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HomeMy WebLinkAboutCOM 0261.004 2006-2008 `oJ,~Tr ar a ~i,,;.~ Barbara Bell Harry Kim Director Mayor - - Nelson Ho ~i':'.- ~ Deputy Director 1rf Uf ~N~i`' C~>xunf~r >rf ~tt~uttii DEPARTMENT OF ENVIRONMENTAL MANAGEMENT 25 Aupuni Street ~ Hilo, Hawaii 96720-4252 (808) 961-8083 • Fax (808) 961-8086 http://co.hawai i.hi.us/directory/du envmn~htm _ W Apri130, 2007 Mr. Donald Ikeda Council Member - Hawaii County Council Ben Franklin Building 333 Kilauea Avenue Hilo, HI 96720 SUBJECT: Biodiesel Tax Resolution -Finance Committee Meeting Apri117, 2007 Deaz Council Member Ikeda, We would like to clarify our testimony before the April 17, 2007 Finance Committee Meeting of the County Council and hopefully answer your concerns about the impact of Resolution 109-07. We reviewed the video from the Finance Committee Meeting in which you stated "We are taking money from our fuel tax." Currently, the County does not collect any fuel taxes for biodiesel sold or produced on island. Used cooking oil collected in the County is converted to biodiesel and sold on Oahu and Maui. Some of this biodiesel is even imported back to the County of Hawaii but any County levied biodiesel taxes paid do not benefit Hawaii County. As stated in our later testimony, the approximately $2,500 in fuel taxes "that we wouldn't collect, but we are not collecting right now anyway" would be the amount of alternative fuel taxes generated by the estimated 450 tons (258 gallons/ton) of used cooking oil that aze currently landfilled or shipped off island to produce biodiesel. Although I may have initially misstated that the City and County of Honolulu waived their biodiesel fuel, my staff correctly testified that the City and County still levied a $.083 biodiesel fuel tax. The City and County of Honolulu modified their biodiesel fuel tax by means of Resolution No. 02-55. 2`~. ,1 Comm. No. ''-1' Ref. To: ~ltisuMilt Hawaii County is an equal opportunity provider and employer. Ref. Rafe MAY 0 2 2001 r' Councilman Yagong later stated, and we agree, that we hope to reach the point in the future in which we could re-implement the County biodiesel fuel tax. Until then, we need to provide an incentive for prospective companies to set up additional production capacity of biodiesel on the Big Island. The lower tax rate would encourage other projects that could use other sources of vegetable oils or biomass to produce biodiesel on island and this would benefit farmers who plant those fuel oil or biomass crops, the potential employees of these new facilities and all the users of biodiesel. In the fiscal yeaz ending June 30, 2006, there were 12,748,927 gallons of diesel used off- highway (no County tax) and 13,485,473 gallons of diesel used on-highway for a total of 26,234,400 gallons (Source: Tax Research & Planning Fiscal Yeaz Summary 07-18-06, State of Hawai'i). The County of Hawaii tracked potentially 116,100 gallons of used cooking oil that could have been converted into biodiesel during the same fiscal year 2006 period. This is minuscule compazed to overall demand for diesel fuel. In order to attract producers of biodiesel, we seek to offer the $.022 fuel tax exemption as an incentive to help make the County more energy self sufficient and promote a healthier environment. An incentive for collectors and producers is the avoidance of the current landfill tipping fee of $75/ton and a special handling fee of $85/load by disposing of their used cooking oil at our recycling facilities. Another benefit of the diversion of used cooking oil is that it provides an incentive to keep the material out of the wastewater system. This lowers the maintenance costs of the sewer system by keeping this unwanted material from clogging our pipes. Please approve Resolution 109-07 as a means to create an incentive for the productive use of used cooking oil, attracting growers of oil seed crops and producers of biodiesel on-island, and helping make our island more energy self sufficient and our environment healthier. Sincerely, 1i/,~ ~ i~O_ _ Barbara Bell DIRECTOR cc: SWD Recycling Section Hawaii County is an equal opportunity provider and employer.