Council advances general excise tax hike

HILO — A general excise tax increase continued its forward march Wednesday, with the County Council voting 7-2 to bring the county surcharge up to one-half percent and extend it for another 10 years.

The measure, Bill 19, faces one more reading before going into effect next January. The current one-quarter percent surcharge will continue until then, under a bill the council passed last year.

Council members favoring the measure said the state Legislature gives the county only until March 31 to pass the hike or risk losing the opportunity.

“I do think we need a GET increase because we need to invest in our infrastructure,” said Puna Councilwoman Ashley Kierkiewicz. “The GET is a gift from the Legislature. It’s a tool we can use to help ourselves.”

The money can be used for roads and mass transit and possibly for bike ways and to make transportation-related bond payments that currently come out of the general fund, said Steve Hunt, internal control manager in the Finance Department.

Kona Councilwoman Rebecca Villegas emphasized that the county has little control over much of its spending, so it’s forced to find ways to make more money to cover expenses. An estimated 75 percent of the county’s $518 million spending goes to payroll, retirement, health insurance and other employee benefits, she said.

“One of the reasons we are in this position with our budget is how much money is committed to the employees of the county. … We’re taking care of the constituents who work for the county,” Villegas said, adding “It’s ironic. … We’re not spending money far afield.”

North Kona Councilwoman Karen Eoff agreed the tax increase is necessary.

“I know it’s hard to raise a tax … The fact is that we’re saddled with this increase which is larger than we can afford,” Eoff said. “Nobody in our community is happy with being stuck in traffic. … I think this is the least painful way to bring in another $25 million or $50 million.”

Kohala Councilman Tim Richards and Puna Councilman Matthew Kanealii-Kleinfelder were the two no votes. They noted a lack of confidence in government by many of the constituents testifying about the bill, and said the county keeps going back to the same playbook of raising taxes to meet expenses rather than looking at the entire county budget structure as a whole.

“Doing the same thing over and over and expecting a different outcome — I believe that’s the definition of insanity,” Richards said.

About a dozen people testified at a Tuesday evening public hearing, with most opposed to the increase. Testifiers cited the cost of living, their personal financial impacts, uncertainty about what the additional revenue would be used for and skepticism that the county administration has really cut expenses as reasons for their opposition.

“I’m trying to pinch pennies and I’m sure a lot of senior citizens are doing that,” said Lei Kalamau, a resident of Mohouli Heights Senior Neighborhood in Hilo. “I wonder if the county can pinch pennies too.”

Another senior, 75-year-old Abel Lui, stripped off his shirt at the testifiers’ table, calling himself “evidence” of a crime, not the crime itself. Lui said his $700 monthly pension isn’t enough for shoes, socks and underwear, much less more taxes.

“What you guys doing taxing the people,” Lui asked. “I only get 700 something dollars and you guys going to tax me?”

Real estate and resort associations also opposed the increase, saying tourism is at a tipping point and adding more costs could drive them to other destinations.

“This regressive and egregious tax puts tax upon tax and affects all economic activity,” said Joy Dillon, representing Hawaii Island Realtors. “In addition, we still don’t know what this proposed increase in the GET will be used for.”

Those favoring the increase say last year’s volcanic eruption and natural disasters stressed county coffers and more revenue must be raised to catch up.

“We have no problem with the GET,” said Waikoloa resident Gail Jackson in written testimony. “When people tell me they are upset about this proposal, I ask if they are willing to be volunteer firemen or be trained and deputized to help the police. Perhaps they would like to close the county parks? No more recreational programs? Should we drop the seniors programs?”