HILO — Eighteen people came out to a public hearing Monday evening on a proposed quarter-percent increase in the general excise tax, evenly split between those in support and those in opposition.
The county administration attributes a $5 million hole in its budget to the loss of property tax revenues from property destroyed, isolated or otherwise devalued because of the lava flow through lower Puna.
If Bill 159 passes, the tax goes into effect Jan. 1, raising about $10 million for the 2018-19 budget year, and $20 million the year after that.
The money can be used only for transportation improvements, mass transit, sidewalks and trails, under the state law that allowed the optional tax. But, because the county currently uses almost $5 million from its general fund to finance mass transit, the tax revenues could free up that amount in the general fund.
Because the tax is itself taxed, the tax on a $100 purchase would increase by 26 cents, raising the purchase from $104.17 to $104.43, once the 4 percent state GET is also taken into account.
The County Council is set to take its final vote on the tax increase today. The council is almost as evenly split as the testifiers, with some saying the county needs the money and others pushing for decreased spending.
“It comes to a certain point that you have to be concerned about doing what’s right rather than whats in your image,” said former Kohala Councilwoman Margaret Wille, who supports the tax. She said having a reputation as one who doesn’t raise taxes doesn’t help if the county can’t find other ways to raise revenues.
Supporters also included a county employee and county consultants, as well as members of the public saying they see the need.
Another former council member, former South Kona/Ka’u Councilwoman Brenda Ford, said the administration hasn’t made it clear where the money will be spent. She urged the council to oppose the tax until it had a clear list of expenditures.
“This is just asking for a shell game. … Do not let the administration do this,” Ford said. “Do not let this administration fool the public or even fool you. … It’s got to be very specific.”
Others wanted more details as well.
“It’s hard to support raising taxes until the county does a better job both saying where the money is going and making that money go as far as possible,” said Geoff Shaw.
The county currently doesn’t get any of the GET, which is collected by the state. The tax is collected on almost all transactions in the state, but doesn’t apply to most prescription drugs or federal food assistance programs such as SNAP or WIC.