and disaster relief for victims who have lost their homes. Hey, we have lemons, make some lemonade already.
BS there was no 5 million dollars of tax revenue in Puna. Secondly, get rid of the union that lets the county employees that DON’T work keep their jobs. Tax the crap out of West Hawaii, provide NO services and then tax us more! Brilliant. Maybe this island can come up with something like the rail boondogle and steal the rest of our money. Hey County! IT AIN’T CHEAP TO LIVE HERE OR RUN A BUSINESS WHERE PEOPLE ACTUALLY WORK! Not that the GE tax isn’t a progressive mess that takes its money from each party on our GROSS income. Liberal thieves.
What? Our county making up numbers?
Let’s assume 700 homes lost. Divide that by 5 million, and you would see that each are paying, on average, $7,000 in taxes!
My math, however, shows a $200,000 Puna home at a residential rate with a standard deduction for all (-$45,000) and no deductions for old age (-48k to -$120k) and no deductions for low income would be about $900. Take deductions for age and low income, and many are paying a few hundred dollars (at most).
Even if we assume $900 lost revenue per home/lot, we’d only be at $630,000, a mere 12% of the County’s numbers.
Just in case anyone forgets, the tax increase did pass.
Councilperson Ruggles was the only no vote.
Today (8/1/2018) the mayor is asking for a new government agency.
Oppression relies are your inability to remember the actions of your oppressors. Over time it feels less like oppression and more like a way of life. We do things “differently” in Hawaii.