A bill to drastically raise the state tax on a barrel of oil dribbled out of the Legislature yesterday, but faces an uncertain future.

House Bill 2421 would increase the tax from 5 cents to $1.05, which is estimated to cost motorists an extra 2.5 cents a gallon when it goes into effect in July.

The Senate voted for the bill 18-7 and the House 40-11. Both totals are enough to override a veto by the governor, but lawmakers fear that there could be more negative votes in the future because the Legislature would be forced to vote again to raise consumer prices in an election year.

A similar measure was vetoed by Gov. Linda Lingle last year, and the Legislature did not have enough votes to override her.

“;This falls disproportionately on the neighbor islands, where people have to travel great distances,”; said Sen. Roz Baker (D, Honokohau-Makena).

“;And yes, it will also impact the cost of food,”; Baker said, adding that the measure is also estimated to raise local energy costs.

Senate Democrats said the tax is expected to raise residential electric bills $9.49 a year and add $2.40 for every 2,000 miles driven.

The barrel tax bill was originally written to fund environmental, agricultural and alternative energy programs, but as the state's budget deficit grew, 60 percent of the money was diverted to the state general fund to pay bills.

  State lawmakers pass tax increase bills

 

The legislature approved a big increase in taxes on oil products.

 

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The bill is expected to dump about $13 million into the general fund, with the remaining $8 million going into energy and agriculture programs.

Baker and other senators have said they would prefer an increase in the general excise tax to balance the state budget, but Sen. Donna Mercado Kim, Ways and Means Committee chairwoman, said the GET increase is not possible.

“;There is no way it can come back. There is no vehicle,”; Kim said, explaining that the Legislature does not have a bill it could amend to include a GET increase. “;The House is not for it. There are some members with the idea that if some measures fall by the wayside, they will get the GET. It is not going to happen.”;

The bill now goes to Lingle. The House and Senate would each need a two-thirds majority to override a veto.

The Legislature also raised the tax on cigarettes 1 cent per cigarette by approving House Bill 1985. A previously approved tax raised it another cent, a total 40-cent per pack increase over two years.

The Legislature also pulled back two tax bills: Senate Bill 2402, which would have raised $25 million by dropping the tax exemption on some businesses and organizations, and SB 2001, which would have raised $115 million by delaying high-tech tax credits.

Kim and Rep. Marcus Oshiro, House Finance Committee chairman, said they are not sure if those bills will be brought back or amended again.

It is unusual for a bill to be agreed to in conference committee, scheduled for a vote and then pulled back.

“;At the end of the day, if we have less, we will have to go into the budget and make more cuts,”; Kim warned.

Lawmakers approved SB 2650 to halt some of the planned closings of state welfare offices. The Lingle administration had planned to close 31 statewide offices and lay off 228 state workers.

The Human Services Department said it would save $8 million and streamline benefits processing into two new call centers in Honolulu and Hilo. Legislators rejected the idea, saying that the needy would lose in-person access to services.