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HomeMy WebLinkAboutREP FC 079 2018/02/06 (2016-2018) Hawai`i County Council-4 January 23,2019 Bill 102: AMENDS CHAPTER 2 OF THE HAWAI`I COUNTY CODE 1983 (Draft 3) (2016 EDITION, AS AMENDED) BY ADDING A NEW ARTICLE (2016-2018) RELATING TO TRANSPORTATION SURCHARGE Establishes a one-half percent general excise and use tax surcharge to fund operating or capital costs of public transportation systems within Hawai`i County, to be levied beginning January 1, 2019. Reference: Comm. 722.84 Intr. by: Ms. David(B/R) Negative: FC-79 (Due to a vote of 3-ayes, 6-noes) Public Hearing: February 20, 2018 Postponed: February 21 and May 9, 2018 (Note: There is a motion by Ms. David, seconded by Ms. O'Hara,to approve Bill 102, Draft 2, as amended.) POSTPONED INDEFINITELY: Ayes: Council Members David, Kaneali`i-Kleinfelder, Kierkiewicz, Lee Loy, Poindexter, Richards, Villegas, and Acting Chair Eoff— 8. Noes: None. Absent: Council Member Chung— 1. Excused: None. REPORT OF THE COMMITTEE ON FINANCE DATE: February 6, 2018 Re: Comm. No. 722/Bill 102 PLACE: Council Chambers Hilo, Hawai`i TIME: 10:04 a.m. Council Chair and Members Hawai`i County Council Hilo, Hawai`i 96720 • Your Committee on Finance, to which was referred Bill 102, reports as follows: Bill No. 102, transmitted by Finance Director Deanna Sako, via Communication No. 722 dated January 19, 2018, amends Chapter 2 of the Hawai`i County Code 1983 (2016 Edition, as amended)by adding a new article relating to transportation surcharge. • This bill establishes a one-half percent general excise and use tax surcharge to fund operating or capital costs of public transportation systems within Hawai`i County, to be levied beginning January 1, 2019. A presentation was given by Mayor Harry Kim and Finance Director Deanna Sako regarding the surcharge on the general excise tax (GET). Mayor Kim commented he does not support the excise tax because it is a regressive tax and it is still in place and it is the reality of revenues and expenses. There are only three taxes that we control; property tax, fuel tax, and vehicle weight tax. A couple of things that has changed his position is the fairness to the people being taxed. The tourists pay 35-40 percent of the amount collected. Governments try to find sources of revenue where the taxes are_taken away from residents, and tourist tax is number one. Mayor Kim stated that there is one element of the GET that he does not care for. If the Council approves it, it will go forward, but he will fight to change it because it dictates that the money be spent for transportation and.nothing else. He feels that the County, the ruling body, should have the determination where our revenues are spent, not the State. The Mayor asked that the Council consider the GET as a source of revenue. Considering the GET as a source of revenue, it eliminates the need to seek revenues from one source, namely property taxes. Also, GET taxes apply to tourists as well as island residents which according to the State, 40 percent or more collected will be generated from the tourists. Finance Director Sako showed a PowerPoint presentation of the surcharge on the GET and fielded questions from Council Members. FC Report. No. 79 FC-79 Page 2 February 6, 2018 Council Chair Valerie T. Poindexter stated she will not be able to support this bill as it is. She stated constituents need time to understand what is going on and this needs to be taken to the.public. There is no plan, as of yet, how the money will be used. Everything is being fast-tracked and that is not fair to the people. Mayor Harry Kim responded that during the budget review process, where every dollar goes will be identified. Director Deanna Sako noted that Act 1 requires a public hearing to allow for public input. Council Member Jennifer Ruggles commented on how unfair the increase would be to the poorest of the poor. In addition to the property tax increase, doubling the minimum tax, almost tripling the fuel tax, and tripling the tipping,fees, the County is greatly increasing the cost of living and decreasing the quality of life for our struggling population. There are alternatives out there and we need to work to identify them. For these reasons, Ms. Ruggles will not be supporting this bill. Council Member Eileen O'Hara will support this bill if this Council will consider offsets that she proposes, which will be brought up at a subsequent meeting. It is important to know where the money is generated from and where it will be expended. If we want to maintain the Big Island in something of a poverty cycle, not doing anything is the best way to'perpetuate that. There are jobs but people are not able to get to these jobs. This increase is an economic driver. She stated that we need a more diversified portfolio in terms of the revenue coming into the county, which is an issue that we have to collectively resolve. Ms. O'Hara stated she wants to see a commitment from the administration; that if we adopt the surcharge and money is freed up, we need to be informed it is going to be spent on services that are needed in the community. We need to diversify our tax base as not all taxes are the same, and it is too complex to lump everything together in one bill. Ms. O'Hara made a motion to amend Bill 102 with the contents of Communication 