New taxes proposed to fix Hawaii roads

Pacific Business News (Honolulu)
Thursday, January 22, 2009

by Randi Petrello

Gov. Linda Lingle and legislative leaders unveiled an ambitious, six-year plan to upgrade Hawaii's roads by increasing fuel taxes, registration fees and rental-car surcharges that would cost the average resident $170 more per year.

The $4.2 billion plan would pay for 183 projects across the state, relying mainly on new taxes that would start in mid-2011.

Officials said the new taxes would generate $2 billion over six years and would be added to the current $1.5 billion highway budget and $500 million in the proposed Federal Economic Stimulus Bill.

State officials said that due to the sluggish economy, the proposed increases would only take effect if Hawaii experiences 1 percent job growth over two consecutive quarters.

Under proposed legislation, the state fuel tax, which is currently 17 cents per gallon, would increase to 27 cents per gallon, generating annual revenue of approximately $51 million. Vehicle weight taxes would increase to 2 and 3/4 of a cent per pound, generating about $68 million in annual revenue. Motor vehicle registration fees would be increased from $25 per year to $45 per year, adding $23.3 million in revenue.

The rental vehicle surcharge tax would rise from $3 per day to $5 per day, adding $32 million more a year.

The average taxpayer would pay $170 more per year, officials said, but that would be offset by the upgraded and expanded highways, which would theoretically save drivers time in traffic.

"The initial investment will bring taxpayers long-term savings," said Department of Transportation director Brennon Morioka in a statement. "Under current conditions, every 10 minutes of traffic delays on our highways costs each driver roughly $600 per year, and for commercial vehicles, these costs are magnified to $3,300 per year. Modernizing our highway system will minimize environmental impacts. It will also reduce stress created by sitting in traffic. This plan is meant to improve safety on our highways as well as enhance the overall quality of life by easing traffic congestion which will save motorists time and money."

The plan was announced by Lingle, Senate Transportation Chair Kalani English, House Transportation Chair Joe Souki and Morioka.

The plan consists of 161 projects in the four counties: 76 projects on Oahu, totaling $1.9 billion; 36 projects for Maui County, totaling $578 million; 27 projects on the Big Island, at $524 million; and 22 projects on Kauai, totaling $263 million, as well as 22 statewide projects totaling $968 million.

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Original article URL: http://www.bizjournals.com/pacific/stories/2009/01/19/daily45.html

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