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Council imposes 6-cent tax on biodiesel blends

Assessment will be first-time tax on biofuel industry

Vice Chairwoman Keani Rawlins-Fernandez is shown Friday during the Maui County Council discussion of the 2010 fiscal year budget. On Friday, the council spent about an hour tinkering with the biodisel blends tax rate, after Rawlins-Fernandez proposed to eliminate the biodiesel blend category and strike its tax. But Council Member Yuki Lei Sugimura said: “I cannot support zero tax.” -- The Maui News / MATTHEW THAYER photo

WAILUKU — With Council Chairwoman Kelly King abstaining from a vote because of her business ties to Pacific Biodiesel, the Maui County Council on Friday approved for the first time a 6-cent tax on biodiesel blends.

The new biodiesel rate was part of slate of fuel taxes that the full council approved Friday for fiscal year 2020, which starts July 1.

Normally the council would have to post the rates again after making changes on the floor, but the council waived its rules to allow a final vote on the rates Friday.

For gasoline and diesel oil, rates will remain the same at 23 cents per gallon, while biodiesel will stay at $0 and ethanol, methanol and liquefied petroleum gas at 11.5 cents per gallon.

The Economic Development and Budget Committee had initially sent a proposal to the full council to keep the rates the same, but later added the biodiesel blends category with a 11.5 cent tax. Biodiesel blends include a mix of biodiesel and petroleum diesel.

On Friday, the council spent about an hour tinkering with the biodisel blends tax rate, after Vice Chairwoman Keani Rawlins-Fernandez proposed to eliminate the biodiesel blend category and strike its tax.

“I believe we should continue to allow our biodiesel industry to grow and not single them (out) before they even had an opportunity to even get anywhere, more than where they are right now, and so for that reason, I believe in all the good work the biodiesel industry does in remove the grease from the landfill, preventing it from going into the ocean and into the groundwater,” she said.

But Council Member Yuki Lei Sugimura said: “I cannot support zero tax. If you are George Jetson and don’t use the roads, zero tax would be appropriate.”

She noted a letter from Maui Disposal, a company that uses biofuel blends and agreed that biodiesel blends could be taxed now that electric and hybrid vehicles are also being taxed.

“I do believe we need to support the environment, we support science and everything else,” Sugimura said. “This is a tax to be used on roads for the users.”

She later added that an overall biodiesel tax was vetted over several years, with council members voting not to tax the industry to allow it to flourish, but deciding to make last year the final year of zero tax on the industry.

After Rawlins-Fernandez’s motion to eliminate the biodiesel blend tax failed, other motions were raised, including possibly setting the tax rate a 3 cents and even 10 cents per gallon. All failed.

Member Tamara Paltin asked King, who is the founder of Pacific Biodiesel along with her husband Bob, how much fat, oil and grease is diverted from the landfill due to their service of using the products for biodiesel.

King said that none of those items are left behind, with the company using the waste.

Council Member Alice Lee said she spoke to a representative of Pacific Biodiesel who said that the company may not collect the grease items anymore.

“I just wanted to bring it up,” Lee said. “People are trying to help you and not realize you may not even have the service anymore. That’s all I’m saying.”

King said they may no longer collect with their own trucks but obtain it from other truckers. The grease wastes are separated on Maui, then shipped off to Hawaii island, as Maui County said it cannot process it at the county landfill, King said.

Rawlins-Fernandez clarified that “my effort in amending the biodiesel blend tax is not to help any specific entity, it’s to help the industry, which helps the environment; therefore we are all connected.”

“I want to make it clear I’m not personally trying to help any entity; it’s the aina I try to be a champion for,” Rawlins-Fernandez said.

She was reluctant to tax the industry 6 cents, saying she didn’t know what the impact would be, but in the “spirit of collaboration” would support the compromise.

Using information from county Budget Director Michele Yoshimura, council members determined that the county will get less than $45,000 from the biodiesel blends fuel tax.

King later said that revenues would probably go down further as those who produce biodiesel blends (which she told The Maui News includes her company) have said that use of pumps will go down and possibly be closed with a new tax.

* Melissa Tanji can be reached at mtanji@mauinews.com.