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.”