State Taxes & Fees Hikes (Charts & More)

In 2017, a full 15 percent of Hawaii County residents lived in poverty, compared to 10 percent on Maui and Kauai and 8 percent on Oahu, according to estimates released this month by the U.S. Census Bureau for use in determining school funding.

The poverty line for educational programs is set this year at $13,960 annually for one person, $18,930 for two, $23,900 for three and so on, to $48,750 for a family of eight.

Hawaii County’s estimated median household income in 2017 was $56,540, compared to $80,947 for Oahu, $74,881 for Kauai and $76,376 for Maui. The median means half the households make more and half make less.

That’s an increase of 3.4 percent over the previous year, when Hawaii County’s median income was estimated at $54,684.

Those at the lower end of the spectrum are more likely to feel the negative effects of fixed tax amounts such as flat increases in general excise taxes, fuel taxes and vehicle registration fees. On the bright side for those residents, the minimum wage went up to $10.10 per hour in 2018, a 9.2 percent increase over 2017.

Few state taxes went up this year, although Hawaii County residents on Jan. 1 will start paying a county-imposed one-quarter cent surcharge on the state general excise tax.

Statewide, motor vehicle owners face an increase in safety inspection fees, with the maximum price rising from $19.19 to $25, a 30 percent increase.

The increase went into effect Sept. 13. From this fee, the Hawaii Department of Transportation receives $1.70 per vehicle toward the cost of the program, said an HDOT spokesman.

Gov. David Ige, presenting a conservative budget plan this year, said any discussion of tax and fee increases would come after he submits his legislative package to the Legislature, where the regular session starts Jan. 16.

Although state lawmakers discussed a bevy of bills that would have raised taxes and fees, none passed except a constitutional amendment that would have imposed a state tax on investment property. The Hawaii Supreme Court struck that measure from the ballot, saying it was too vague.

But an equally controversial tax passed in a 2017 special session hiked the transient accommodations tax on hotels and short-term rentals to 10.25 percent from its previous 9.25 percent as of Jan. 1, 2018, with the proceeds dedicated to the Honolulu rail project. Neighbor island governments opposed the tax, saying it would siphon away money visitors would normally spend in the local economy, and it would hit residents off on a “stay-cation.”

So far, there’s little indication that’s happened, but the May 3 volcanic eruption cast a pall on the visitor industry islandwide, making it difficult to determine cause and effect.

“There is no way to quantify this, plus there was too much noise from the volcano that would make it even more difficult to get a sense on this,” said David Givens, general manager of Hilton Waikoloa Village. “However, from January to April, the hotel was ‘rocking’ busy, as was the island, so I don’t think the TAT increase caused any slowdown in visitors or spending.”

It’s likely the Legislature will take another shot this year at some kind of dedicated tax for schools, but at least one lawmaker wants to find a way to spare some of the poorest state residents. Rep. Chris Todd, D-Keaukaha, Hilo, Panaewa, plans to sponsor a bill removing state income tax requirements for those under the poverty line.

“We’re taxing what they don’t have already,” Todd said.

The saying, “a rising tide lifts all boats” applies to taxes and fees too, putting the squeeze on private businesses and utilities that usually raise prices to compensate.

That’s the case in the housing market, especially with rentals, as hikes in property taxes, utilities and garbage pickup costs are often passed down to the renter.

The renter feels some of the squeeze, but so does the landlord, said Tam Vu, interim dean of the College of Business and Economics at the University of Hawaii-Hilo. Landlords can’t pass all the costs on to tenants for several reasons, she said.

“First, many landlords want to keep long-term tenants who might move out if the rental fees go up, so the landlords look around and wait, worrying that they might lose some good tenants to the other landlords,” Vu said. “Since in the U.S., the landlords are not allowed to collude with each other, they end up (so they) cannot raise the rental fees high enough to cover the costs.”

“Second, the rental fees are controlled in part by the local governments, which always try to protect the low-income residents, so it is not easy to increase the rental fees,” Vu added. “As a result, both the landlords and the tenants suffer from a tax increase.”

Nancy Cabral, owner of Day-Lum Rentals and Management Inc. in Hilo, says a sewer fee increase currently under consideration by the County Council would be an especially hard hit for condo owners, as association fees would have to rise to pay for it.

After unanimous approval from a council committee, the sewer fee increase proposal was cleared by the Environmental Management Commission and now returns to the council for two final votes.

The current $27 monthly fee would increase to $39 on March 1, if approved by the council in time. That’s a 44.4 percent increase. Increases would continue annually until the monthly charge reaches $52 in 2021.

And it’s not just the county government that’s raising prices. Electric rates, set by Hawaiian Electric Industries after approval by the state Public Utilities Commission, are likely to increase next year, after an average cost increase of 7.4 percent this year.

The average residential cost for electricity would go up 3.4 percent late next year if the PUC approves the increase, Hawaiian Electric Light Co. President Jay Ignacio said in an open letter to the public published in the newspapers.

The money would be used to help pay for rising operating costs, as well as modernizing the grid and continuing a vegetation management plan. If approved, a typical residential bill for 500 kilowatt-hours on Hawaii Island would increase by $8.21 a month. Any increase would likely not take effect until late 2019.

“If you were affected by storms, flooding, earthquakes or the eruption, then you saw our employees in action,” Ignacio said in the Dec. 9 letter. “That we continued to make progress toward our state’s renewable energy goals while responding quickly and effectively to emergencies is a tribute to the commitment of our employees and their pride in serving our communities.”

Water charges, controlled by the semi-autonomous county Department of Water Supply, also are inching up, following a five-year rate plan approved in 2015. The water bill includes an energy charge, a water consumption charge, a set standby charge and a power cost charge that fluctuates with the price of electricity.

Water bills would likely go up about 2.6 percent next year, following an 8 percent increase this year.

Cabral said Big Island rentals have been increasing incrementally, but landlords have been holding the line so as not enter the zone that would be considered price-gouging, since the county is still under an emergency proclamation because of the recent natural disasters.

She said her company has been suggesting to landlords that they stay in the affordable rental category, where property taxes are significantly lower in exchange for landlords keeping their rents at or below rates set by the county each year.

The price rubbish haulers pay at the county’s Hilo and West Hawaii landfills went up in 2018 to $108 a ton, a 27.1 percent increase, with annual increases to continue until the price reaches $116 in 2022.

The increases most affect commercial customers, such as those with dumpsters like condominium dwellers, retail shops, grocery stores and other businesses. Small haulers who pick garbage up curbside for residential customers will see a residential credit increase that should wipe out the tipping fee hike, officials said.

The garbage pickup hike coupled with the proposed sewer hikes could especially hurt landlords renting condo units, Cabral said.

“That’s going to have a huge impact,” she said. “The owner is going to look at both and say, ‘I’m spending more and making less.’”

Email Nancy Cook Lauer at ncook-lauer@westhawaiitoday.com.