SUBJECT: FUEL, Earmark Barrel Tax for Climate Impact Special Fund
BILL NUMBER: HB 1052; SB 1350 [GOV-04]
INTRODUCED BY: HB by SAIKI, SB by KOUCHI (Governor’s Package)
EXECUTIVE SUMMARY: Establishes the Climate Impact Special Fund, allocates five cents from the Environmental Response, Energy, and Food Security Tax to the Climate Impact Special Fund, and appropriates funds to the Hawaiʻi Climate Change Mitigation and Adaptation Commission to address impacts of climate change and to mitigate further impacts on the State through carbon sequestration and resiliency planning, allocates funds to the sea level rise voluntary relocation fund.
SYNOPSIS: Adds a new section to chapter 225P, HRS, to establish the climate impact special fund. Moneys in the fund may be used for: (1) The operations of the Hawaii climate change mitigation and adaptation commission; and (2) Activities carried out by the State to address the impact, mitigation, and adaptation of climate change, including but not limited to nature-based solutions; climate smart agriculture; vehicle miles traveled reduction; sea level rise modeling, mapping, planning, adaption, and mitigation; managed retreat; carbon sequestration technologies; electrification of homes, vehicles, and appliances; clean renewable energy technologies; climate change education and outreach; and other activities deemed appropriate by the commission.
Amends section 243-3.5, HRS, to earmark 5 cents per barrel from the barrel tax to go into the fund.
EFFECTIVE DATE: July 1, 2023.
STAFF COMMENTS: The barrel tax, HRS section 243-3.5, now imposes a tax of $1.05 on each barrel of petroleum product sold to an end user. It also imposes a tax on 19 cents per million BTU on a fossil fuel other than a petroleum product that is sold to an end user. It may be through inadvertence that the earmark only reaches barrel taxes on petroleum products and not on other fossil fuels.
The proposed measure would perpetuate the earmarking of barrel tax revenues. Climate impact mitigation activities may provide some benefit to the State. But does that justify grabbing a pot of barrel tax money without going through the normal budgeting process that also considers sweltering primary schools, underfunded state pensions, or disaster relief for rain-flooded or lava-burnt counties as well as the economic decimation wrought by COVID-19?
Rather than the continual earmarking of revenues, a direct appropriation of general funds would be preferable. Earmarking revenues from any tax type for a particular purpose decreases transparency and accountability.
Next, it should be remembered that revenues diverted for a special purpose, in this case to stuff in a special fund with a broad mission, will not be counted against the state’s spending ceiling or debt limit and will obscure the state’s true financial condition.