HILO — It’s deja vu all over again.
This time around, we hope the County Council skips the self-imposed delays and gets right to what needs to be done. Which in this case, would be vote to raise or extend the general excise tax.
It’s what the County Council should have done when it was first given the opportunity last year — an opportunity it sidestepped in the face of an upcoming election before finding a last-minute half-way fix. Now, half a year later, the impacts of the Kilauea Volcano eruption are more definite and easier to grasp.
Still, the pitfalls are the same. Hawaii County is in a perpetual budget crisis, one exacerbated by the fact that the island’s economy is too dependant on tourism. Because when that suffers, everything burns in its path.
And that’s what happened last year after Kilauea’s May 3 eruption. A lot disintegrated. And there’s no telling when it will regrow.
Home sales? The year 2018 ended below 2017, nearly unheard of in the Hawaii real estate market.
It wasn’t just felt in Puna, where Pele swallowed 700 homes. Nearly all districts on the island suffered drops. South Hilo home sales fell by nearly 9 percent, Hamakua sales by 16 percent, North Kona by 10 percent and South Kona by 17 percent.
The Aloha State’s bread and butter, tourism?
It’s been down for six straight months and there’s no telling when it will bounce back. With a fickle industry like travel, how long a stigma like a natural disaster can stain is anyone’s guess. During the holidays, industry insiders confided that a number of high-end establishments slashed prices on rooms that for years never sat unoccupied during December. They did this year, though, simply because the volcano canceled so many plans that were never rebooked.
One famous West Hawaii resort experienced an occupancy rate in the 40-percent range at one point. It’s a breathtaking locale where percentage rating in the low 90s would normally be grounds for a company-wide crisis email.
And here we are again. The county is in need of money with limited revenue sources. Actually, this time around, Kilauea’s numbers are impossible to ignore.
Mayor Harry Kim knows this.
To his credit, he lobbied for the entire half-cent tax hike last year. The County Council ignored him because, in part, the eruption began prior to the August primary election, where talks of tax increases torpedo campaigns. The other part, in fairness, was that reacting to the destruction in real time proved an overwhelming task for some.
What tax we have now is a half-size measure. The council reduced the half-cent surcharge to one-quarter cent and shortened the duration to Dec. 31, 2020, rather than the Dec. 31, 2030, end date allowed by the state Legislature. Collection of the tax began Jan. 1.
The current one-quarter cent on a dollar brings in about $25 million annually; the county could take in $50 million if it were doubled to one-half cent.
The state Legislature threw the county a lifesaver, however. It extended the time county governments could consider the tax to March 31 of this year. The attorney general tossed a second lifesaver by recently deciding that the March 31 window allowed counties to tweak measures they’d already passed.
Together, it gives a new County Council a do-over, but with the concrete Kilauea data as hardened as the lava rock.
Understand this is an emergency. This is not an endorsement for the way the county handles its budget. Every year, it scrapes for every nickel while warning services could be cut. Every year, employee salary and pensions command an escalating lion’s share of the finances, yet vacancies constantly plague the police department and aquatic centers and frustrate anyone who’s been to the Department of Motor Vehicles. It’s a broken salary system negotiated on Oahu that can’t be fixed in this space.
Understood, too, the GET is a regressive tax. It burdens the least fortunate among us the most. It doesn’t sound like a lot, but it does add up. The current quarter-cent translates into $2.27 monthly for a household spending $10,000 annually on taxed items and $11.36 monthly for those spending $50,000 annually.
However, Kilauea dealt a fragile system a major blow. Prior, maintaining service and infrastructure had proven daunting. Add rebuilding on top of that, it becomes nearly impossible. An extra $50 million per year through at least the end of the next decade will prove invaluable.
It should have been done in the first place.
