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Sunday, September 21, 2014         

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New laws push up price of paradise

Various state taxes and fees that help balance the budget will kick in on Friday

By B.J. Reyes

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The cost of living in Hawaii will edge upward on Friday as the new fiscal year begins and brings with it a rise in various state fees and taxes that were needed to help balance the budget in tough economic times.

In addition to motor vehicle weight taxes and registration fees going up, various businesses and commercial activities will no longer be exempt from having to pay the state's general excise tax — costs that likely will be passed on to customers.

Counties also will have to adjust, as a new measure goes into effect capping at $93 million the amount of money they receive from state hotel room tax revenues. The Honolulu City Council adjusted the city operating budget for the upcoming fiscal year by accounting for $3 million less due to the cap. That same measure also caps at $69 million the amount of transient accommodations tax money going to the state tourism special fund and imposes the hotel room tax on rooms provided on a complimentary or gratuitous basis.

Meanwhile, other bills taking effect are aimed at strengthening laws against prostitution and labor trafficking, cracking down on cruelty to animals and attempting to spur development of a statewide broadband network.

The fiscal bills were heavily debated during the legislative session as lawmakers sought to close a $1.3 billion budget hole over the two-year budget cycle. The several smaller tax bills emerged as an alternative to a more significant increase, such as a hike in the general excise tax or a tax on pensions. Gov. Neil Abercrombie had sought the latter.

Rep. Marcus Oshiro, the House finance chairman, described the budgeting process as making "lesser evil choices."

"We basically put together a bare-bones budget to provide core government services," Oshiro (D, Wahiawa-Poamoho) said Friday. "We didn't want to go with a general excise tax increase. That would have had, I think, a detrimental impact."

Lawmakers decided against additional taxes on soda, liquor and alcohol, but increased the cost of owning a vehicle.

Come Friday, the vehicle registration fee will increase by $20 to $45, while the weight tax increases by a penny to 1.75 cents per pound for vehicles up to 4,000 pounds. Rental cars also will cost more, with the surcharge increasing to $7.50 a day from $2 a day until June 30, 2012, when it goes down to $3 a day.

Senate Bill 754, which temporarily suspends general excise tax exemptions on nearly two dozen business activities, was the largest source of new revenue to help balance the budget. Lifting the tax exemptions on contractors, businesses that sublease, airlines and others was forecast to generate about $200 million a year before it sunsets in June 2013.

But the law already has had some impact.

Matson Navigation this month announced it would impose a $52 general excise tax "arbitrary charge" on all cargo moving to Hawaii to help recoup costs related to paying the GET.

Although the suspension of exemptions could lead to higher costs for shipped goods, Oshiro said, again, it was a preferred option to raising the GET across the board.

"They were all considered and finally approved only after we had exhausted all other options," he said.

Aside from the fiscal bills, other laws that take effect Friday stiffen laws related to prostitution, human labor trafficking and animal cruelty.

On prostitution, the governor signed a measure making it a misdemeanor to offer or agree to pay a fee to another person to engage in sexual conduct within 750 feet of a school or public park.

Another measure amends prostitution statutes, giving greater priority to cases involving witness security and protection, increasing the grade of offense for promoting prostitution, expanding offenses of prostitution and solicitation of prostitution to cover patrons and making the offense of habitual solicitation of prostitution a class C felony.

A separate measure establishes class A and B felonies for labor trafficking offenses, a nonpayment of wages offense and an unlawful conduct with respect to documents offense.

Abercrombie last week signed into law a bill establishing offenses for cruelty to animals by fighting dogs and clarifying existing dog fighting and animal cruelty laws. Meanwhile, another measure provides that killing, or attempting to kill, the pet animal of another person without that person's consent constitutes animal cruelty in the first degree.

Other measures taking effect July 1 would establish a special fund for environmental conservation and coordinate efforts to establish a public lands information system, while another measure would temporarily exempt the development of broadband infrastructure from state and county permitting requirements.

The law allows for permitting exemptions for five years — from 2012 to 2017 — on broadband upgrades on existing utility poles and conduits used for telecommunications. Telecommunications companies would also be exempt from new utility pole replacement regulations on broadband upgrades.

The law is intended to expand access to high-speed Internet service in Hawaii.

"This is the first major step, I believe, in making a commitment to broadband expansion and capacity and availability that will literally give us the opportunity to have a future here in Hawaii, most particularly a future for our young people," Abercrombie said.






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