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Hawaiʻi County Council votes not to lower fuel tax

A gas pump nozzle gas station
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A gas pump nozzle is seen at a Miami gas station in 2018. Some activist shareholders are pushing companies to tie executive compensation to meeting climate targets.

Updated 5 p.m. May 4

At 23 cents a gallon, Hawai’i Island has one of the highest fuel tax rates in the state. With better-than-expected county revenues and gas prices averaging over $5 a gallon, Hawai’i County Councilmember Matt Kaneali'i-Kleinfelder began looking at ways to bring down the county’s fuel tax.

“Although some people say it’s manini, it’s not going to do a lot for people,” Kaneali'i-Kleinfelder, who represents Puna, said. “I think that's an understatement. I think the fuel tax decrease has an ability to touch everybody who fills up at the pump.”

Last month, Kaneali'i-Kleinfelder introduced a resolution to drop the tax from 23 cents a gallon to 13 cents for about a year.

But the resolution failed Wednesday morning. Following a lengthy discussion about the county’s road work plans, the county council voted 4-5 with one member excused.

Without a five-vote majority, the resolution could not pass.

Across the nation, municipalities in Georgia, Maryland and New York have made similar cuts, but the measure would come at a cost.

For the consumer at the pump, the savings would amount to one to two dollars for every fill-up.

Hawai’i County Finance Director Deanna Sako told the council that the 10-cent decrease over a year could cost the county $7.5 million in revenue, but that depends on the volume of gas purchased.

There are about 250 miles of roads throughout the island considered to be in poor condition, Department of Public Works Director Ikaika Rodenhurst said.

“This possible reduction of $7.5 million in our revenue budget there, for engineering, that could impact our bridge and roadway infrastructure projects and operations,” Rodenhurst said. He pointed to varying contracts, fund matching and emergency repairs as other items in the budget that could potentially be affected.

But the county has about $20 million in unexpended highway funds, Kaneali'i-Kleinfelder said before the vote.

“I hear the trade-off being if we lose the funding, we can't do the infrastructure, but reality is, we have the funding, we have the manpower,” he said. “We have a surplus that all points to not being able to utilize the revenue that we have.”

Each county enacts its own fuel tax rate on top of state rates. Depending on the island, rates range from 16 cents to 23 cents.

Kohala Councilmember Tim Richards voted against the fuel tax increase five years ago, but sees a greater benefit in having it around now to leverage matching funding.

“We have an opportunity before us to take care of some of the roads and it’s going to take that matching fund,” Richards said in April. “My concern is if we reduce the fuel tax, we will impact our ability to obligate the state, which I guess (also) our federal funding as well, thereby reducing our ability to maintain the roads.”

The finance committee recommended against cutting the tax in a 5-3 vote.

During a public hearing in April, public testimony was split, with some voicing their desire for roads to be put first.

But others, like Hawaiian Acres resident Shannon Matson, said the tax cut would provide a big relief.

“That amount is pretty small when you look at it at 10 cents per gallon, but I don't know anyone right now who isn't willing to drive a little bit farther to find that gas pump that might be 10 cents cheaper, or pay cash, if that's the way to get that 10 cent discount right now,” Matson said.

Sabrina Bodon is a general assignment reporter at Hawaiʻi Public Radio. Contact her at sbodon@hawaiipublicradio.org or 808-792-8252.
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