Excise tax collection obligation in dispute
Hannemann and Lingle debate over funding responsibility
Gov. Linda Lingle said there is no way the state will be able to collect the 0.5 percent general excise tax for city mass transit, and it is now up to Mayor Mufi Hannemann to fix it.
"We can't collect it. We don't have the funding to do it. The Legislature didn't appropriate it, and we can't spend money that hasn't been appropriated," Lingle told reporters.
Hannemann fired back, saying that the law is clear that the state is the one to collect the tax beginning Jan. 1.
"It's very clear to me that she is going to break the law, because that's what the law says," Hannemann said. "If you're not going to collect the tax, you're breaking the law."
Last year, the state Legislature gave the city the authority to levy the new tax for city transit projects, but it also designated that the state should collect the tax. The new county surcharge would add one-half percent for Honolulu to the already 4 percent general excise tax being paid statewide.
Lingle tried unsuccessfully this past session to get the law changed so that the city would collect the tax. She has said that the mayor did not lobby the Legislature hard enough for the change.
Funding to assist the state Tax Department to prepare to collect the tax was nixed in the final days of the legislative session.
The governor and mayor have been sniping at each other for months now over the collection of the tax.
The new round of disagreements came about after the City Council rejected a request from the mayor to provide the state with a $5 million guarantee that the vendor hired to install the tax collection computer system would get paid.
Hannemann said it was suggested that the state Tax Department could use its budget allotments for the second half of the fiscal year as a guarantee that the computer vendor agreed to.
"Clearly, he needed to make sure the Legislature put this money in the budget, and when he didn't do that he needed to get it through his Council," Lingle said. "And the mayor was supposed to go forward and get that so the project could move forward, and he just wasn't able to get the votes and it's too bad."
The mayor said Lingle is "showing no leadership" by not making traffic relief for Leeward Oahu commuters a priority. Lingle could be identified with the former councilwoman who was the deciding vote derailing rail transit in 1992, he said.
"I think right now she's setting herself up to be the Rene Mansho of this new transit debate. I think that's what she's doing -- everyone is going to look to her as the reason why transit has failed this time around," Hannemann said.
Hannemann said he will be asking the state attorney general for the legal justification for the state not to collect the tax, and if the state does not collect the tax, the city could take the state to court.
"I think he probably lost his head for a minute when he said that," Lingle said. "It's become too much of a pattern with the mayor -- when he doesn't get what he wants, he tries to blame someone else."
Hannemann said state Tax Department employees have told the city that they can collect the tax without the additional funding.
Lingle said she would consider a request from legislative leaders to go back into a special session to fix the problem, but she will not call the Legislature back into session on her own.
"The Legislature did not appropriate the funding necessary to collect the tax, so the city is going to have to deal with that," she said.