 Okay, Community Matters 4 p.m. on a given Tuesday 4 o'clock Rock and there's a double entendre if you hadn't noticed community matters That's Tom Yamachika. He's with the Hawaii Tax Foundation. Thank you for coming on the show Thank you for writing me on the show and the reason is that you wrote a really sterling article this morning in civil beat Tell us about the article. Well, we talked about the new system of funding highways that our Department of Transportation is coming up with they Have some very interesting ideas. They have I guess they've seen the handwriting on the wall. They have a problem because Right now what they are spending for our roads Comes from what's called the highway fund and the highway fund is Fueled by a number of different things mostly from the gasoline tax our fuel tax which is imposed on gasoline among other fossil fuels as well as vehicle weight tax registration and you know some other some other things but They've kind of been noticing that the amount that they're getting for year after year has been going down and This has been a problem that other states have experienced as well and the reason is because one of the aims or the The reasons for the enactment of the fuel tax in the first place was well, geez Fossil fuel is not a good thing We need to get people off of it. So that's the same reason why they they taxed tobacco or liquor or or other incentive disincentive kind of right right right so they it's like a syntax you've you've heard of the phrase syntax as it applies to Tobacco attacks or or alcohol attacks. Well part of the rationale for imposing attacks and fossil fuels is it's a syntax and they want people off of it Well, guess what the public is responding People are using using less People are going to alternative fuel vehicles. They're going to hybrids They're going to Electric cars and so guess what fuel consumption is going down and The and the revenue that's coming in is also going down so we've seen that phenomenon happen with With the tobacco tax most recently Right because we had tied The tobacco tax to the cancer research cancer cancer research center Yeah, right and then guess what they did they raise the smoking age Right so and it was perfectly you were perfectly How are we gonna how we're gonna fund ourselves now? So That's that's the pickle they find themselves in yeah, okay, so So the question then becomes What are they gonna do to make the transportation tax system fair Okay, and what they consider fair Is that people who use the roads pay for the roads? okay so so what they are envisioning is a per-mile usage charge of some kind and so they Had some grand plans for this and they wrote up and a grant application to the Federal Highway Administration because they have some money That can be made available to states for doing this kind of study And the feds like the programming of so that they said okay, we're gonna give you four million dollars Well, it is what it is We have to come up with a million and a half in cash and other in-kind contributions which the Department of Transportation valued at about a lift million dollars so all told it's a 19 million dollar project The fed the feds contribute four million we contributed a million and a half and We get this big study done so the plan is for The department to measure Your your vehicle usage Typically When when you drive a car you have to have to do an annual safety check it's recorded by law in in all the counties and they pick up your odometer reading from there and The plan is that they'll send you a bill for whatever the The miles are right for whatever the miles are That's all the roads. I mean you could run freeways. You could run up and down Sierra Drive Doesn't matter. It's the same thing. Yeah on-road off-road, whatever it is. Yeah. Yeah, but they'll they'll track your mileage And they'll send you a bill Okay. Well, okay, is that fair? Again, it's it's it's really a question of degree And and what you think is fair, but it's it's a very different system for what we have now. Mm-hmm some people will find out that it's It might save them money. I don't know Some people will find out that they have to pay a lot more You know what strikes me just off of the top of my head is The people who live out in Oshkosh there in West Oahu They have terrible time Commuting terrible. They sit in traffic all day partly because the highways are inadequate for them and Terrible congestion. It's painful the number of hours they spend. It's you know, it's in it's in 30-40 hours a month they sit in traffic like it's terrible and then in fact They do more miles coming and going they would be taxed more heavily under this program. Wouldn't they they would and and it's It's a regressive system. Yeah, which which means that it has no bearing on How much you can pay or or what your net worth is? It's just a bit just a matter of how how far you drive your car. Yeah We can do better, huh? I don't know. I don't know what better is though. I mean is you have do you have a better system in mind? I don't know. Do you we can invent one right here? What do you think Tom? We're not the first person to we're not the first thing to try this there are there a few states that have done it with You know a fair degrees of experimentation in Oregon for example, they have something called already go and and and the and the idea is that you sign up your your vehicle and It is an alternative to the fuel tax. So what they do is they they track your mileage and they calculate the amount of Tax that you would have to pay under their system and If it comes out to less than what they pay on fuel tax then they get money back If it comes up to more than they have to pay in So it's it's kind of a gamble with real money. Yeah. Yeah, some people aren't gonna like it I mean people don't like change. They don't like change in Hawaii. They don't like tax either in Hawaii Let me let me give you let me give an idea of how the the Oregon system works. Okay in Oregon Their fuel tax is 30 cents a gallon Okay, and that more or less than what we pay Well, when you when you add up the state county and federal gasoline taxes, I