Hawaii lawmakers are moving forward with legislation to fix one of the many problems in the Department of Education‘s student transportation services.

Under the current contracts, the state is paying school bus companies’ general excise taxes. The auditor singled this issue out in a scathing report last year, and House Bill 506 was introduced as a result.

The legislation, which cleared the House Finance Committee Thursday, would prohibit the state from paying contractors’ GET.

While school bus contractors have remained mum on the matter, a group representing the construction industry is urging lawmakers to reject the bill. 

“While the preamble of this bill seems to suggest that this bill is a remedy for the problems with the contracts for school bus services we are concerned that the consequences of this bill will have far reaching effects that will harm all businesses that do business with State government in particular the construction industry,” Malcolm Barcarse Jr. of Associated Builders and Contractors said in his testimony. “It is the common practice in the marketplace for customers of all varieties including the State of Hawaii in government contracting to pay the appropriate General Excise Tax on the contract.”

He warned lawmakers that making contractors pay the GET would increase the price of public works projects.

The bill heads next to a vote before the full House.

Read Civil Beat‘s past coverage of the state’s broken student transportation program here.

— Nathan Eagle