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Don’t Turn An Eye To Problem Waiting For Highway Users

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By Lowell L. Kalapa
(Released on 5/23/10)

In the closing days of the session, lawmakers seemed frantic to get out of the state capitol building without injuring their chances for reelection by having to vote on any major increase in the taxpayers’ burden. After all, it is an election year and while voters may not have long memories, a tax increase is just a matter of tempting the devil.

While it is just a matter of conjecture, which is perhaps why the controversial civil unions bill was brought out for a vote in the closing hours of the session. It was not so much a matter of taking a stand on the issue as perhaps it was a means by which to deflect the attention of the public that lawmakers had indeed raised taxes, albeit through the back door. And some lawmakers will readily admit that they passed bills to raise additional revenues to close the billion-dollar budget shortfall, be it limiting the amount of itemized deductions high-income earners can claim in the next few years to reinstating the state inheritance tax. At least those lawmakers will be honest enough to admit they raised taxes. And those who will admit to raising taxes also understand the other side of the problem, that state spending has gotten out of hand to the point that they had no where to turn to find the money to cover those expenses.

One measure that flew under the radar at the end of the session would certainly have raised the ire of taxpayers as it represents a substantial tax increase. However, because lawmakers had already passed the newly increased “barrel tax” that is estimated will add another two and a half cents to the price of a gallon of gasoline, they quickly shelved the bill they had brought out as a leftover bill from the previous session. The problem is that this potential tax increase will not go away and more than likely will be back on the legislative agenda next year, like it or not.

The measure was entitled the Highway Modernization Act and was introduced during the 2009 session. The purpose clause of the measure outlined how the state’s roads have deteriorated over the years and that because of the poor conditions, highway users were ending up paying a high cost for the wear and tear on their vehicles. In order to “fix” the state’s roads, the bill noted that the highway fund’s resources will have to be enhanced, read more taxes.

As a result, the bill, as submitted by the administration in the 2009 session, would have increased the gasoline tax by ten cents per gallon, raised the vehicle weight tax by two cents per pound and added $20 to the annual vehicle registration fee bringing the total annual fee to $45 per vehicle. Some readers might say that this is not worth it and lawmakers should probably reject such a proposal should it reappear next year. The problem is that lawmakers and administrators have allowed the deterioration of the state highway fund to go on so long that such major increases in these taxes will be needed just to keep the highway fund from going into the red.

In fact, the administration’s supplemental budget proposal submitted at the beginning of this year’s session forecasts that the highway fund will be more than $90 million in the hole by fiscal year 2011. Both the administration and the legislature knew there were problems developing in the highway fund as much as four years ago, but obviously chose to do nothing about that situation. Had something been done some four years ago, the increases necessary in the highway fund resources may not have had to be as dramatic because the increased revenues would have been realized over a longer period of time.

Why lawmakers decided to put off dealing with this crisis is anyone’s guess, but the downside of their inaction is that taxpayers and highway users will be saddled with substantially increased costs of transportation as the cost of those taxes will be seen not only at the pump but in the grocery stores and department stores as all goods being transported over the state highways will be affected by the increased cost. Perhaps the politicians didn’t want to be tainted with the perception of having increased taxes, and in return pushed the problem off on someone else to be the bad guy. The problem with that is that taxpayers and voters got short-changed by these elected officials and will end up paying a very dear price for the solution.

So while lawmakers made themselves look important in addressing the budget shortfall or addressing the issue of civil unions, or chasing sustainability by imposing the higher “barrel tax,” they failed to address the bread and butter issue of insuring the viability of the state’s highway system.

Lowell L. Kalapa is the president of the Tax Foundation of Hawaii. Mr. Kalapa’s commentary is printed each week in the Maui News, West Hawaii Today, Garden Isle News, and the HawaiiReporter.com.


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