Think we pay more Okay, we pay something like 33 34 cents a gallon you know a gallon on state state in county taxes. So I Guess it's comparable to to Oregon's system. Yeah so there per Mile charge under or ago Is one and a half cents a mile? Okay, so You do the math and You have your break even at 20 miles a gallon What that means is that you if your car is more fuel efficient than 20 miles a gallon You will pay If it is less fuel efficient You'll get your money back So it's kind of kind of the opposite of Conventional thinking of what you want to reward versus what you don't it really is Yeah So, I mean this is in existence now. This is working now. Yeah, is it being accepted by the public? I'm not sure it's like I said, it's a it's a trial project in Oregon. Yeah, it's I think started maybe a year ago There's like 5,000 Vehicles that they're planning to do this with and I'm not sure how it's going it raises the question though is a number of questions in my mind One is we have failing infrastructure problems In this country, I mean I became aware of this back way back when it was a failure of the grid And then north the northeast grid In the country it was huge failure and I recall that Spencer Abram was the You know was the energy guy at the time On the cabinet, you know on the president's cabinet it might have been Clinton might have been And we had this failure and he got up on television. He said you don't understand We put this grid in place, you know like 40 years ago after the war And you know, we haven't put anything else in to maintain it to improve it to handle You know the additional load. What do you think is going to happen? It's going to get old It's going to fail and you know the problem is at least with the electrical grid that that you need you need to You know address the infrastructure. You need to take care of it. You need to improve it. You need to maintain it Okay, and I I don't think people were really aware until he said that that we were living in a country of failing infrastructure and then the bridge fell in and I think it was Minnesota. Was it the bridge bridge fell into the water Everybody became aware. Well, you know bridges don't last forever. Sometimes they fail And unless you maintain these pieces of infrastructure, you know lose them And so we have highways in Hawaii and other states That are getting old that are not meeting the demand and we we have a million cars on the road now A lot of these roads a freeway for example Good example we're built when there was a fraction of a million cars We've been selling cars like hotcakes all this time and then you know, you take a look at the potholes It's really sort of tragic that we haven't really fixed the potholes And we haven't accounted for the cost of it either And you can say that we don't have enough money for it, but we don't have enough political will for it either One way or the other you have to fix the infrastructure or we are in a third world country Um, so that's happening not only in Hawaii, but in other places in the country. I don't think people are addressing it Yeah, uh matter of fact, uh, there was a study that was done of of all of the Uh, that the state Uh transportation infrastructure conditions it was done by this, um, non-profit called the reason foundation and They looked at the condition of our roads bridges and so forth and And uh when and they compared us against other states And and we're we're coming in close to the bottom of the list close to the bottom I think it was like 47 48 something like that So And it'll have and not only that not only that but Um The problem is not only the existing condition of what we have But the problem is how much it costs to fix it right which increases It's and it's and and right now it's it's um Uh Quite high I remember, uh, you know cliff slater who keeps on Opposing rail and all that in fact there was an article recently. Was it in civil beat? It was a cliff slater Um and panels preveduros, you know, he's opposed rail from the beginning and randy roth the three of them Yeah, trying to do a You know a bishop estate type, you know this positive article on the subject Anyway, um In the case of slater he he has a bus and he took people around to show them Where the rail was going to be this is before construction started And he still believed that it would politically be stopped before it construction started well Didn't happen and we took we took the route I was on the bus took the route all the way in from west oahu campus all the way in, you know We wound up downtown When it just occurred to me that the whole thing had a huge absurdity to it because every road we drove in was a wreck everywhere And oh, there were potholes and and you know, what do you call it infrastructure failures all along the way? And we had not been able to fix them and yet we were committing to a project of somewhere between five and ten or more billion dollars Which it was not clear we could pay for So you you you sort of add Liability on top of liability without a clue on how you're going to pay for any of it including the original problem of congestion and potholes This is a you know, I mean you must spend your days and nights thinking about this time. How are we going to pay these bills? You know and and uh, I just and then to add to what you what you said There are a number of highways For which The state and the county governments disagree as to who's responsible for them, right? This is this is the what we call the roads in limbo issue and and it kind of dates back to the You know right after the monarchy Was was overthrown You know during the monarchy, of course, there was no no dispute that the There was one kingdom and it owned all the roads and had to had responsibility for all of them But when we became a territory and then a state then there was a you know, a state Uh instrumentality and there were there were counties and some of them had some of the roads and others had others and Uh, it wasn't really clear as to who owned what? And and we never bellied up to the issue and resolved it Yeah, and and and you see when you have a dispute like that Nobody