HILO — Hawaii County residents and visitors will have to dig a few more pennies out of their pockets for goods and services starting Jan. 1, after the County Council on Wednesday passed a half-cent general excise tax surcharge, replacing the one-quarter percent approved last year.
The tax, which expires in 2030, will add an estimated $50 million annually to the county budget, compared to about $25 million now collected.
With no discussion, the council approved the tax hike 7-0, with Kohala Councilman Tim Richards and Hamakua Councilwoman Valerie Poindexter absent. Mayor Harry Kim was on hand to address the council, but didn’t speak.
Kim said after the meeting that the administration will likely use the new money in the pending budget for police, parks maintenance and homeless services. The council action means the mayor will be able to add about $12 million to the $573.5 million 2019-20 budget he proposed March 1. His final proposed budget is due by May 5.
Council Chairman Aaron Chung said the issue has been discussed at length, both for Bill 19 and also previous bills that temporarily raised the tax by one-quarter percent.
The county’s one-half cent GET is in addition to the state’s 4-cent tax. The county share would add 52 cents to a $100 bag of groceries, with the county share costing $100 annually to a household spending $20,000 on eligible expenses or $250 for those spending $50,000.
The tax is charged on almost everything, except for federal food assistance programs such as SNAP food stamps and the WIC program, prescription drugs and prosthetic devices. It’s estimated that tourists pick up 25 percent to 35 percent of the tax.
About a dozen people testified at a public hearing last month, 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.
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.
While the money currently may be used only for transportation, mass transit or bikeways and trails, bills moving through both houses of the Legislature would grant more flexibility to allow money to also be used for infrastructure and public safety.
Members of the council Finance Committee on Tuesday expressed support for an ad hoc committee of four members to delve deeper into the budget and county finances and bring recommendations back to the full body for discussion.
Puna Councilwoman Ashley Kierkiewicz, who asked the ad hoc committee be created, said she’d identified nine priorities the committee could tackle. They include analysis of the priority of county services, vacant and needed positions, incentives for economic development and county debt policy.
Kierkiewicz plans to refine the objectives for the group and present them at the committee’s March 27 meeting. The members of the committee will be formalized at that time.