Lawmakers covet fees on rental cars

Hunting for a ready source of cash to help balance the budget, state lawmakers might divert some of the daily surcharges that tourists and others pay on rental cars.

A surcharge on customers who rent cars at airports was increased last September to $4.50 a day — up from $1 — to help finance rental car facility improvements.

Under federal law, lawmakers can use that money only for airport-related proj­ects. But lawmakers might suspend the surcharge and increase a separate surcharge on all rental cars by $4.50 a day — to $7.50, up from $3 — and divert the extra cash to help close the state’s projected $1.3 billion deficit over the next two years.

While the switch has received little attention — the Senate Ways and Means Committee added it to a bill (House Bill 1039) earlier this month — it would generate about $60 million a year for the general fund, the second-largest potential source of new revenue to balance the budget after the temporary suspension of general excise tax exemptions on some business activities.

Tourists will likely not notice any difference — since most rent cars at airports and would pay the same $7.50 a day in surcharges regardless — but others, including many residents, who rent at other locations would have to pay $4.50 more per day.

LAWMAKERS ALSO would authorize the state to issue general-obligation bonds to replace the money that was supposed to go toward new rental car facilities at airports.

The bonds would require the state to make debt-service payments — a liability on all taxpayers — and could force the state to juggle or delay other construction proj­ects to stay within debt limits.

The state Department of Transportation had expected to use the money from the rental car facility surcharge to finance a new complex at Honolulu Airport scheduled for construction next year and completion by 2016. The department planned to sell revenue bonds backed by the surcharge for improvements at airports on Maui, Kauai and Hawaii island through 2017.

"It moves a lot of money that we need into the general fund, and it replaces it with bonds, which actually helps them do their proj­ects now," said state Sen. J. Kalani English (D, East Maui-Lanai-Molokai), chairman of the Senate Transportation and International Affairs Committee.

State Rep. Joseph Souki (D, Waihee-Wailuku), chairman of the House Transportation Committee, said the proposal would not harm the department or the rental car companies that want new airport facilities.

"I don’t know why anybody would complain," he said. "You’re just replacing cash with another form of cash."

Souki said he does have concerns about the debt-service payments from issuing additional bonds, but he believes some trade-offs are necessary to balance the budget.

State Sen. Sam Slom (R, Diamond Head-Hawaii Kai) has opposed the creation of special funds because lawmakers often raid the money for other purposes. Lawmakers would not be raiding the rental car facility special fund, but instead tinkering with the surcharge, and increasing a separate surcharge that normally goes into the state Highway Fund, to access cash.

The switch would also impose a higher surcharge on people — more likely to be residents — who rent cars at locations other than airports.

"It is a question of taking the money and not using it for the purpose it was supposed to," Slom said. "I have been opposed to those raids, particularly where you have a situation where the public was led to believe that the money was going to be used for one purpose, it was not used for that purpose and is now basically being dumped into the general fund."

The Department of Transportation initially opposed the switch before officials learned of the bond component. Dan Mei­sen­zahl, a spokesman for the department, said department officials are talking with lawmakers about an acceptable draft.

The department has been planning a consolidated rental car complex at Honolulu Airport because of complaints from visitors about the cramped, open-air strip now shared by rental car outlets there.

Rental car companies have told senators that the rental car facility surcharge is an important source of dedicated revenue for airport improvements.

Garrick Higuchi, Hawaii area director of operations at DTG Operations Inc. — which runs Dollar Rent A Car and Thrifty Car Rental — told senators in testimony that rental car facilities have fallen behind in other infrastructure that serves tourists.

Higuchi said the rental car industry has been working with the department for several years on airport improvements and does not want to risk any disruptions.

"It is in Hawaii’s best interests to continue to proceed quickly to accomplish the construction of state-of-the-art vehicle rental facilities," he said.