Honolulu taxpayers can expect to shell out hundreds of dollars more each year in taxes and government fees as the state and city scramble to maintain revenues during the deepening economic recession.

Gov. Linda Lingle is proposing a 10-cent bump in the state gasoline tax and vehicle fee increases that would cost taxpayers $170 more a year, and in July, a general excise tax exemption on gasoline expires, meaning consumers will be charged 4.5 percent of their purchases at the pump on top of federal, state and city gas taxes calculated into the per-gallon price.

Honolulu residents already have been paying a half-percent surcharge on the general excise tax at an annual cost estimated at $365 to $450 per household, with revenues from the surcharge earmarked for a rail transit system.

The tax and fee hikes are taking place at a time when Ho- nolulu residents are in the middle of multiyear sewer and water rate increases while facing job layoffs, wage cuts and other financial woes. Although the government levies, when taken on their own, may seem manageable, there is concern that taxpayers are being nickel-and-dimed to death with a steady stream of increases.

"You're tapping into a source that is already strung out and that's the problem. ... It's hitting people when they are down," said Leroy Laney, professor of finance and economics at Hawai'i Pacific University and economic adviser to First Hawaiian Bank.

"I don't know what else can be done about it. You've got to get the funds somehow."

Although any tax and fee increases will pinch household budgets, Laney noted their impact will be softened by low inflation that will moderate price increases for groceries, gas and other consumer goods.

VEHICLE FEES

Under Lingle's proposal, the state gasoline tax would increase from 17 cents per gallon to 27 cents per gallon. Vehicle weight taxes charged by the state, currently set at three-quarters of a cent per pound for vehicles up to 4,000 pounds, would be increased by 2 cents per pound. State motor vehicle registration fees would be increased from $25 per year to $45 per year. Counties charge separate vehicle fees.

Officials said the proposed increases will generate an estimated $174 million annually and help fund the governor's six-year, $4 billion highway modernization plan.

They would be conditional, taking effect when Hawai'i experiences 1 percent job growth over two consecutive quarters, as determined by the state Department of Business, Economic Development and Tourism. Officials said that likely won't happen until mid-2011.

"While it is important to be sensitive to the current financial situation of our families and businesses, we also need to plan for the future when the economy rebounds, and not just sit and wait for it to happen. This idea of an economic trigger tied to future growth in the economy means that we can do both," Lingle said in a statement announcing the plan.

State officials said taxpayers will be able to recoup at least a portion of the tax and fee increases, because the road improvements will result in savings in gas, time and vehicle wear. The Department of Transportation estimated that savings at about $1,825 a year for someone who lives in Kapolei and works in Honolulu.

GAS PRICES

The proposed gas tax increase comes as consumers are enjoying a respite from the record-breaking fuel prices of last summer, when O'ahu prices climbed to a peak of $4.39 per gallon. Ho- nolulu gas prices over the weekend averaged $2.28 per gallon, according to AAA Hawaii.

The U.S. Department of Energy's Short Term Energy Outlook is projecting a less-steep increase in gas prices nationally this year of 19 cents per gallon, followed by a 31-cent increase in 2010.

State Rep. Joseph Souki, D-8th (Wailuku), sees the proposed gas tax increase as a "painless" way to squeeze more dollars from taxpayers, and more sensible in the long run instead of relying on government borrowing to fund road projects.

"The good thing about it is that you're not punishing future generations to pay for what we need now. Users who are using the roads now will pay for it, and that's not a bad idea," said Souki, chairman of the House Transportation Committee.

"For those who don't want to raise taxes but want all the services anyways, this is a bad idea. Then there are those who are akamai enough to understand if you don't have revenues, you can't do anything."

RIGHT TIME

Lowell Kalapa, head of the private, nonprofit Tax Foundation of Hawaii, favors an immediate increase in the gas tax, at a much smaller level, so the state doesn't waste time in generating revenue. Motorists would be more willing to accept increases now, Kalapa said, because gas prices are relatively low.

"You don't want to enable a higher cost of living, but on the other hand, unless you can find another way to raise money for highways, that's the only alternative," he said.

Kalapa said he is doubtful the economic triggers proposed by the governor will be reached anytime soon.

"Does the governor know something we don't know? We won't have that kind of growth. If we don't trigger the increases, then what will we do? I know it's politically unpopular to raise taxes, but on the other hand we could be in dire financial straits if we don't."

He said it would have been wiser to raise the tax by 2 or 3 cents and increase vehicle fees a couple years ago, and instead of exempting gas purchases from the general excise tax, dedicate GET revenues collected on gas purchases to the state's highway fund.

Although tapping into taxpayer pocketbooks, higher gasoline prices can spur conservation and prove more effective than tax credits and other incentives in encouraging electric cars and other technology, according to Kalapa.

"Raising the gas tax by 10 cents can be seen both as bad and good: Bad because it will cost more to drive; good because it will change people's habits and they will be more inclined to drive fuel-efficient vehicles," he said.

'SMALL PRICE TO PAY'

Waipahu resident Jeroen Joosten, 32, said taxes in Hawai'i are very low compared with his native Netherlands and elsewhere in Europe. He said he'd accept higher gas taxes in return for better roads.

"I think it's a small price to pay if the improvements will really be done," Joosten said.

Already in place are substantial water and sewer rate hikes that officials said are necessary to fund long-delayed repairs and improvements.

In 2006, the Honolulu Board of Water Supply implemented a 58 percent rate increase spread out over five years to lessen the impact on consumers. By July 2010, a single-family home that uses 13,000 gallons a month will be paying $78.38 per bimonthly billing, or $172 more a year than before the start of the rate increase.

An average household is now paying $69.11 bimonthly, with charges climbing to $74.72 in July.

The figures do not include power cost adjustments, which currently stand at $1.22 per month.

SEWER RATES

Meanwhile, the city's Department of Environmental Services is halfway through a four-year rate hike that will increase the bimonthly bill for an average household by 107 percent. That translates to an additional $900 per year in sewer charges by July 2010.

Sewer charges that are now $138.96 per bimonthly billing will jump to $164.12 in July, costing customers an additional $151 annually. In the final year of the rate increase, sewer bills for the average household will rise to $188.62 per bimonthly billing.

Homeowners are waiting for the next shoe to drop: real property taxes. Escalating property values in recent years allowed the city to keep homeowner tax rates flat this year after two years of rate cuts, but that has all changed.

Mayor Mufi Hannemann hasn't released the administration's proposed budget for the next fiscal year, but city officials say they haven't ruled out new tax hikes and fee increases to offset a looming $13 million to $40 million deficit.