The House Transportation Committee on Wednesday indefinitely deferred a bill that would have increased taxes and fees on motor vehicles and fuel.
Rep. Henry Aquino, who chairs the committee, questioned the Department of Transportation’s request to raise $70 million in revenue in part to gain an extra $8 million in federal funding.
“We understand the concern that the department has,” he said. “But there is concern about the backlog and DOT’s management up until this point.”
Senate Bill 2938 cleared the Senate earlier this month in a 16-8 vote, with members voicing their concern about the tax increase’s disproportionate impact on the poor, and a lack of faith in the department to spend the money efficiently and in a timely fashion.
The agency has a massive backlog of projects that the administration is working to address. The department said in its written testimony that is has “spent down the pipeline” of available federal funds from a historic high of $940 million in 2010 to $584 million as of this month.
The department noted that if the funding issue is not resolved, projects to address congestion would be deferred, including the Farrington Highway turning lane extension, H-1 eastbound widening, Kahekili Highway widening and Kuhio Highway short-term improvements.
Sen. Jill Tokuda has said the funding was essential for addressing road conditions.
The bill would have effectively asked thousands of families in Hawaii to pay roughly $90 more per year so the state could raise an estimated $70 million annually to fix the highway system and leverage more federal funds.
Ed Sniffen, deputy director of the Highways Division, said after the hearing that he was disappointed the bill failed to pass, but that the conversation about the need to increase certain fees and taxes will continue.
He said preservation and safety are the department’s top concerns, and the lack of new state funding could delay plans to widen highways on the east side of Oahu and other projects.
Sniffen and DOT Director Ford Fuchigami appeared a bit caught off-guard when lawmakers questioned them during the hearing about why the department let a 1 cent gas tax increase lapse last year, which amounted to about $5.1 million annually.
Fuchigami said he simply wasn’t aware of the sunset clause for the tax.
The state currently charges a liquid fuel tax of 16 cents per gallon, which brought in about $86.6 million last fiscal year. The department wanted to increase it to 19 cents. Each cent is estimated to cost drivers $5.50 a year.
The department had also sought to increase the annual vehicle registration fee to $76.50 from $45, which was estimated to bring in an extra $35 million a year for the state.
The department had proposed raising the annual vehicle weight tax rates an extra cent per pound, with the exception of vehicle over 10,000 pounds which would pay an increased flat rate of $400, up from $300. That was expected to raise $25 million a year.
Individuals from the west side of Oahu told lawmakers that they cannot afford more taxes, and that the bill would have hurt Native Hawaiians who are already struggling to make ends meet.
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