Mayor predicts end to tax dispute
But he is not certain about $5 million the state wants in order to collect the transit tax
Mayor Mufi Hannemann emerged from a meeting with state lawmakers at Honolulu Hale yesterday and predicted that their dispute over the transit tax collection will be resolved "pretty soon."
"I'm very confident we'll work something out," Hannemann said. "I expect to do it within the next few days."
But Hannemann also said he is not sure the solution lies with the city entering into a $5 million contract with the vendor tasked with upgrading the state Tax Department's computerized tax collection system, as is being proposed by Gov. Linda Lingle's administration.
"I'm still trying to figure out how's the best way to demonstrate our assistance to the state, and that's where we are right now. I've got to figure out how we can help the state get this done," Hannemann said.
The governor and the mayor have been in a verbal tug of war for months over the collection of the 0.5 percent excise tax increase for mass transit. The latest disagreement is over how to get funding to the state Tax Department to start collecting the tax on Jan. 1.
Two weeks ago the City Council voted down a $5 million guarantee of payment for the state's tax collection system.
Last week, the governor began meeting with City Council leaders and proposed the city enter into a $5 million contract with the computer vendor. In turn the state would repay the city with interest for any money expended over the contract.
Attending the meeting with the mayor were about 10 legislators, the City Council chairman and vice chairwoman, and a representative of the computer vendor. Senate President Robert Bunda and House Speaker Calvin Say did not attend, but the mayor said he has previously met with them or their representatives.
Hannemann said that what the governor is proposing now is "no different in theory" than the $5 million guarantee he proposed to the Council, except now the state has briefed Council members.
The City Council has scheduled a special meeting Thursday to vote on a measure supporting the Lingle plan.
The Legislature has set aside 10 percent of the tax increase to pay for the cost of collecting it, but instead of putting the money in the Tax Department budget, the Legislature put it into the general fund. Also, a bill that would have appropriated $6.1 million for the computer system died this past session.
Lingle argues that she cannot take the money out of the general fund without specific authorization from the Legislature.
Legislators, however, suspect that Lingle could try harder to find the money.
Sen. David Ige (D, Aiea-Pearl City), in a letter to the mayor after the meeting, said Lingle could have requested supplemental funding in the budget for the tax collection but did not. And, he said, the governor could still call a special session, which Lingle said she will not do.
"Some of us feel that the governor has been stonewalling because she is not one who supports a tax, especially in an election year," Sen. Will Espero (D, Ewa-Kapolei-Ewa Beach) said.
"For $5 million ... she could find the money. Give me a break," said Sen. Lorraine Inouye (D, Hilo-Waimea), Senate Transportation Committee chairwoman.