City Council defers vehicle weight tax hike
By Treena Shapiro
Advertiser Staff Writer
In an unexpected move, the City Council last night refused to increase the motor vehicle weight tax for O'ahu car owners, leaving in limbo the four-year arbitrated contract giving Honolulu police officers pay raises and benefits.
The council sent the weight tax measure back to the Budget Committee for further consideration, leaving open the question of how the city will come up with the $5.8 million needed by June 30 to pay for the contract approved by the council.
The State of Hawaii Organization of Police Officers had scheduled a meeting with city officials on Monday to confirm the raises, but after the council meeting, city Managing Director Ben Lee said the city would not be able to confirm that it can pay for the $5.8 million in raises and benefits.
"I don't know whether SHOPO will file suit, or whether they're going to wait for future council actions, or perhaps the City Council is going to raise the gas tax," Lee said.
Unless the council calls a special meeting and approves a weight tax increase this month, the city will not be able to use that revenue source until 2005, because the rate can be adjusted only on Jan. 1 of each year.
The police union could not be reached for comment last night.
The bill would have charged owners of more than 500,000 passenger vehicles $16 to $34 extra on their annual motor vehicle registration fees starting Jan. 1, and generated $6.5 million by June 30 and $13 million the next year, according to city estimates.
Also during the lengthy meeting, the council gave final approval to debt and expenditure caps, and a program allowing trained volunteers to enforce parking and abandoned and derelict vehicle laws.
However, after a three-hour discussion, members postponed a decision about whether to give a permit to the controversial Synagro facility at Sand Island that would turn sewage into fertilizer pellets.
Few options left
When the council last month approved the four-year police contract to start retroactively on July 1, they also advanced the weight tax increase as a way to pay for the first two years of the contract. They previously had rejected a plan to increase the gasoline tax by 2 cents a gallon to pay for the raise.
City Budget Director Ivan Lui-Kwan said a combination of service cuts and as many as 350 layoffs is the only option left to pay for the raises before the fiscal year begins on July 1.
Lee added that finding $5 million would mean shutting down departments.
Lui-Kwan said another option is for the city to go back to the arbitration panel and say the pay raises effectively have not been approved because there is no funding mechanism attached to them. Lui-Kwan was not sure what that would mean for the statewide contract covering police on all islands, because all four counties had to approve it before it took effect.
"It was definitely puzzling about why they would approve the pay raises and not approve funding to pay for them," he said.
Lui-Kwan disputed Councilman Romy Cachola's and Councilwoman Ann Kobayashi's argument that the proceeds from the $10 million sale of the city's Block J property on the corner of Beretania and Alakea streets could be used to pay for the raises. He said the money already has been used to balance the city's operating budget.
The council members argued that they had included $15 million from the sale of Block J for several years, and the money finally came in.
Lui-Kawn said delaying the pay raises until the fiscal year beginning July 1 would be "out of sync and not in compliance with the arbitration award," which mandates that the raises be paid this year.
$66.4 million needed
Bill 69 would have increased the weight tax from 1.25 cents to 2 cents a pound for passenger vehicles. It would have increased the commercial-vehicle tax rate to 2.5 cents a pound from 2 cents.
O'ahu has 545,323 passenger vehicles.
The motor-vehicle weight tax has been unchanged since 1990.
The city administration had urged the council to approve the increase, arguing that there were few other alternatives to pay for the police pay increase.
Police contract details released by an arbitration panel at the end of September give officers a 4 percent raise in each of the four years of the contract, which along with health-fund payments and other benefits will cost about $66.4 million over the length of the contract: an additional $5.8 million this fiscal year, $12.7 million the second year, $20.7 million the third year and $27.2 million the fourth year.
City Human Services Director Cheryl Okuma-Sepe said in addition to an across-the-board raise, officers would see fringe-benefit rollovers and an additional $15 per month in their standard-of-conduct differentials. "The total wage package is really a 22.14 percent increase to the base salary," she said.
Because state laws prohibit the motor-vehicle weight tax from being used to pay for police raises, the taxes actually would go into the fund that pays for TheBus and HandiVan operations, and general funds would be moved out of the bus transportation fund for the police contract.
Vetoes likely
In other business, the council passed controversial bills 61 and 62, which limit the city's borrowing and spending. Members in favor of the caps believe they will lead to more fiscal discipline, but the administration contends they will hamstring the city or force the council to lift the cap when unexpected expenses such as the police raises come up.
In addition, both Citibank and First Hawaiian Bank Chairman Walter Dods have warned the bills could damage Honolulu's credit rating.
Lui-Kwan said Mayor Jeremy Harris will veto the bills, and after 5-4 votes it is unlikely the council will be able to override the vetoes.
The council also unanimously passed Bill 64, which would allow the police chief to set up a volunteer policing program to let citizens enforce parking and abandoned and derelict vehicle laws. The program would allow trained volunteers to issue tickets ranging from $30 to $255.
The council could not come to a decision about the Synagro-WWT, Inc. facility, whose permit has been held up for months. Although the facility has been approved by every other pertinent government agency, community members are concerned about health and safety issues if a 116-foot, egg-shaped "digester" is constructed at Sand Island Wastewater Treatment Plant.
The issue will come back before the council in January.
Reach Treena Shapiro at tshapiro@honoluluadvertiser.com or 525-8070.
