Council OKs tax hike

LIHUE — Kauai people will be getting a tax increase that will pay for public transportation improvements.

On Wednesday, the county council approved Bill 2670 to establish a general excise and use tax surcharge.

“Traditionally the Board of Realtors opposes the GET tax because of its regressive nature,” said Chad Deal, government affairs director for the board, who provided public testimony at the meeting.

“However, we can support the intent of this tax provided that it is earmarked specifically for the use of transportation and the highway infrastructure that we so badly need.”

Statewide, the GET tax rate is 4 percent, so it will increase to 4.5 percent on Kauai with the council’s action. People will pay the tax on pretty much everything they buy.

The half percent tax increase will take effect Jan. 1, 2019 and is projected to generate nearly an additional $25 million annually. It will remain in effect until Dec. 31, 2030.

“This funding will be critical to funding our road infrastructure and traffic congestion needs on our island,” said Mayor Bernard Carvalho Jr. “Our Administration has long-stated the need to diversify our revenue stream, particularly with the state’s cap on our Transient Accommodations Tax, as we cannot keep relying solely on Real Property Tax increases, on the backs of our homeowners.”

He continued: “While the increased GET revenues would not be fully realized during my time as mayor, I supported a half-percent GET increase for our county, as I feel strongly that this revenue will be necessary for the next administration and the future of our county.”

The Hawaii State Legislature has authorized the county to establish a surcharge of up to one-half percent on the general excise taxes currently imposed by the state.

Funds generated from the new tax will go into a “G.E. Tax Fund” and are planned to benefit land-transportation improvements, including roadways and bridges, land acquisition as well as the bus system.

“The poor conditions of our roads are not because of the lack of funding,” said council chair, Mel Rapozo, who was the only member not in support of the new tax.

“It’s not the money that’s causing the problems with road conditions, it’s our accountability, our efficiency and our ability to do it,” he said. “The money has been allocated; the jobs haven’t been done.”

Longtime residents who spoke at the meeting, like Glen Mickens and Joe Rosa, were concerned that designated funds generated from previous tax increases were used for unrelated purposes.

“In the past, we’ve been kicking the can down the road,” said council member Arryl Kaneshiro, who supports the tax for fixing Kauai’s roads. “We know we have this obligation; we know we have this liability. We have over one hundred million dollars worth of roadwork that needs to be done now.”

Council member Derek Kawakami, who was for the general excise tax increase, said a 2017 report stated that 39 percent of Hawaii’s public roads are in poor condition, and US Department of Transportation statistics show that 494 of its 1,125 bridges are structurally deficient.

“Extra vehicle repair and operating costs due to driving on roads in need of fixing in Hawaii is $515 per motorist per year on average,” he said.

Although most residents agreed that roads are desperately in need of repair, some believe the general tax will hurt the lower and middle income people more than those in higher tax brackets.

“The general excise tax is regressive,” said Alice Parker, a 20-year Lihue resident. “It hits the poor people most, especially because it’s on foods and medicines.”

Also on Wednesday, the council rejected proposed salary increases of 2.5 percent for certain county employees, mostly administrators.

“We are not Santa Claus,” said council vice chair, Ross Kagawa. “We deal with a budget that right now tells us we cannot afford to commit monies that we don’t have.”

Police chief Darryl Perry voiced his opinion about increasing salaries for his position as well as the deputy chief of police.

“Getting the best people who are suitable for this job is very difficult,” he said. “The pay increase is what helps us to recruit and retain those individuals.”

He spoke in general about the need to pay police officers more.

Total pay and compensation for an entry level police officer amounts to about $70,000, along with added benefits.

“I’m supportive of the council’s position until we get into a better position to afford pay raises for the department,” Perry said. “We’re here to serve the public first.”

  1. Ken Hughes December 7, 2017 6:26 am Reply

    Does this mean sole proprietors providing services will have to pay 4.5% to the state?

