Quit Hiding the Truth From Taxpayers

So you thought big brother was going to do something about bringing those gas prices more into line with what drivers are paying on the mainland.

Well, guess again! According to the budget document submitted by the state administration, the state highway fund will be nearly $70 million in the hole by the year 2003. This is even before some of the proposals to raid the highway fund were submitted by the administration. For example, under one bill, the administration is proposing taking the $2 per day rent-a-car tax away from the highway fund and putting it into the state general fund. In addition to stealing this source from the highway fund, it is also proposed that the fee be increased from $2 per day to $3 per day.

To add insult to injury the administration is also proposing a new tax on cars that would be based on the value of the automobile. It would be in addition to all the other taxes you are currently paying on your auto. But what is surprising is that instead of all of these revenues going to help keep the highway fund in the black, only a specific dollar amount – currently unspecified in the proposal – would be designated for the state highway fund. Some of the revenues would be given to the counties, but the larger portion of the residual would be plunked into the state general fund.

So what is the long and short of all this? There is a good possibility that the price of a gallon of gasoline will go up in the near future. How much? Well, based on the projected $70 million deficit for the year 2003, the state gas tax would have to rise by 23 cents per gallon if that deficit was to be made up all in one year. Hopefully lawmakers wouldn’t leave that decision to the day of reckoning. Spread over three years, that per gallon tax rate would have to rise by 8 cents per gallon.

At 8 cents a gallon more, the total state gas tax would stand at 24 cents per gallon – the highest in the nation. For drivers in Honolulu, the combined state and county levy would then be 40.5 cents, in Maui it would be 37 cents, Hawaii, 32.8 cents, and on Kauai it would be 34 cents a gallon.

Those numbers could go even higher if the legislature fails to act sooner rather than later. What is even more critical is that lawmakers need to stop the hemorrhaging now by resisting the temptation to raid the state highway fund to shore up the state general fund. Not only does that raiding of the highway fund steal from the highway user, but it also masks the real issue, that is, the state general fund needs to go on a diet.

This shell game of stealing from the highway fund to bail out the general fund is also hypocritical in light of all the rhetoric about the desire to improve the state’s economy. Given the critical role that transportation and more importantly energy plays in commerce and industry, any hike in the cost of transportation and energy will have a rippling effect throughout the economy. The cost of moving goods and services from one end of the island to the other will go up making Hawaii made products and services that much more expensive and that much less competitive on the world market.

So where did lawmakers err that such a huge deficit will materialize four years down the road? For one thing, lawmakers went along with the proposal to dip into the highway fund to the tune of more than $66 million over the past three years. Administration officials assured lawmakers that there was more than enough money in the state highway fund – at least for the next year. Little did lawmakers realize that taking money today will affect the long-term outlook of the fund.

So while it seemed like a good idea at the time and it did take off pressure to raise general fund taxes or in the alternative, to cut state general fund programs, in the long run lawmakers will have to pay the piper and drivers will have to pay more at the pump. So where is this all going to end up?

Instead of a lower tax burden and a more friendly tax and business climate, the heat is being turned up even hotter. Taxpayers need to draw the line in the sand, enough of these shenanigans! The only acceptable answer is that the spending belt needs to be tightened. If not, then Hawaii is in for some big problems.