Maui Mayor Mike Victorino has asked House and Senate leaders to extend the deadline for Maui County to implement an excise tax surcharge of up to 0.5% to match similar surcharges imposed by other Hawaii counties.
The request by Victorino was part of a package of proposals submitted by the counties to legislative leaders on the eve of the 2020 legislative session, which got underway last week.
The state’s 4% excise tax is levied on virtually all goods and services sold in Hawaii, which makes it a lucrative source of tax revenue. The Legislature in 2005 authorized Honolulu to impose a 0.5% excise tax surcharge to fund the city’s rail project and also offered the neighbor island counties opportunities to impose their own excise surcharges to finance transportation projects.
Honolulu imposed the surcharge in 2007, followed by Kauai and Hawaii counties. But Maui never did, failing to adopt a surcharge by the March 31, 2019, deadline. If lawmakers agree to extend the deadline and Maui imposes the excise tax surcharge, it would add 5 cents to a $10 consumer purchase, for example.
The resulting additional revenue would “benefit Maui County’s Long-Range Transportation plans for land transportation improvements, including roadways, bridges and land acquisition as well as Maui’s public bus system,” Victorino’s office said in an email to the Honolulu Star-Advertiser. “The funds also will pay for maintenance and repairs to bridges, roadways and applicable road infrastructures on Molokai, Lanai and in East Maui.”
The county administration’s other priorities to the Legislature include:
>> Central Maui middle school. Funding for plans and designs for a new middle school in Central Maui. Kahului and Wailuku have seen major residential development in recent decades, with more to come, and the two public middle schools currently serving the area each has enrollments of roughly 1,000 students.
>> Axis deer. Support for management of axis deer, an invasive species. Concerns include vehicle accidents, property damage, disease, crop damage and threats to native species and ecosystems.
>> Historic preservation. A management audit of the Department of Land and Natural Resources’ State Historic Preservation Division, especially its handling of iwi kupuna and burial sites. Victorino’s office said the SHPD has had no new administrative rules for 23 years.
>> Low-income housing. Additional funding for a variety of programs to increase the inventory of housing for “very low-income” residents. These include the state’s Housing First program for homeless residents and the Assisted Community Treatment Act, which helps homeless people with severe mental illness and other chronically homeless people who cycle in and out of hospitals and jails.
>> Vacation rentals. Passage of a bill authorizing counties to regulate transient accommodation-hosting platforms such as Airbnb and Vrbo as a business practice and requiring the state Department of Taxation to collect information that identifies the physical location of transient accommodations.
>> Honoapiilani Highway. Funding for a strategic plan to consider the impacts of sea level rise and coastal erosion along portions of Honoapiilani Highway in West Maui, especially from Olowalu to Ukumehame, where high surf has been known to wash over the roadway.
HAWAII COUNTY NEEDS
Hawaii County Mayor Harry Kim has asked state lawmakers to provide an excise tax exemption for medical services performed in group and private practices as a way to lighten the tax burden on doctors and help ease the physician shortage, which is particularly severe in Hawaii County.
Kim is also asking for greater flexibility in the use of the excise tax surcharge funding, which totals about $50 million a year for the island.
Currently, state law allows the counties to spend that money only on transportation projects, but Kim is seeking authority to use at least some of that tax revenue to help pay for costs such as public employee pensions and retirement health care, health insurance for county workers and disaster recovery.
Hawaii County Council Chairman Aaron Chung said he urged state lawmakers at a recent meeting to consider establishing a new network of publicly funded inpatient care facilities on the neighbor islands for the mentally ill.
“Much of the homeless population has mental health issues, and we need to provide them with the help that they deserve,” Chung said. There are no long-term inpatient facilities on the island now, he added.
Chung also is hoping lawmakers will earmark money for a site study to relocate the Hawaii Community Correctional Center. The jail is in the middle of a dense residential neighborhood and just down the street from Hilo Intermediate and Hilo High schools.
The state Department of Public Safety this year sought $3 million for a site development study to move the Hilo jail, but that request was not included in Gov. David Ige’s proposed budget for next year.
KAUAI’S TVR CONCERNS
One of the issues Kauai Mayor Derek Kawakami would like the Legislature to consider is returning residential areas “to the intended purpose of actually housing residents, by eliminating nonconforming uses over a reasonable period of time.”
The Garden Isle was required to offer nonconforming use permits to transient vacation rentals when it clamped down on TVRs, Kawakami’s office said. The result turned some residential areas into “de facto hotel zones.”
Kawakami wants to eliminate nonconforming uses but is barred from doing so by state laws except in areas zoned for commercial, industrial, resort or apartment use. A proposed bill would authorize the amortization and elimination of nonconforming uses within residentially zoned areas and would place zoning authority back under county control.
The Kauai mayor also supports a bill intended to make it easier to obtain a composting permit and meet permit requirements. Kawakami’s office said composting permits are difficult to obtain and expensive to comply with, which affects Kauai’s “landfill crisis.” A bill would modify state Health Department rules to allow a tiered regulatory structure, similar to what other states have, that makes it easier for small composters to obtain a permit under certain conditions.
Kauai County also wants a study and design plans for DLNR to dredge the Waimea River and for regular maintenance of the river mouth. Also needed, Kawakami said, is a structural engineering review and upgrade to Kilauea Gym on the island’s north shore, which can be used as a helicopter landing zone and for disaster relief operations.