wants to repair the road. You know why? They want to give it away to somebody else Because if generally if you repair it you own it and you're responsible for the maintenance from that point forward You take you take ownership. Yeah to repair is to take ownership You know, it doesn't seem terribly fair at the end of the day. Nobody repairs it Well, let's take a short break time. Let me come back. I'd like to ask you, you know for your solution I've I'd like to ask you how you feel as a tax foundation of Hawaii about the problem that we are going to have to raise this money Probably by taxes You know billions and tens of billions to fix all these infrastructure problems What are we going to do and how are you going to feel about how are your constituents? You know your supporters in the tax foundation going to feel about it We'll take this short break and then tom is going to answer those questions. I'm sure Hi, I'm chris lithium with think tech Hawaii and I'd like to ask you to come watch my show the economy in you Each Wednesday at 3 p.m. Aloha. I'm kirsten Baumgart Turner host of sustainable Hawaii. Thanks for watching think tech this summer We have a lot of terrific shows of great importance And I hope you'll watch my show too every Tuesday at noon as we address sustainability issues for Hawaii They're really pertinent as the world conservation congress approaches in september And the world youth congress that's focusing on sustainability Next year as well. Have a great summer and tune in at noon every tuesday Hey, you stand the energy man here. I know you're bored this summer You're just sitting at home figure out what to do go to the beach Spend some time with think tech Hawaii spend the time thinking about how you can contribute to Hawaii and making it a better place to Live and start watching some of the programs on think tech including stand the energy man Well, you'll learn all about everything energy, especially hydrogen and transportation So we'll see you every friday at 12 o'clock noon stand the energy man here on think tech Hawaii. Aloha Okay, we're back. We're here with tanio and shika of the tax foundation of Hawaii talking about taxes for transportation I think we've agreed that we need we need to fix the transportation system And we don't have the money to do that and you say taxes from a foundation for for transportation in your article this morning at Sybil beat and that means I think we agree that there's a problem And that we're going to need more money and the taxes are the only way and I can think up to raise that money So a lot of money how are we going to raise that? I mean is there something is it an alternative to taxes or is it got to be taxes and if it's got to be taxes What kind of taxes and how are people going to react politically to that? Well, I mean taxes are always a problem and and I guess the I think It's less of a problem if The department of transportation or whoever we're giving this money to Can show us that the money's being well spent efficient and that kind of thing You know right now The the study I was talking about the one from the reason foundation Shows that that we're spending You know right now about three times as much per mile As as say somebody like somebody like Oregon and they're not they're not the most efficient government in the world either but but At least they have A better system than than than than than we have I don't know if the The problem is in the permitting Whether it's in the cost of just Basically providing any kind of transportation service whenever somebody picks up a shovel it it's it's it's going to cost so much money Uh, I don't know if it's part if part of the problem is All of these post-employment benefits that we're giving all of our state workers And that we all going to have to pay for but nobody's come forward and said tom. Let me explain You know, there are good and valid reasons why The cost three times as much to build a mile of road in Hawaii than in Oregon. Nobody has actually answered that question, have they? Well, I think the department of transportation is trying to You know answer it. I I don't I don't know um whether That's going to be deemed sufficient by the public or not But but uh, they're certainly in the position to provide answers to what they're doing why they're doing it And and and why it's costing so much um We've pointed out before and uh, the senate had hearings on this before that You know not too long ago uh, the department of transportation was was was in trouble with federal money Right because they couldn't spend it They they were they were sitting on close to a billion dollars in federal money that they couldn't spend why For one of a number of reasons technical reasons like, uh, they they weren't able to get their permits. They Uh, you know couldn't do their eis in in a timely fashion or get it approved or people were suing Uh to to to stop the building of the road or to to stop the expansion of the road You know, all of these situations exist. I mean, you've seen them in age three. You've seen them in other Uh transportation projects uh Certainly there are externalities like that that that we do have to deal with here But that's a great concern not so much that we lost the money. I mean, this is this is a great concern We lost the money But because it demonstrates that we we are locked up somehow Whatever it is in terms of permits or eis or you know, governmental process and one way or another We are unable to do Something critical for our community. I mean it's it's like um, this is the canary in the coal mine If you you know, it's it's our circulatory system. It's the way we get around It's the it's the public spaces You know, everything else is kind of private but the public spaces where we get around go from point a to point b That is a measure of how well this community does And if we can't build roads or fix roads or redesign roads to to meet the changing the changing, uh, you know community Then we're in big trouble You know and and and so what the transportation department has has told me and and the legislators is that they are You know re-engineering what