County zaps Helco
in tax fight

By Craig Gima
Star-Bulletin

It's about money, land and power.

Money meaning taxes. Land and power because electric utilities do not pay property taxes to counties.

Big Island Mayor Stephen Yamashiro says that's about to change. Hawaii County will be mailing bills to Hawaii Electric Light Co. next week for about $2 million in property taxes.

The idea is not to impose a new tax on utilities, but to get the state to give the counties a share of the public service company tax, Yamashiro said. The public service company tax is supposed to be paid in lieu of the general excise tax and property taxes. But the state keeps all of the money.

"We're just saying you guys (Helco) are paying it, you're just paying it to the wrong guy," Yamashiro said.

The tax is assessed based on electric power sales. Yamashiro believes the state should give the counties all the money raised above the 4 percent general excise tax. Statewide that works out to about $32 million of the $100 million collected from utilities, according to the Tax Department.

Once the bills go out, Yamashiro expects Helco to either sue the county or join the county in a lawsuit against the state. He hopes the money in dispute will be paid and put into a court-ordered account until the lawsuit is settled.

Helco President Warren Lee said his company doesn't want to be caught in the middle of a battle between the state and the county.

"My main concern is it is not another levy on our ratepayers. If it's an issue of whether the county or the state should be getting it, that's a county and state issue," Lee said. He added that any increase in taxes could mean higher electric bills for consumers.

Yamashiro's action is being watched by other counties, which are also struggling to balance budgets amid declining property tax revenues and a cut in the counties' share of the hotel room tax.

Counties and the state have been battling over the public service company tax for years along with other taxes collected and kept by the state.

Sen. Jonathan Chun (D, Lihue), a former deputy county attorney, said the law is unclear about the counties' right to impose property taxes on utilities - but "the legal arguments are there."

Chun said the only measures still alive to give state revenues to counties are a bill to reimburse counties for the excise tax paid on goods and services, and a hike in the highway beautification fee.