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The Honolulu Advertiser
Posted on: Wednesday, December 28, 2005

Movement afoot to place excise tax repeal on '06 ballot

By Eloise Aguiar
Advertiser Staff Writer

A grassroots movement is emerging to derail the recent general excise tax hike and change the way such increases are enacted — but, even if it proves successful, the process would take at least two years.

Voters could repeal the excise tax hike, which was passed to support a mass transit system, if a proposed amendment to the City Charter were placed on the next election ballot in 2006, and voters ratified it. However the actual repeal could take another two years to complete.

The petition for the "repeal of any ordinance imposing a county general excise tax or county surcharge on the state general excise tax" has been quietly circulating for about two months. Supporters expect to increase their efforts after the holidays. The petition would require more than 40,000 signatures.

No deadline for collecting the signatures has been set.

The process would take place in two steps. If the proposed amendment were to pass, then another petition would have to be circulated, allowing the actual repeal to be put on the ballot in 2008. If voters also approved that, the GET tax increase would be repealed.

This comes at a time when residents have seen increases in motor vehicle registration fees, sewer fees, the conveyance tax and property tax values.

But the repeal process is labor intensive and needs considerable public support, said state Sen. Sam Slom, R-8th (Kahala, Hawai'i Kai).

Elected officials only pay attention and act when constituents speak up, Slom said. "It's only when the public says we're mad as hell, and we're not going to take it any more."

The GET hike from 4 percent to 4.5 percent, a 12.5 percent increase to take effect in 2007, was imposed to pay for the city's mass transit project, which by some estimates could cost as much as $2.8 billion. A dedicated source of revenue was necessary to obtain federal funds for it. Supporters of the tax increase say it is necessary to deal with O'ahu's increasing traffic congestion.

Bill Brennan, spokesman for Mayor Mufi Hannemann, said the mayor's office has not yet seen the petition and could not comment on it specifically.

But Hannemann has been a key supporter of using the tax for transit. "We and the majority of the council members believe that there needs to be a local funding mechanism in place so that we can proceed with our plans for transportation solutions for our island," the mayor said.

An amendment is necessary because the City Charter initiative law is limited to non-fiscal matters, said City Councilman Charles Djou.

Djou said if the people back the petition in 2006, council members might take action sooner.

"The political reality is, should this question get on the ballot and the voters enact it, I would imagine that the Honolulu City Council on its own — without having the citizens force us to do it — would reverse the tax increase," he said.

Djou said people are frustrated about recent tax and fee hikes and could see this amendment as a way to cut back those hikes.

"We're seeing our real property taxes up 26 percent this year," he said. "We doubled vehicle taxes. We doubled sewer fees. We've increased building permit fees. In theory if this initiative passes it could also — depending on how it was worded — reverse the double vehicle tax or property tax."

Once the petition is completed, the City Clerk must verify the signatures and then turn it over to the City Council, said Denise De Costa, city clerk. De Costa said she didn't have a deadline yet as to when her office would have to check the petition and turn it in for inclusion on the ballot.

The City's Clerk's office said a petition would have to have a number of signatures equal to 10 percent of the number of voters who cast ballots in the previous mayoral election. In the most recent election in November 2004, there were 445,253 ballots, so a petition would have to have 44,525 signatures.

Petition supporters say the amendment isn't just about a transit system.

"We have a lot of people on our side who are in favor of mass transit but they don't like the idea of the tax being passed until we know what the project is going to look like," said Bob Kessler, president of the Waikiki Residents Association. "In our case it's a matter of tax issue not the transit issue."

Kessler had opposed the increase before the Legislature and the City Council. He said the association also opposed the hike, but had taken no position on mass transit.

State Rep. Colleen Meyer, R-47th (Ha'iku, Kahalu'u, La'ie), said more people from her district opposed the tax hike than supported it, and she believes the public should vote on such issues and not leave it up to legislators.

"When you're talking about the biggest public work project in the history of the state, I think taxpayers should be able to weigh in on it," said Meyer, who doesn't support a rail system.

The issue was introduced at the Kailua Neighborhood Board in October, and once the drive begins, board member Larry Bartley said he will ask the board for an endorsement.

The city Charter Commission is also reviewing two proposals to remove the limitation on initiative power concerning taxes. The commission has until August to submit its recommendations for charter amendments that would appear on the 2006 ballot.

Staff writers Robbie Dingeman and James Gonser contributed to this report.

Reach Eloise Aguiar at eaguiar@honoluluadvertiser.com.