GET spending: Council debates allocating, saving, general excise tax revenues

HILO — Hawaii County won’t even begin collecting its share of the general excise tax for more than four months, but there’s already disagreement over how to spend it.

With a hurricane around the corner, unpaid expenses for lava damages and other unknown costs looming, the County Council on Wednesday advanced bills to divvy up the $10 million it expects to collect from a quarter-cent GET surcharge that starts Jan. 1. That amount, for the first six months of the tax, applies to the 2018-19 budget that started July 1.

Bill 169 passed its first of two required readings 7-1, with Kohala Councilman Tim Richards voting no and Puna Councilwoman Jen Ruggles absent.

“We don’t need to spend every cent we raise,” Richards said. “I cannot support increasing our spending until we know what’s going on.”

Richards, a reluctant supporter of the GET surcharge, said he voted for the tax hike because of the financial crisis, but wants $5 million of it socked away.

“We’ve gone through volcanoes, one hurricane, wildfires and now another hurricane,” Richards said, suggesting the county, “pump the brakes a little bit.”

“It’s not bad to have a reserve of $5 million because we don’t know what’s coming forward,” he said.

Several other council members questioned whether all the money should be earmarked now, without knowing what other expenses could be more pressing.

“This weekend we might have another event and we might need this money elsewhere,” said Hilo Councilwoman Sue Lee Loy. “What if we just slowed down a little bit and just hold it in this account. … I am a little concerned we may be moving too quickly.”

Of the $10 million in the new GET fund, $3.8 million covers the mass transit costs formerly in the general fund, $1.8 million will buy new buses, $1.6 million will create additional bus routes, $700,000 will go for technology improvements in the Hele-On bus system, $500,000 will go for bus shelters and $100,000 for bus stop signs. The remaining $1.5 million is slated for improvements on two Kona roads: Oneo Lane and the Ane Keohokalole extension.

The general fund was reduced by $3.9 million to account for property tax revenues lost from Puna properties lost or devalued because of the lava flow.

Puna Councilwoman Eileen O’Hara asked why commercial properties in Pahoa and Volcano aren’t also seeing property tax reductions to account for their lost business.

“We need something more if we’re not talking about property tax relief, we need something more to keep our businesses in business,” O’Hara said. “There’s a real immediacy to this. … This isn’t something we can just sit on and have meetings about. … We’re basically … we’re just driving them into ghost towns.”

Finance Director Deanna Sako said the county is monitoring property values in those areas and they’re not showing decreases based on comparable sales there.

“We realize the businesses are hurting, but we’ll have to look at other ways to address that,” Sako said.

Sako reminded council members the GET revenues can be used only for transportation and mass transit projects, because of the way the state Legislature wrote the bill allowing the county to raise the tax.

She said the administration will be asking state legislators to expand the use of the revenues if they meet in special session to address the county’s request for a $680 million recovery package following the volcanic eruption.

The Legislature hasn’t scheduled a special session, and tentative plans may be laid waste by new disasters threatened by Hurricane Lane, which is approaching the Hawaiian islands.

The county administration and state legislative leaders plan to meet Aug. 31, state Sen. Russell Ruderman, D-Puna, Ka‘u, said Wednesday.

“We’ll know then whether the county plan is acceptable enough to proceed,” Ruderman said.

In the meantime, Sako said, the county should proceed with its plans to use the money to patch up its mass transit system with improvements the public agreed to during a series of special meetings on the master plan.

“Right now, since our hands are tied to transportation, I feel like this is the right thing to do,” Sako told the council. “You can put it in whatever accounts you want to put it in, (but) this is our proposal.”