  2. manongindashadow December 7, 2017 9:00 am Reply

    Now that taxpayers will be paying more tax on every thing we purchase. The mayor say, “it’s for the future administration! Don’t he mean pay raises and better retirement money for himself and the administration now and future.
    In the past and now we paid more out to taxes. It was promised for our highways and roads. Nothing has changed in the pass ten years.
    As for Chief Perry, “why ask for more raises for the department?” Nothing gets done!

  3. Sunrise_blue December 7, 2017 9:43 am Reply

    Police officers making $70,000 dollars entry pay is a lot. An increase in the excise tax puts more burden on small businesses and will burden the economy by making it rely too much on mom and pop’s stores. What makes you think new revenue will flow in to the economy from larger corporations? In reality, there will be no money to use on these projects. If you look at it closely, corporations pay the bulk of the taxes in the community, and not the middle class working man. A good example, island air wasn’t able to make payments on let go employees. The company closed down. Chapter 7. The payments were not made for the health insurance of those employees.

  4. Shannon December 7, 2017 9:51 am Reply

    I don’t agree with this at all. It goes into the general fund??? That is not okay as history has showed us that not all of it will then go towards roads. It already says there is going to be a administrated raise involved. And that goes back to the problem that we are paying a higher percentage of our income because they decide they want to give more raises or pay for more things instead of keeping in line with a budget like everybody else has to do.
    So our income goes down so they can raise theirs.

  5. Sunrise_blue December 7, 2017 2:59 pm Reply

    Public works would be a main player. With the increase in population over the next 10 years, planning and administration becomes more vital to Kaua’i’s necessary upkeeps, and to maintain its facilities to better promote Kaua’i as a major destination area for many generations ahead. This fits into the central planning of the state since 1970, PPBS, act 185.

  6. Lee December 12, 2017 9:19 pm Reply

    I’ve watched most of the meetings regarding this issue, including this final vote. I even attended and spoke on this topic at a meeting last month. I sincerely appreciate what each council member shared with the public, even if I don’t entirely agree with some details. In all, I think Derek mentioned that the additional tax is small compared to damage on our cars, or compared with the fluctuating taxes paid on our property. Heck, gas prices shift weekly by far more than this tax. If you spend $100, your additional tax amount is 50¢. If you spend $20,000, the extra tax is $100. Yes, this is a regressive tax. Those who can’t afford the additional half-cent on every dollar they spend are going to feel this more than Mark Zuckerberg. But $6,000,000 goes to bus improvements – – and bus ridership is highly subsidized, giving those in need more of the “pie”. Streets should be improved, (Let’s make it happen, Mel!) with the extra $19,000,000 each year. About half of this $25,000,000 of new “income” for the county will come from visitors who spend a lot, and who should be helping to pay for our roadways. I was surprised to learn that Transient Taxes are capped for each county, the extra funds going to pay for the Rail system in Honolulu. This new GE Tax stays here. It’s not for pay raises (though some folks might say the new tax frees up General funds that were once earmarked for road maintenance…). It’s for transportation. I hope we focus on making our roadways safe, and I hope we do this work soon. We’re not a sugar island any more. We’re an economy based upon tourism. We can finally get the visitors to help pay for our roadways, thanks to this GET. (And Mel’s got a great point: How about actually lowering the weight tax a little, or something that will directly improve the situation for residents.)

  7. Lee December 12, 2017 9:27 pm Reply

    It sounds as if new police officers get $70,000 per year, but I’m guessing that this is the budget total for salary, health insurance, taxes, retirement, worker’s compensation, SSI, … the total that the county has to spend to hire a new officer.

  8. Jake December 13, 2017 5:13 am Reply

    “we’ve been kicking the can down the road,” said council member Arryl Kaneshiro

    For the love of God Arryl, please stop using this phrase. The same for the rest of the Council.

    Sooooooo, the money has always been there, but there has been little progress on the roads……um, WHY??? In the real world, people are held accountable and fired if they don’t do their job. Again, who has been responsible?? Always the “previous administration”?

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