Big Island officials reject temporary tax hike

HILO, (AP) — Big Island officials have killed a measure that would have temporarily raised the general excise tax by 0.25 percent and plugged a $5 million budget hole.

The Hawaii County Council voted down the bill Tuesday and will instead make cuts to account for the budget shortfall.

The proposed tax hike would have expired in December 2020 and was a compromise following calls for a 0.50 percent tax increase.

Some council members rejected the measure because it was not the higher tax rate with a 2030 expiration date, West Hawaii Today reported.

“This was never intended to be some stopgap measure, which it has become,” Hilo Councilman Aaron Chung said.

County officials have attributed the $5 million shortfall to a loss of property tax revenues from the hundreds of homes destroyed by lava flows following the Kilauea volcano eruption.

The county Department of Finance has proposed suspending recycling programs and closing down some county facilities two days a week to cut expenses. Other cuts could come from council members’ contingency funds, unfunding vacant positions, reducing grants to nonprofits and suspending community programs.

“We’ll have to meet with each and every department again,” Finance Director Deanna Sako told the council. “To cut $5 million is not going to be easy.”

The county, as allowed by the state Legislature, can still pass a general excise tax surcharge if a new bill moves forward by early next year. If a future bill is passed, it wouldn’t go into effect until 2020 — too late to address the current budget shortfall.