Vehicle tax
hike stalls

Without the funds for police
pay raises, city officials warn
of cuts in jobs and services

A proposal to increase the vehicle weight tax to help fund police pay raises ran into a roadblock last night after the City Council delayed a vote on the hike.

City & County of Honolulu

The Council's 6-3 vote to send the tax bill back to committee means that the city won't be able to use the additional revenues from the tax increase to pay for $5.7 million in pay increases for the current fiscal year.

Officials said the tax increase must go into effect Jan. 1. Now, it appears that the city would have to wait until Jan. 1, 2005.

Without the extra revenue, the city administration says that it may have to make budget cuts that could mean hundreds of city employees being laid off to come up with the money to pay for the raises.

"When you're talking about $5 million, you're talking about shutting down departments," Managing Director Ben Lee said.

"It's going to be very disruptive. We're going to have to cut services that people are clamoring for. It's going to affect employees," said Councilman Gary Okino, who urged other councilmembers to approve the weight tax increase. "If we don't pass this out today, we're in trouble."

But Budget Chairwoman Ann Kobayashi said that instead of raising taxes, legislation is being drawn up to designate part of the $10.5 million from the recent sale of the city parking lot known as Block J to cover the police pay raises for the current fiscal year. But the administration says that money is already used in the budget.

Kobayashi said after the meeting that the tax increase wasn't a good idea.

"It's also sending a message to the administration that every time there's a problem we shouldn't hit the public with increasing this or increasing that constantly," Kobayashi said. "We have to put a stop to this."

Kobayashi joined Council members Romy Cachola, Charles Djou, Nestor Garcia, Ann Kobayashi, Rod Tam and Donovan Dela Cruz in voting to send the vehicle tax bill back to committee.

Okino and Council members Barbara Marshall and Mike Gabbard voted against delaying the final vote on the tax proposal.

The State of Hawaii Organization of Police Officers won an arbitrated award that will cost $67 million over the four-year contract. The city needs to pay for $5.7 million in raises this year and nearly $13 million next year.

Mayor Jeremy Harris proposed hiking the passenger vehicle weight tax to 2 cents a pound, a 0.75-cent increase. Under the proposal, a 4,000-pound car would cost an extra $30 a year. The proposal also calls for the commercial vehicle weight tax to climb to 2.5 cents a pound from 2 cents.

The proposed tax increase is expected to generate $6.5 million in revenue for the current fiscal year and $13 million for next fiscal year.

The proposal, which was slated for final Council approval yesterday, had come under increasing criticism from the ground transportation industry and the automobile dealers' association.

Yesterday's meeting was the last opportunity this year for the Council to approve an increase to the vehicle weight tax for the increase to take effect Jan. 1.

Last month, the Council unanimously passed a resolution supporting the pay increases.

"It's certainly puzzling as to why they would approve the pay raises and not provide the funding to pay for the raises," said Budget Director Ivan Lui-Kwan.

Lui-Kwan said that the only other option to raise revenue in the middle of the fiscal year would be to increase the fuel tax, but the administration decided against that because the Council indicated privately that it's not in favor of raising the gas tax.

He said that without additional revenues the administration may have to lay off an estimated 350 employees.

Lui-Kwan said the money from the Block J sale already is spoken for and designating it to pay for the raises will cause the city's budget to be unbalanced, and city services would still need to be cut to make up the difference.


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