Increase in vehicle tax likely
By Treena Shapiro
Advertiser Staff Writer
The City Council has moved a step closer toward paying for raises for Honolulu police officers by advancing a bill that will require motorists to pay an additional $18 to $30 per year when registering their vehicles.
The Budget Committee, by a 4-1 vote, yesterday passed Bill 69, which would raise the motor vehicle weight tax for passenger vehicles from 1.25 cents to 2 cents a pound on Jan. 1. The city administration estimates the measure will bring in enough revenue to pay for the police officers' arbitrated award for the first two years of the four-year contract.
Under the bill, the commercial vehicle tax rate would also increase, to 2.5 cents a pound from the current 2 cents.
Along with the four other committee members, council Chairman Gary Okino and Councilman Donovan Dela Cruz were open to raising the weight tax, so the measure is likely to pass the full council.
"The last change in rate or increase in this tax rate was in 1990, so this is the first time in a long time the rate has been changed," Ivan Lui-Kwan, city director of Budget and Fiscal Services, told the committee yesterday.
He urged the council to pass the increase, noting that "there are very few alternatives to find the revenue sources to pay for this."
Councilman Charles Djou, the only committee member to oppose the bill, pointed out that it is the largest vehicle weight tax increase in city history, and Honolulu has the highest vehicle weight taxes in the state. "I just believe that every time you have a fiscal bump, you can't continue to raise taxes," he said.
However, Councilwoman Barbara Marshall voted with the other three committee members to pass it back to the full council for a public hearing Nov. 5.
"I'll support your recommendation with the same 'ugh' as everyone else," she told Budget Chairwoman Ann Kobayashi.
"We are supportive of the police raises and there has to be some way to find the money," Okino said.
Dela Cruz said he preferred it over a previous proposal to increase the gasoline tax to pay for the raises. He represents a district stretching from Mililani to 'Ahuimanu through the North Shore. "I was very much opposed to the gas tax because it had a more direct impact on my district, which I didn't think was fair," he said.
He said he is willing to work with the administration on raising the vehicle weight tax instead.
The higher taxes would bring in $6.5 million through June 30, and $13 million the following year, according to administration estimates.
The police contract details released by an arbitration panel at the end of September would give officers a 4 percent increase in each of the four years of the contract, which along with health fund payments and other benefits, will cost the city 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 will also 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.
Since state laws prohibit the motor vehicle weight tax from being used to pay for police raises, the taxes would actually go into the fund that pays for TheBus and HandiVan operations, and general funds will be moved out of the bus transportation fund for the police contract.
In other business, the Budget Committee advanced two bills that would create artificial ceilings that would limit the city's spending and would set a limit to the amount of debt that could be incurred by the city.
The city administration advised the council not to pass the bill and brought in a bond writer who testified that such a move could hurt the city's excellent bond rating.
According to Lui-Kwan, the limitation on debt could lead to a situation where the city could not pay for its ongoing construction projects and might hamper the city's ability to improve and maintain public infrastructure needs.
Only Marshall opposed the bills.
Okino, who is not a committee member, said the limitations would "hamstring the administration and council in doing what's right."
"It's really not necessary," he said. "I think the council just has to have strict self-discipline from our side and not fund unnecessary (capital improvement projects) and fund essential services."
Reach Treena Shapiro at tshapiro@honoluluadvertiser.com or 525-8070.