722.1, urging the administration to consider expending money in the department of wastewater management for wastewater projects and in the County Police Department for additional patrol services in the most underserved areas of the island. The proposed amendment was tabled until end of the meeting. Council Member Dru Mamo Kanuha commented that it was tough to read about it in the paper. He stated he did not vote for the real property tax increase. He voted for the fuel tax because of public safety and how the roads needed to be fixed. Timing is really bad after all the tax increases and all the additional benefits paid to everyone; it is tough. Unless he has a list that states exactly where the funds are going, it is really hard to vote for something like that. He felt the bill will actually help the poorer districts with the transit system, however, it is hard to give a vote for a blank check at this time. FC-79 Page 3 February 6, 2018 Council Member Herbert M. Richards, III presented his motion to amend Bill 102 with the contents of Communication 722.3. His amendment is to take the general funds being replaced for public transportation and revenues from the surcharge and use it to reduce the fuel tax for the next three increments coming up and reducing the real property tax rate for all classes by a minimum of 10 percent. Mr. Richards' amendment, as presented, failed. Council Member Karen Eoff commented on the amendment and that for Mr. Richards' proposal, there is a completely separate process that needs to be followed along with public hearings. As much as we want to tax where most appropriate, it cannot be accomplished through the proposed amendment. Council Member Aaron Chung stated that due to the severity of this measure and the ramifications it has on everyone, not just now but going forward, timing of bringing this forward is poor. Mr. Chung feels at this time, it is impossible to meet with constituents, and we need to utilize the media and get it out quickly. Working through everything in such a short period of time is very difficult, especially since no one knew it was coming. When Mr. Chung realized it was coming to Council, he felt the timing was off. Despite that, he does support it. Imposing this tax will help the poor immeasurably with the transit system. The fuel tax money, established by state statute, does not allow for road repairs,but this could allow for it because it is not fuel tax monies. Mr. Chung also noted we could propose an ordinance which would allow for certain private roads to be improved. Chair Maile David noted that Bill 102 is before the Council to approve the Mayor's proposal to implement the Act 1 recently signed into law. She inquired of Joseph Kamelamela, Corporation Counsel, whether proposed amendments to Bill 102 can be made to a law that is under State jurisdiction or do we need to wait until this Council elects whether or not to impose such an increase and then bring forth amendments to the bill. Mr. Kamelamela stated he has concerns with the amendments because Section 3-10, of the Hawaii County Charter, contains a provision which states a Bill should have but one subject matter. In this case, it addresses three distinct matters and this is something major. If it goes through the public hearing and passes, Mr. Kamelamela would have no alternative but to advise that the Mayor veto the bill because it violates the Charter. The clear path is to deal with everything separately. Mr. Richards stated he disagreed with Mr. Kamelamela because under the name of the bill it says "Adding New Article Relating To Transportation Surcharge" and that nowhere in Mr. Richards' amendment does it change that. It only puts a timeline; so until this actually happens, we don't adopt the function of this bill. He stated the amendment does not change anything, it is complete separate legislation. If the bill were named differently, he would appreciate that, but this all relates to the bill. Mr. Richards states that he is trying to be fiscally-minded and responsible by tying things together going forward. FC-79 Page 4 February 6, 2018 Ms. O'Hara withdrew Communication 722.1 and made a motion to amend Bill 102 with the contents of Communication 722.4, that the funds be used for police services. She encouraged the administration to use any of the monies freed up from the general fund for that purpose. Council Member Susan Lee Loy asked for clarification regarding procedures. Bill 102, as amended, as she understood, needs a public hearing process and then forwarded on to the Council. County Clerk Stewart Maeda clarified that the public hearing will be on February 20, 2018 in Kona, after Committee meetings. Mr. Maeda also noted that the public hearing must also be published in two newspapers prior to the public hearing, and noted we have a very tight time schedule. Mr. Maeda further explained that Bill 102, as amended, will be heard before Council on the February 21, 2018, Council meeting in Kona. Your Committee on Finance is not in accord with the purpose and intent of Bill 102, as amended to Draft 2, and forwards it to Council with a negative recommendation. dmm AYES NOES ABS EX Respectfully submitted, CHUNG X DAVID x COMMITTEE ON FINANCE EOFF X KANUHA X ,r LEE LOY X /•, 461111 O'HARA X �* POINDEXTER x MAILE DAVID, CHAIR RICHARDS X FC REPORT NO.: 79 RUGGLES X ADOPTED: