Mayors all hope
for more money

The various hopes range from
exempting counties from excise tax
to asking for greater flexibility

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By Gordon Y.K. Pang
Star-Bulletin

AYOR Jeremy Harris and other county mayors today pleaded with the state Legislature's money committees to exempt the counties from paying excise tax on their purchases.

Every time the city makes a purchase, be it a pen or a bulldozer, it pays the same 4 percent excise tax everyone else pays to the state.

At the same time, the state is exempt from paying the City and County of Honolulu and the three other counties property taxes on schools, airports, harbors and other state government parcels.

"We pay exorbitant taxes to the state and don't get any back," Harris told the House Finance Committee today.

Harris said securing more funding sources is critical as the city tries to meet a $130 million budget shortfall for the next fiscal year.

Neighbor island mayors also appeared, saying their budgets are hurting because of a loss of revenues from the transient accommodations tax, or hotel room tax.

Part of Honolulu's shortfall involves a projected $6 million reduction in the city's share of the hotel room tax due to lower tourism. That reduction would be on top of a drop this fiscal year, when the city's share went from $45 million to $37 million because of a change in the formula the state uses to divide the proceeds, Harris said.

Property tax revenues, the city's major source of funding, meanwhile has dropped $67 million to levels last seen five years ago.

"Every major city in the country has its own taxing authority," Harris said. "When all we have are property taxes, it really limits the ability to spread our costs."

Harris said persuading legislators to exempt the counties from paying excise tax is his No. 1 priority for the legislative session that opens tomorrow.

The city could net between $26 million and $28 million in savings if such an exemption were granted, said Harris and Honolulu City Council Chairman Mufi Hannemann.

Hannemann said if legislators are unwilling to grant the exemption, they should consider allowing the city to tax some or all state properties. The state exempts itself from paying property tax to the counties.

Waiving an exemption on all properties could bring in as much as $58 million for the city, Hannemann estimated.

"I think this makes the point that if we're going to be charged excise tax, then they should reciprocate and pay our taxes," the mayor said.

Harris also will lobby for giving the city a share of uncontested fines and forfeitures that the state receives in traffic and parking violations.

"If it's just a city ticket written for a city violation, he (the offender) ought to write that check for the city," Harris said.

Harris figures such fees would amount to about $5 million annually for the city.

The mayor also wants the Legislature to give the counties a share of the state public services tax. Utilities pay the public services tax in lieu of paying state excise and city property taxes.

The counties, however, don't get any of it, Harris said. "We ought to get that portion of the state property tax that they're not paying," he said.

Receiving those proceeds would add about $18 million to the city budget, Harris said.

Hannemann and Harris also want the city to get a share of the recently announced settlement from the nation's tobacco companies for $1.1 billion over 25 years.

MAUI: Maui Mayor James "Kimo" Apana wants state lawmakers to give his county the same share of the transient accommodation tax it received last fiscal year: $22.8 million.

Under a new formula passed by the Legislature, that amount would drop to an estimated $20.8 million in fiscal 1999, then to $15.5 million in fiscal 2000.

The money is needed to increase the police force and other public services, including park maintenance, Apana said.

In his budget request to state lawmakers scheduled today, Apana asked for the state to provide an emergency aeromedical system, enabling helicopters to transport patients to Oahu hospitals from Maui, Kauai and Big Island hospitals.

BIG ISLAND: Hawaii County plans a budget of $170 million for fiscal 1999-2000, but expects $2.5 million less than that, said Marcia Reynolds, aide to Mayor Stephen Yamashiro.

Rather than asking for a specific amount to cover the shortfall, Yamashiro will simply ask for "flexibility" in dealing with the problem, Reynolds said.

That flexibility alludes to greater authority to privatize services currently done by government, Yamashiro suggested in written testimony to lawmakers.

Yamashiro's proposed $170 million budget is 5 percent smaller than that of the preceding year, Reynolds said.

Real property taxes, the largest single source of county revenue, are expected to drop about $2.1 million, Reynolds said, from $83 million to $80.9 million.

An even bigger loss will be the cut in the county's share of the state hotel room tax, dropping 30 percent from $18.6 million last year to an expected $13.1 million next year, she said.

KAUAI: Mayor Maryanne Kusaka says her county is approaching a threshold where cutting personnel will affect services and needs the state to return hotel room tax revenues to 1998 levels.

Under a new formula developed by the Legislature, the revenues will be reduced to an estimated $10 million by fiscal year 2000. In fiscal 1998, it was $14.5 million.

The county also expects lower property tax revenues.

She said if state lawmakers refuse to return the transient accommodation tax to 1998 levels, perhaps they should consider exempting the county government from paying general excise taxes.

Kusaka said another alternative is for the state to look at allowing the counties to receive a portion of the general excise tax revenues and raising it by 1 percent to benefit the county.

Kusaka said Kauai County provides services to the state, including the use of parks and stadium for state high school competitions. She said without adequate state funding, the county may have to consider charging the state a fee.

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Maui correspondent Gary T. Kubota and Big Island correspondent Rod Thompson contributed to this report.

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Harris looks for
fireworks compromise

By Gordon Y.K. Pang
Star-Bulletin

Honolulu Mayor Jeremy Harris said he supports returning authority over fireworks to the counties but is reluctant to support a ban.

Instead, a bill restricting fireworks to certain areas might be the way to go, Harris said.

"I'm looking at some kind of compromise that will set up an area or areas on the island, away from residences, where fireworks could occur," the mayor said.

Whether such a plan would allow the public to set off fireworks, or simply limit such activity to specially permitted commercial and government entities is not clear.

No details could be provided because the plan is still being worked out among his staff, Harris said. "Until I figure it out, I'm not going to forward the proposal," he said.

"I don't prefer a total ban. It's obvious we have to do something different from what we're doing -- subjecting people to unacceptable levels of pollution and a health threat," he said. "(But) I'm convinced we can sit down and work out some kind of reasonable compromise."

Last week, the City Council's Executive Matters Committee moved a resolution urging the state Legislature to either support a statewide ban, Oahu-only ban or return jurisdiction to the counties.

The Legislature took away the counties' authority over fireworks in 1995. Honolulu Council members say fireworks-related incidents have increased since then.

"I think the Legislature was wrong in taking authority away from the counties," Harris said. "It's not an issue of statewide concern."

Council Chairman Mufi Hannemann said most of his colleagues want regulating authority so something can be done, but there does not appear to be majority support for an outright ban.

Personally, Hannemann said, he favors allowing exceptions, such as special observances or occasions.

And while cultural or religious observances might enter that mix, the law has to be within reason, he said.

"You can't convince me that aerials are part of a religious or cultural observance," he said.

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