Transportation businesses say they were staggered by the amount of the tax and fee increases proposed by state officials to pay for a $4.2 billion plan to rebuild and expand Hawaii’s highways.
While state officials say the average Hawaii driver will pay $170 more a year under the plan, businesses that use buses or heavy trucks will pay significantly more to register and refuel their vehicles.
Under the proposed legislation, the state fuel tax will increase nearly 60 percent, motor vehicle registration fees will rise by 80 percent and the vehicle weight tax will more than triple.
Raising the weight tax alone will increase the fee for a heavy vehicle from $150 a year to $450. The registration fee for all vehicles will go from $20 to $45 per year.
“It will have a huge impact,” said Gareth Sakakida, managing director of the Hawaii Transportation Association, which has 390 members. “The natural reaction on the part of our members is to feel alarmed.”
On top of the weight and registration fees is a proposed 10-cent per gallon increase in the state fuel tax, which trucking companies say will hit them especially hard.
“It will lead to a vicious cycle,” said Nick Smallwood, president and CEO of Courier Corporation of Hawaii. “If we are overburdened and overtaxed, we have to pass that on.”
The highways modernization plan is comparable in cost and scope to plans to upgrade Hawaii’s airports and harbors, a massive project that already has been approved by lawmakers.
But in the case of the harbors, its biggest users offered to pay higher fees to help finance the improvements, reasoning that more space and greater efficiency would more than offset the costs over time.
State transportation officials have offered a similar theory to highway users.
Brennon Morioka, director of the state Department of Transportation, said economic models run by the department indicate that companies will see savings of between $3,300 and $8,000 per vehicle because they will spend less time in traffic and pay less for vehicle maintenance.
“The bottom line is that we are asking everyone to think of this plan as just investing a little more,” Morioka said. “If we just have business as usual, then more people are going to die and more people are going to sit longer in traffic. That is not acceptable.”
The plan describes 183 projects on Hawaii’s six largest islands, with work expected to start in 2011.
The projects are intended to widen highways, build bypasses, replace bridges, protect shorelines, preserve pavement and stabilize slopes and rockfalls.
The highways plan has the support of Gov. Linda Lingle and the Democratic leadership in the Legislature, which will hold hearings on the measures (House Bill 1167 and Senate Bill 985) beginning next month.
Morioka said that since the plan was announced he has heard from both supporters, some of whom say they would actually like to pay more to fix Hawaii’s roads, and detractors, who argue that the last thing people need in tough economic times is higher operating costs.
State officials have emphasized that the higher fees wouldn’t go into effect until the state sees two consecutive quarters of at least 1 percent job growth, which economists believe probably won’t happen for at least two years.
In addition to the $2 billion generated by the new fees, the highways plan will be supported by $1.5 billion generated over six years by current taxes and fees and $500 million expected from the federal government.
Many small-business owners agree that the state’s highways need work, especially on the Neighbor Islands where growth has outstripped the capacity of rural roads.
But there isn’t agreement on the scope of the work. Smallwood, for one, said he doesn’t believe the roads are that bad.
“In my humble opinion, they don’t need the help,” said Smallwood, who delivers service via four station wagons, 15 box trucks and about 40 vans. “My guys are on the roads all the time and I spend little or no money on delays because of bad roads or damage to vehicles. I have not spent any more on tires or shocks or suspensions than I have over the years.”
The highways plan has angered Kris Gourlay, owner of The KNG Group, which hauls recycling and refuse with 23 vehicles on Oahu.
“As a hard-working businessman, quite frankly, I am appalled at the way the State of Hawaii conducts business,” said Gourlay. “They look for every which way they can skin off every bone on this island. If the governor had sat down with people like me before announcing this plan, I would have explained how much of a risk it has been for a person like me to build his business and provide payroll for 35 people so they can buy food for their families.”
But others say the roads need the work and it makes sense for drivers to pay, as long as they’re guaranteed the money will go to highway improvements.
“I can’t really disagree with improving the quality of roadways, and it is the users that have to pay for that,” said Mike Rossell, owner of Production Hawaii, which uses flatbed trucks to transport equipment for events. “I always believe that you pay for the services you receive and it is always disappointing when special funds are raided or earmarked for other types of spending when it was not announced previously.”
Paying for the $4.2 billion highways plan*
• Increase vehicle weight tax 2 cents to 2.75 cents per pound
• Increase vehicle registration fees $20 to $45 per year
• Increase rental vehicle surcharge $2 to $5 per day
*Also includes $1.5 billion from the state highway budget and $500 million in federal funds
Source: Hawaii Dept. of Transportation
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