Proposed Decrease to Fuel Tax Fails

There will be no relief from high gas prices for residents and visitors of the Big Island after the Hawai‘i County Council during its meeting Wednesday, May 4, rejected a proposed decrease to the county’s fuel tax.

Council members voted 4-4, with Councilwoman Ashley Kierkiewicz absent, on Resolution 363.22, which would have cut the county’s tax of 23 cents per gallon for on-highway diesel and gasoline by 10 cents. The measure, proposed by Councilman Matt Kaneali‘i-Kleinfelder, needed at least five affirmative votes to be adopted.

Since the conversation about the resolution began, the Council has heard from the public and county administration and had extensive discussion about the benefits and downfalls of its possible adoption. The measure was even postponed during the Council’s last meeting in April to give Kaneali‘i-Kleinfelder some time to address concerns raised by his fellow members.

On one side, a decrease would offer some relief at the gas pump, where prices have remained at $5 or more per gallon for the past month or so, and put money back in the pockets of island residents and visitors that they could use elsewhere. Kaneali‘i-Kleinfelder said during the meeting Wednesday that the proposed decrease was a way for the Council to help everybody on the island.

On the other side, a cut to the fuel tax would result in a loss of revenue that could be used for maintenance and improvements to hundreds of miles or poor and deteriorating roadways and bridges around the island.

County Department of Public Works Director Ikaika Rodenhurst said during Wednesday’s meeting that his department has been in discussions with the state Department of Transportation in regard to funding that should come to the county this year in connection with four projects already submitted to the DOT. Two are large projects, including work on Waikoloa Road that is estimated to cost a total of $50 million. The county’s total match for all four projects would be about $12 million.

Rodenhurst admitted that the product provided by DPW in the past is part of why the county is where it is when it comes to poor roadways, but he and his staff want to get better — they just need to catch up. But no matter what decision the Council made, DPW would adjust.

While council members understood and appreciated the sentiment behind the measure, several continued to have concerns Wednesday that a loss in revenue, despite having a surplus of about $20 million in the county’s highway fund and additional funds being generated by real property taxes, could jeopardize the county’s ability to not only move forward with road and bridge improvement and maintenance projects but also secure necessary matching funds for state and federal dollars.

Rodenhurst said that because of reduced operations during the COVID pandemic, Public Works wasn’t able to fully capitalize on those excess funds. However, that is changing. He said the department is looking at how it can improve efficiency and production to better meet the needs of the island’s roadways and bridges, because everyday those needs aren’t met, they continue to deteriorate.

“There just becomes a point in my head where we gotta look at that and say, look, for what it is, we have excess funding; if we can’t spend down the funds, can we provide relief to the residents of Hawai’i County?” Kaneali‘i-Kleinfelder asked county Finance Director Deanna Sako on Wednesday.

“Yes, we have excess funds. Yes, we have choices on how we spend those funds, and I still have concerns about the impact on our federal funding,” Sako replied.

There also was concern expressed by some of the Council and administration that a loss of funds could hinder response in the event of emergencies such as a landslide. Some council members also wanted to make sure a tax rate change wouldn’t affect funds the county already received, such as federal COVID relief and American Rescue Plan dollars.

Several members previously also did not like that there was no sunset date included in the original proposal. Kaneali‘i-Kleinfelder proposed an amendment to the resolution Wednesday that placed a March 1, 2023, end date on the suggested tax reduction in an effort to address that concern.

The amendment, which was approved by the Council before it voted on the resolution itself, changed the time frame for the proposed decrease to about eight months, since it wouldn’t go into effect until July 1 of this year, lessening the fiscal impact on the county. County Finance Director Deanna Sako originally estimated, based on this year’s budget, that a 10 cent per gallon cut would amount to a loss of about $7.5 million for one year. An eight-month period would shrink that estimated loss to between $5 million and $6 million.

“I’m really trying to find a good balance between ensuring our roads are taken care of and that our residents are taken care of,” Kaneali‘i-Kleinfelder said during discussion about the amendment.

But the sunset amendment — and additional testimony from three community members in favor of the resolution prior to the Council’s discussion Wednesday — still wasn’t enough for the proposed fuel tax decrease to gain approval.

“This is the time to provide the matches, work our capacity issues and then contract work so that we can start improving our roads,” said Councilwoman Sue Lee Loy. “I like the sunset, it’s just not gonna have the impact I think we’re trying to provide.”

Councilman Tim Richards said the county has a lot of roads to fix.

“This county has a thousand miles of road that we are supposed to maintain, and when we took office six years ago now, five and a half years ago, I think the cycle was once every 65 years of paving everything, which is not reasonable,” Richards said. “We have to step it up.”

He thinks it is short-sighted of the Council to try to save a few dollars now and not repair the roads that desperately need it now. The state has been successful at capturing federal funding for shovel-ready projects, and the county needs to be sure it’s projects are at that point as well.

Richards said he doesn’t want to miss the window to get some of those funds by not having matching dollars.

“We need the funding to go after this. If we don’t capitalize on that now, when there is funding for infrastructure, I think we’re being exceedingly short-sighted,” he said.

“I know that everybody’s hurting in their pocketbook,” Kimball said. “However, I’m literally thinking right now about all the rain we’re getting over on the east side and I’m questioning, OK, where are we gonna have the landslide? Where are we gonna have the culvert that needs to be repaired? Which bridge is gonna go down next? What community’s gonna be shut off?”

And thinking about how poor roadways can impact people’s pocketbooks, she said the roads in her district are just that bad.

“They’re damaging people’s cars. I get calls all the time — come pave this, come pave that. And you know, we can’t do it,” Kimball said. “We just can’t do it.”

She’s sensitive to the how higher fuel prices are affecting people, but said there are costs to not doing this work, too.

“It’s costs to public health and safety, it’s bigger cost to the pocketbooks for maintaining vehicles,” Kimball said. “Again, I appreciate where this is coming from, but I just can’t support it based on the feedback from the people of my district.”