Mayor Kirk Caldwell’s plan to increase the city’s fuel tax to help pay for road repairs and restoring bus service could be running out of gas even before it reaches the floor of the City Council.
Both Council Chairman Ernie Martin and Budget Chairwoman Ann Kobayashi expressed grave reservations about the proposal that calls for a 5-cents-a-gallon increase to the existing 16.5 cents per gallon motorists now pay at the pump. Caldwell estimated the increase would give the city coffers an additional $15 million annually.
"It’ll be an uphill battle," Martin said Friday in response to the proposal. "I myself will personally not support it. I think (there are) ways to make up the cost which the mayor is proposing through the fuel tax (increase) by looking at further cuts within the operating budget."
The proposal to raise the city fuel tax was the most eye-raising part of a no-frills, $2.09 billion operating budget that Caldwell submitted to the Council on Friday. Caldwell’s first budget plan is also the first $2 billion-plus operating budget in the city’s history; it is roughly 6.5 percent higher than the budget approved by the Council last summer for the current 2013 fiscal year. The plan does not include any increases in property tax rates.
Caldwell also is proposing a $623 million construction budget for the coming year, much of it for wastewater facilities and other infrastructure projects.
"It’s not the most sexy thing to work on, but it’s the very reason I ran for the job and I’m committed to moving infrastructure projects forward," he said.
The fuel tax hike would be the first since 1989.
At a news conference, Caldwell said the additional money generated would go toward helping finance $150 million in planned road-paving projects around the island and restoring bus routes that were cut as a cost-curbing measure by former Mayor Peter Carlisle last year.
"Each of us who drives around this island complains every day on the potholes and uneven paving of our streets," Caldwell said. "It affects the quality of life in our city."
The American Petroleum Institute, in its latest monthly survey of gasoline taxes, reported that in January, Hawaii motorists paid the third most in combined federal, state and county fuel taxes behind only New York and California.
Two years ago the Council rejected Carlisle’s plan to increase the fuel tax by a penny, to 17.5 cents, but only after a series of debates.
Like Martin, Kobayashi said Friday she’s skeptical about the latest proposal by Caldwell. Repaving roads and restoring bus routes are important, but "I don’t know if the City Council would be supportive of raising taxes. We’ll have to discuss that."
Kobayashi said she believes Caldwell knows the Council is reluctant to raise taxes and likely has fallback sources of funding.
Kobayashi and Martin both also reiterated their skepticism that the city would be able to spend $153 million to repave and preserve roads, noting that even city engineers have said they cannot process and issue contracts that quickly.
Caldwell told reporters, however, that additional staff is being hired in both the Planning and Permitting and Budget departments to handle the additional projects and that contractors have assured him that they will be able to handle the extra workload. "We’re going to hold their feet to the fire."
Also on the revenue side, Caldwell is not proposing a hike in property tax rates. But the budget projects that property tax revenues will increase by $23 million due to an increase in property values. Property taxes make up about 42 percent of operating budget revenues and is its largest funding source.
The budget also anticipates a one-time infusion of $139 million from the closing of the sale of 12 city affordable-housing complexes under Carlisle’s Honolulu Affordable Housing Preservation Initiative. Much of the revenue is going toward paying for one-time improvements to the structures or providing a safety net for people who might be displaced as a result of the sale, Caldwell said, and therefore won’t affect future budgets.
The budget also projects $7 million in revenues from the elimination of an existing waiver for photovoltaic projects and $3.8 million in "modest" increases to other planned review fees.
Caldwell said most expenditure increases are the result of nondiscretionary, or fixed, costs. The largest category of expenses, nearly 20 percent, continues to be principal and interest on previous construction projects.
The second-largest commitment is to public safety expenses. Among the new items is $5.1 million in upgrades to the Police and Fire departments’ radios.
Restoration of the lost bus service is expected to cost $3.5 million. An additional $62 million is going toward "prefunding" employee health care and other benefit costs in order to keep future costs down.
Among the highlights of the capital improvements package:
» $226.1 million for solid waste and wastewater facility improvement projects, including $131.2 million for consent decree projects tied to previous lawsuits filed against the city.
» $17 million for construction of the Alapai Transportation Management Center.
» $6.5 million for Waikiki sidewalks, driveways and landscaping improvements, and $6.6 million for islandwide bridge rehabilitation.
» $11.8 million for various park improvements, primarily restrooms and replacement of aging playground and lighting equipment.
» $24 million to replace buses and Handi-Vans.
» $42 million for various public safety projects including a Kuakini fire station and flood control, ground stabilization, rockfall and slide mitigation.
» $3 million in improvements at Ala Moana Park, $1 million for Thomas Square, $1.5 million for Blaisdell Center and $500,000 for the Waikiki Shell.
