HONOLULU (HawaiiNewsNow) - Honolulu Mayor Kirk Caldwell proposed a nickel-per-gallon increase in Oahu's gas tax to help pay for road improvements and restoration of city bus service Friday. But minutes after he unveiled next year's budget proposal at Honolulu Hale, City Council chairman Ernie Martin said the gas tax hike idea was "dead on arrival."
"People are demanding that the quality of life improves here, dramatically by dealing with road repaving, dealing with restoration of bus service, dealing with the homeless issue. These things do not come free," Caldwell said during a news conference at his City Hall office Friday afternoon.
The 5-cent gas tax hike would bring in about $15 million a year in revenue to the city. That money would cover the cost of plans Caldwell announced in the last week to spend $3.5 million to restore bus service that was reduced under previous Mayor Peter Carlisle. Caldwell also plans to spend $153 million to rebuild Oahu's roadways over the next year, and the gas tax would help pay for those upgrades too.
Martin reacted to the proposal this way: "I would say it's dead on arrival."
"I think there's ways that we can look at meeting some of the mayor's priorities as well as addressing some of the council's priorities without having to increase the fuel tax," Martin added.
Martin said last year, the city had $30 million in vacant unfunded positions, twice as much money as would be raised by the gas tax hikes. He said the city could use some of that money to avoid another fee hike.
Hawaii motorists already pay 68 cents a gallon in federal, state and county gasoline taxes, the third-highest in the country, according to the American Petroleum Institute. New York drivers pay the highest gas taxes at 69.6 cents a gallon, followed by those in California, where the taxes amount to 69 cents. Caldwell's hike would make Oahu's gas taxes the highest in the United States.
The hike amounts to nearly a one-third increase in the current city gas tax on Oahu, which is now 16.5 cents. It was last increased in 1989. Two years ago, former Mayor Peter Carlisle proposed a one-cent hike in the gas tax, but council members rejected that.
The gas tax hike would come on top of auto registration fees that have gone up sharply on Oahu in recent years.
Council Budget Chairwoman Ann Kobayashi said council members are not inclined to approve a gas tax hike.
"The sewer fees are going up again this year, the water rates have gone up, everything's going up and if we raise the gas tax, that means people, when they go to the market they're going to pay more because the delivery people are going to have to be having to pay more," Kobayashi said.
Caldwell said, "I'm hoping that people will agree with me that if this money is spent directly on roads and the restoration of bus service, that they'll say it's worth the price to pay for better roads and showing a long-term commitment."
In his first budget proposal since becoming mayor in January, Caldwell did not propose any property tax hikes. The city expects to collect $23 million more in property taxes because of higher property values.
The city will also receive $7 million in photovoltaic permitting fees starting in July, after the City Council repealed a permit fee exemption for solar electric power systems.
Caldwell's construction budget will ask the Honolulu City Council to approve $17.7 million for island-wide improvements to parks on Oahu.
Caldwell's budget also includes more money to restore the five-percent pay cuts for most city employees that went into effect in 2009. Similar pay reductions for state employees are also being restored.
The mayor's proposed operating budget is $2.089 billion, which is above the $2 billion mark for the first time in city history.
The City Council now receives Caldwell's budget proposal and can make additions, deletions and changes. The council must approve a balanced budget by the middle of June.