Looking for money to finance renewable energy and food security, state lawmakers have agreed to increase a per barrel tax on petroleum products sold by distributors, which could cost consumers a few cents more per gallon of gasoline but eventually help wean the state off fossil fuel.

The barrel tax, which is now collected to help the state respond to oil spills, would increase from 5 cents per barrel product to $1.05. The $1 hike could generate $31 million a year to help the state explore alternative energy and protect local agriculture.

Depending on how the barrel tax is passed on to consumers, the price per gallon of gasoline could increase by 2 to 3 cents.

"It's a tax that really could be called an investment and viewed as an economic stimulus for us, because it puts money where we need it most, in our energy and food infrastructure," said state Rep. Hermina Morita, D-14th (Hanalei, Anahola, Kapa'a). "One of our biggest problems right now, especially in a down economy and with the general fund, is that both food and energy are long-term strategies to lessen our dependence on imports.

"In order to make this kind of transformation, we need dedicated funding."

The bill would create a Hawai'i Economic Development Task Force to back public and private renewable energy and food security programs, including Gov. Linda Lingle's clean energy initiative, which has set a goal of having 70 percent of the state's energy produced by renewable sources by 2030.

Clean energy is one of the governor's priorities, but the Lingle administration has opposed the barrel tax increase because it would be passed on to consumers during a recession. The administration has also questioned the need for a task force, since there is already consensus that the state has to move toward alternative energy.

Linda Smith, the governor's senior policy adviser, told lawmakers in testimony last month that the administration "opposes any measure that increases the cost of living for Hawai'i residents."

FOR ENVIRONMENT

The environmental response tax, known commonly as the barrel tax, was established in 1993 and applies to petroleum products sold by distributors to retail dealers and end users other than refiners.

The money collected from the tax can be used by the state for oil-spill prevention, county used-oil recycling programs and energy security. The money can also be directed toward environmental protection, including issues related to air and water quality and global warming.

Under the bill, the tax would be renamed the environmental response, energy and food security tax, to reflect its expanded scope.

The Tax Foundation of Hawai'i, in testimony to lawmakers, said there was a nexus between oil importers and the possibility of oil spills which may have justified the initial tax, but that lawmakers have already expanded the scope to include environmental and natural resource protection.

The foundation described the bill as "a classic effort of getting one's foot in the door with a palatable and acceptable" tax for oil spills and then increasing it for broader purposes.

Several business and environmental interests have urged lawmakers to pass the bill.

"I am so proud of our legislators. I am extremely proud of the work that they did," Pono Shim, kahu and vice president of Enterprise Honolulu, said of the conference committee negotiations that produced an agreement just before midnight Friday. "This is Hawai'i's economic stimulus. That's what we see.

"There are companies — and we can't mention them — that are in the queue right now that have wanted to come into Hawai'i. What this is is a response from Hawai'i that says, 'We're ready.' "

NEW TASK FORCE

Robert Harris, director of the Sierra Club's Hawai'i chapter, said that among the wide-ranging benefits of the barrel tax increase would be providing money for a new climate change task force.

"First, it's a great economic stimulus, really trying to invest in green power now. Second, it's something we can identify as a source of problems in Hawai'i," he said of the reliance on imported oil.

"It's the idea of taxing your problem in order to create money for our solution. It seems like an ingenious way of proceeding."

State Rep. Jessica Wooley, D-47th (La'ie, Hau'ula, Punalu'u), said the bill would create a new special fund for agricultural development and food security that could help protect and expand local agriculture.

The bill, for example, would provide money for pest inspection to help contain threats such as the varroa mite, which attacks honey bees, along with money for food safety, livestock revitalization and water pipelines for agriculture.

"It's a source of revenue that's going to provide at least a small incentive for people to find alternatives to oil," Wooley said. "As you increase the price for oil, you're putting a little pressure on that market to find alternatives as well as to decrease use, which fits in very nicely with our big-picture policy."

State Rep. Isaac Choy, D-24th (Manoa), an accountant and former chairman of the state's Tax Review Commission, said consumers would only face a few cents per gallon in higher gas prices in return for the potential development of renewable energy and food security programs.

"I think that's a great deal," he said. "It's well worth it."