they spend Okay, uh, that they're spending more in maintenance And less on capacity projects so, uh Because it's easier to spend for maintenance you can you can uh, you don't need to typically go out with an eis because the road's already there You just you're you're just fixing it. So you can get people mobilized quicker. When you say fix what what do you mean fix? like resurfacing or um You seal coating or pothole patching. Isn't it well known though at least in in the city and county? Isn't it well known that instead of putting down a heavy uh Level have a layer of new, uh, you know road material We put down a really thin layer. So politically looks like we fixed the road We spent a lot less money that way, but it doesn't last very long, you know in a year year and a half two years It's all busted up again Um, so, you know, there's a real problem in that that we we may be saying this is jonah denilian We may be having less maintenance For fixing the roads, but in fact those fixes are not good Everyone knows it seems like that the roads are not being properly fixed Well, that's that's again a matter of political will as well because um If if your decision is to fix the roads properly as you put it Uh, then there's got to be an expenditure of money to to do that And that and that really comes down to the point of our whole discussion Is that we agree that the infrastructure needs needs repair maintenance, you know improvement Um, we need to build more roads. You don't have more cars on the road. We have more people living here We need to attend to that and as I say, it's our circulatory system It's the canary in the coal mine And so the question and we still be that that means that we have to raise a lot of money billions Okay, not only for rail, but for roads, but for just getting around Um, how are we going to do that best? I do you know, if we don't like this idea of charging drivers by the mile for how much they drive on our roads What better way and and how is that going to change? You know, I'm sure you're into this kind of analysis Is if if the community has to pay more money and taxes to achieve You know this basic level of service reasonable roads How does that affect the community when they pay a greater and greater percentage? Especially on a regressive basis a greater and greater percentage of their income What is the ultimate effect of that of that pain to the average joe and to the community in general? Well, one one one thing that does happen Is is you squeeze taxpayers hard enough? the leave town the leave town the leave of the state They'll go to nevada, which has no income tax. They'll go to to deload. They'll go to, uh, california They'll probably go past california because they have problems just as bad or worse than us But but but they will leave and and and um There are studies that show that we have a net out migration of residents Uh, and it's been so for every uh for every year in the past five or six years really And this has got to be one factor in all of that. Yeah, so this is the phenomenon called voting with your feet Yeah So what do we do? I make you governor Presto Your governor What do you do? well, uh, I I I'm I'm not really in a position to make the tough policy choices I mean, I'd probably get booted out before ever probably did um But uh, you know something's ought to happen I mean if we have If we have a problem, we have to You know something's ought to happen and if not It's not immediately over time Well, you know the thing about it is we've been talking about infrastructure. It's about transportation But there are other issues. There's a social safety net. There's the homeless problem Which I mean people agree are going to cost billions to fix. I don't know if you ever fix it But at least, you know, keep it at a reasonable level Um So we have and we have unfunded liability for example to the er s we have we owe billions as they can be state owns billions O's billions to the er s and the utf for which the state owns bill owes billions more Yeah, so I mean really when you start looking at the landscape, we are surrounded with our liabilities funded and unfunded or mostly unfunded And where we are going to have to pay. I'm not the federal government, you know, not somebody else It's gonna have to come out of the The the pockets if you will of our of our citizens here in the state Uh, what do we need to do? We need to change the tax system. We need to raise rates We're best. I mean if you look at real property tax on the city side or income tax on the state side Where is the fairest way to get that money? Well, if you ask 30 different people, what's what's fairest, you'll get 30 different answers Is there is there a way to find out which is better? I mean, I forgot to mention gross excise, of course So gross excise and income and the real property those are our those are our sources Well, right right now what what happens is real property goes to the commies General excise goes to the state net income tax goes to the state and there's a there's a We we mentioned a tax system being regressive Uh, the only tax system that that isn't regressive is net income tax because that's that's Based on how much ability you have to pay. Yeah, by definition. It's progressive, right So Some combination of all of the above Is probably what's going to get you to where where you need to be The People will disagree on what the what the proper combination is Would you agree with me about this though? The legislature really must Hunker down on this and for that matter the executive They must hunker down. They must address this issue. They must decide where the priorities are What kind of tax would be appropriate and decide how much increase in order to Achieve greater funding for these these important projects. Yeah, that's that's that's why we uh, you know pay them the fabulous salaries Okay Well, all right, I'm you know the session's coming up I hope you'll join me again and we'll take a look at what they're doing or not And see if we can make comment on what they should be doing Thank you, Tom Yamachika. Great to have you here. Thank you, Jane. Thank you very much