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The Honolulu Advertiser
Posted on: Tuesday, April 13, 2010

Hawaii oil tax hike nears final vote

By Derrick DePledge
Advertiser Government Writer

Expecting vetoes by Gov. Linda Lingle, state House and Senate leaders yesterday placed several potentially contentious bills in position for final votes this week, including an increase in the barrel tax and an attempt to block the state from closing eligibility offices on the Neighbor Islands that help the poor.

House and Senate negotiators agreed yesterday to increase the barrel tax on petroleum products from 5 cents to $1.05, which would generate about $22 million a year to help with the state's budget deficit and finance food and energy security programs. The Senate had wanted to raise the barrel tax to $1.55, but agreed to a House compromise.

Negotiators also reached agreement on a bill that would prohibit the state Department of Human Services from implementing a reorganization plan this summer that would close most eligibility offices and lay off 228 of 517 eligibility workers.

The reorganization plan, which would concentrate eligibility processing at centers in Honolulu and Hilo, is expected to save $8 million. But lawmakers are worried that it would erect barriers for the poor, the elderly and people who speak limited English by reducing the opportunity for face-to-face interviews when applying for aid.

The bill would instead authorize a pilot project in Honolulu after the state adopts administrative rules, sparing the Neighbor Island eligibility offices.

Lawmakers want to move the two bills, and several others, by tomorrow so they would reach Lingle in time to force the governor to act before the end of session later this month. The governor has 10 days to act on bills passed 10 or more days before the session ends, compared with 45 days on bills passed at the end of session.

House and Senate leaders would prefer to consider veto overrides during session rather than in a veto override session in July.

Lingle vetoed a barrel tax increase last year and has indicated she would probably reject the bill again. The governor has said the tax hike, which would likely be passed on to consumers and raise the price of gasoline and electricity, does not make sense as people are struggling economically.


Some lawmakers and environmentalists were disappointed yesterday that much of the barrel tax hike would go to reduce the state's budget deficit. Lawmakers estimated that $13.2 million would go toward the deficit, while $8.8 million would be directed to alternative energy and food security programs.

"I think the major concern right now is balancing the budget," said state Rep. Hermina Morita, D-14th (Hanalei, Anahola, Kapa'a), the lead House negotiator.

Morita said lawmakers would have an opportunity when the state's economy improves to devote more resources to the environmental programs.

"It's a step," she said.

State Sen. Clayton Hee, D-23rd (Kāne'ohe, Kahuku), the lead Senate negotiator, said using money from the barrel tax to help with the deficit is part of an attempt to avoid a broad-based general-excise tax increase.

"The question that's being asked is how to raise revenue. And there's a general reluctance on the part of the Senate to raise the general-excise tax," he said. "To balance the budget, the Senate budget committee looked at special funds. The barrel tax is one of the special funds."

State Rep. Cynthia Thielen, R-50th (Kailua, Kāne'ohe), an environmental attorney and one of the House's strongest advocates for alternative energy, opposed the agreement because only 40 percent of the money generated by the barrel tax would go to environmental initiatives.

"That becomes nothing but a tax on the motoring public and on everyone that turns on their lights," she said.

Robert Harris, the director of the Sierra Club's Hawai'i chapter, said the new draft is a shell of what environmentalists wanted when the bill first moved last year. But he chose to look at the positive.

"Forty percent of manapua is better than no manapua at all," he said.


Lingle may also consider a veto on the bill that would halt the reorganization plan at the Department of Human Services. Lillian Koller, the department's director, has said the plan could reduce a backlog in applications and offer more convenience by allowing people to apply for aid online and over the telephone instead of visiting eligibility offices.

But the Hawaii Government Employees Association, the union that represents the eligibility workers, and many lawmakers believe the department is rushing through a plan that will cost state jobs and inconvenience the poor.

"We need to save these jobs," said state Rep. Tom Brower, D-23rd (Waikīkī, Ala Moana), one of the negotiators. "We're going to have a new administration that may have a new perception on how the state should administer human services.

"And, in addition, now is not the time to cut these positions. If we're going to cut these positions, it has to be much slower and drawn out over time."

Negotiators also reached a deal yesterday on a bill that would lift general-excise tax exemptions on several business activities and impose a half-cent GET on the activities. The new tax is expected to raise $25.3 million a year to help contain the deficit.