If Ben Cayetano thinks he can get his hands on the general excise tax surcharge that’s currently being collected for the city’s $5.26 billion rail project, he may want to think again.

That’s the message Marcus Oshiro, the chair of the House Committee on Finance, recently sent in a letter to Dan Grabauskas, the head of the Honolulu Authority for Rapid Transportation. He says Cayetano will have a difficult time wrestling the money from the state, which is currently collecting the funds on behalf of Honolulu.

Oshiro said that not only does Cayetano’s alternative transportation plan not qualify for the surcharge funds under current law, but that the state could put the money — already nearly $1 billion — to a more effective use, such as filling its own budget gaps.

“The law is clear in its intent that funds not be diverted to other transportation or county capital projects,” Oshiro wrote in his letter. “Additionally, as you are aware, the State has many of its own programs and projects that face funding shortfalls, and any legislative initiative to change the restrictions in the use of the surcharge will almost certainly result in the surcharge funds being directed away from Honolulu’s transportation needs to address the budgetary challenges confronting the State.”

It’s hard to tell how much of this is political posturing by Oshiro, and whether his views would be supported by others in the Legislature. In addition to Grabauskas, the Oct. 15 letter went to House Speaker Calvin Say and HART Chair Carrie Okinaga.

Oshiro’s letter also raises questions about whether it’s even appropriate for the state to take control of funds for the county, especially considering only people on Oahu pay this surcharge.

In 2005, the Legislature passed House Bill 1309, which allowed Honolulu to collect a 0.5 percent surcharge on the state’s general excise tax. The purpose of the surcharge was to pay for the “operating or capital costs of a locally preferred alternative for a mass transit project.”

Through 2022, the city intends to collect $3.29 billion through this surcharge. So far, it has collected $906 million, or about 27 percent of what it is currently projecting.

Cayetano, who has vowed to kill the rail project, has said that if he’s elected as Honolulu mayor, he believes he has the political acumen to convince the state to rewrite the law to let him use the surcharge funds for his own plan and possibly spend it on other infrastructure improvements related to sewer and water.

Oshiro said in his letter that Cayetano can’t use the money to implement his own plan, which includes bus rapid transit, building a viaduct over the Nimitz Highway and constructing underpasses at various intersections.

The lawmaker contends that spending any of the surcharge on these projects, particularly BRT, would violate a section of the law that says the surcharge “shall not be used to build or repair public roads or highways, bicycle paths, or support public transportation systems already in existence.”

He said BRT is already a well-established part of the city’s transportation program, and therefore would be ineligible under the law.

“Please be assured that I would look unfavorably on a request that the City and County of Honolulu be permitted continued use of the surcharge funds under Act 247 for existing transportation systems or capital improvement projects, if such changes to the law are requested,” Oshiro said.

Cayetano is in a heated race with former Honolulu Managing Director Kirk Caldwell, a pro-rail candidate, to see who takes over the Mayor’s Office. The election is Nov. 6.

About the Author