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Quagmire of Fees Versus Taxes Confronts Policymakers

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By Lowell L. Kalapa

As revenues shrink both at the state and county level, the debate over how to cover the shortfall shifts the debate to the quarrel over whether lawmakers should raise taxes or impose new or increased fees.
Many argue that services unique to the beneficiary should be paid for with fees imposed on the beneficiary of that specific service. For example, charging a fee for a camping permit where only the specific fee payer will benefit from the enjoyment of camping in one of the state or county parks seems appropriate.
In the case of a car registration fee, the fee can be rationalized as an entrance fee for the privilege of entering one’s vehicles onto a state or county road. Fees to access the exclusive right to use a public facility is another example of an appropriate service for which a fee may be assessed the beneficiary.
One the other hand, there are fees assessed which challenge the common sense when it comes to the purpose of providing government services. For example, the Honolulu City administration is proposing that a fee be charged for garbage collection. While the idea of curbside garbage collection may seem foreign on the Neighbor Islands where the population is sparse and far between, curbside garbage collection in a city of Honolulu’s size is almost basic.
The counties were given the responsibility of public safety – police and fire protection – and health and sanitation – picking up garbage and flushing toilets. These are what is known as core services of the county government. It is what county government is all about. These are the services that the counties are expected to pay for out of general revenues.
Thus, it came as no surprise when Honolulu council members spurned the idea of charging residents $8 a month to collect their garbage. The administration had proposed the fee as an alternative to raising residential real property taxes more than its originally proposed ten cents. That increase, along with a hike in the tax rate on non-residential properties, would generate more than $427 million in the coming fiscal year.
Now one would assume that Honolulu county officials could shuffle the deck so that core functions like police and fire protection and garbage collection and sewer activities could be paid out of the real property tax because these are the basic duties or core functions of the county.
At the state level, pending the governor’s approval is a measure that would allow the imposition of a $20 annual fee for textbooks in the schools. While the fee might be viewed as a way to instill respect for textbooks, it can also be seen as another way lawmakers have abdicated their responsibility to provide for public education.
Did it ever cross their minds that there are a lot of kids whose parents just can’t come up with an extra $20 to rent those textbooks? So what happened to the mandate that every child has access to education? Or have state lawmakers decided that education is not a core function of state government?
The conundrum that public policy makers are faced with is the inability to set priorities for state and local tax dollars. Faced with the political consequences associated with a tax increase, elected officials figure that imposing a fee will avoid that tax increase sword while helping to pay for everything on their plate.
What elected officials seem to overlook in their quest for office is that they are charged with setting priorities for the limited resources we, as taxpayers, have given them. Instead, they strive to keep everyone happy by funding every project and program they believe their constituents want. Not once does it seem that they realize that when push comes to shove and taxpayers must make a choice between higher taxes and doing without the frosting, the choice will be to do without the frosting.
Taxes are intended to pay for the core services that we established government to provide. That means paying for the public education for our children, keeping the streets safe for use, flushing the toilets and picking up the garbage. When elected officials resort to charging fees for these core services, taxpayers can be sure that those officials no longer understand what government is all about.
Fees and charges are valid only when there is no other beneficiary for the specific service or program. Paying for those programs out of general taxes is nothing but a subsidy for those specific services. On the other hand, charging fees for services that benefit the entire community is nothing more than hiding the fact that a tax increase was necessary but elected officials didn’t have the courage to tell taxpayers the increase was necessary.

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