Finance committee recommends against proposed fuel tax cut

A move intended to relieve Big Islanders from the pain of extraordinarily high fuel prices at the pump seems like a good move — at least on the surface.

Resolution 363-22, introduced by Finance Committee Chairman Matt Kaneali’i-Kleinfelder, proposes to reduce the county fuel tax for on-road diesel and gasoline from 23 cents per gallon to 13 cents per gallon . Kaneali’i-Kleinfelder pitched the measure based on what he’s heard in the community and what’s happening around the world regarding fuel costs.

Motorists put gas in their vehicles in March at the Hele gas station on Kaumana Drive in Hilo. (Photo by Nathan Christopher)

“The island of Hawaii is unique. We are huge,” Kaneali’i-Kleinfelder said Tuesday, April 5, during a finance committee meeting. “Each island can fit into ours. Our residents drive further. We spend more on gasoline.

He added that Big Islanders commuting to work spend extraordinary amounts on gas and transportation. Many people also drive fairly large vehicles.

“You can just see it’s having a very harsh effect on our community,” Kaneali’i-Kleinfelder said.


And while a majority of the committee agreed with the intent of the resolution, many members questioned whether a decrease in county coffers, particularly funds that help maintain the 1,000 miles of roads and bridges around the island, was worth the relief at the pumps.


According to County Finance Director Deanna Sako, if approved, the measure would mean a decrease in county coffers of approximately $7.5 million based on the current year budget and 8, $3 million when reviewing the next fiscal year. The fuel tax is one of the county road fund’s three sources of revenue.

Funds generated by the tax are used for a variety of county needs, including highway and roadway maintenance and paving projects, bridge projects, providing matching dollars for federal funds awarded for roads and bridges, traffic lights, streetlights and even traffic enforcement operations from the Hawaii ‘i Police Department.

“It actually impacts a lot of our services,” county public works director Ikaika Rodenhurst said.


A majority of committee members agreed and expressed concern that removing more than $7 million from the county budget, regardless of intent, could jeopardize future projects. The county has hundreds of miles of dilapidated roads and bridges and withdrawing funds that could be used for maintenance and repair or even matching federal grants for the same purpose did not sit well with many members.

There was also some feeling that the burden of paying the fuel tax does not fall entirely on island residents. Sako reminded the committee that visitors also pay the tax at the pump.

Councilwoman Sue Lee Loy said while the measure would save people a few dollars at the pump, if the county’s roads are bad it will cost people more to fix problems with their vehicles, such as damaged shock absorbers or struts. She wondered if reducing the fuel tax would really bring relief.

“Or is it just a good kick in the arm?” asked Lee Loy.

Committee members also wondered where the county would make up the difference in lost revenue and worried that they wouldn’t have funds available in case of an emergency.

Kaneali’i-Kleinfelder suggested that lost funds could be compensated by additional funds generated from property taxes and the balance of the road fund. He also pointed out that it wouldn’t be a permanent fix, depending on how long the fuel tax cut lasts, but it would take about a year before the county would have to account for lost revenue.

He also reminded the committee that regardless of the wording not being in the measure, his proposal is intended for temporary relief and the board could revisit the matter at any time in the future.

Council chair Maile David said the idea behind the measure is great, that the council could do what it can to help communities on the island, but council members also have a responsibility to balance this with the impacts of the unknowns.

“That’s my biggest concern,” Lee Loy said, adding that she doesn’t want to have to scramble to find funds from somewhere else for emergencies or other purposes that might be covered by these. additional sources of revenue available to the county that would instead essentially be committed to covering the shortfall resulting from a lower fuel tax.

Councilor Ashley Kierkiewicz summed it up, agreeing there would be short-term relief, but council also needs to think about the long-term heartache that taking so much money out of the county budget could create.

“I just feel like there might be too many unintended consequences to taking a step like this,” Kierkiewicz said.

The committee members also thought it wise to ask the public’s opinion. A public hearing would be needed before further consideration of the measure at full council level, giving island residents a chance to intervene.

“I’d like to hear what people want,” Councilor Rebecca Villegas said.

Ultimately, the committee forwarded the resolution to the full board with an unfavorable recommendation. A public hearing on the measure will take place on Tuesday April 19 and the measure will be on the agenda for further consideration by Council at its meeting on Wednesday April 20.