Within minutes of the Honolulu rail bailout bill being signed into law Tuesday, Honolulu Mayor Kirk Caldwell issued a statement crediting the state House and Senate for “hard work” on the legislation.

“The signing of the rail funding bill into law shows Gov. David Ige’s commitment and leadership in completing the rail project as promised to the people of Oahu, and is proof of the hard work done by members of the state Senate and House during the special legislative session,” Caldwell said in a press release.

It was a very different tune from the one the mayor sang prior to the five-day special legislative session that concluded Friday.

Gov. David Ige displays Senate Bill 4, the rail-funding bill now known as Act 1. A key architect of the law, House Finance Chairwoman Sylvia Luke, is left of Ige.

Gov. David Ige

Caldwell has long insisted that the general excise tax surcharge levied on Oahu be extended until 2037 or longer to make up for a $3 billion shortfall for the $10 billion rail project.

He has also repeatedly clashed with individual lawmakers over financial details of the project.

In the end, the Legislature got its way, writing a compromise measure that was acceptable to a majority of House and Senate members.

The GET surcharge will be extended only until 2030, generating an estimated $1 billion in revenue. The hotel tax will also be increased statewide by 1 percentage point until 2030, bringing the total tax haul for rail from the bill to nearly $2.4 billion.

Caldwell did not mention the hotel tax, known as the transient accommodations tax, in his statement.

FTA Financial Plan Expected

As Civil Beat reported Tuesday, anger toward the mayor’s salesmanship of rail helped unite state lawmakers to reach a compromise after they failed to do so just four months ago.

The rail project will still be short as much as $900 million, according to Caldwell, and he and Honolulu City Council members have issued dire warnings that city property taxes may have to be hiked and city services slashed to make up the difference.

It’s not clear where the city will get the money. But the mayor said the city is now “working closely” with the Honolulu Authority for Rapid Transportation to craft an updated financial plan that takes the new funding mechanism into account.

“We stand ready to answer any questions the Federal Transit Administration may have about completing the elevated rail line from East Kapolei to Ala Moana,” said Caldwell.

The FTA has committed $1.55 billion to the rail project but could take it back should the city be unable to build all 20 miles of the route.

The signing of Senate Bill 4 into law also allows the City Council to approve Bill 45, which would implement Oahu’s half-percent GET surcharge until 2030.

The mayor’s office described the county legislation as “a key component” of the updated financial plan the FTA requires by Sept. 15.

“Meanwhile, my administration continues to work closely with our federal, state and city partners on implementing all of the mandates of the rail funding bill, in particular more state oversight of rail construction and the timely transfer of tax revenues to the city,” said Caldwell.

The mayor was not present at the governor’s fifth floor ceremonial room for the bill signing. Ige was joined by Attorney General Doug Chin, Budget and Finance Director Wes Machida and House Finance Chairwoman Sylvia Luke, who gave Ige a hug after the bill signing.

The governor said his administration reviewed SB 4 for legal and policy concerns and concluded that it contained no “fatal flaws.”

But Ige also said he understands how many neighbor island residents and their representatives resent the transient accommodations tax being increased outside of Oahu.

“I have heard the concerns of leaders and residents in Hawaii, Kauai and Maui counties,” he said. “I recognize the uniqueness of each county and the fiscal challenges they face, with main revenue sources being property taxes and the TAT.”

The governor added: “I understand why they would like to see more support from the visitor industry and I intend to work with the county mayors, county councils and the Legislature on a fair distribution of the TAT.”

SB 4 is more than a funding mechanism.

It calls for a thorough review of the project by the state auditor, additional oversight by the state and the consideration of possible alternatives routes, development options and projected costs for the section of the rail that will run from Middle Street to Ala Moana Center.

House Speaker Scott Saiki issued this statement following the bill’s signing:

“SB 4 sufficiently funds the rail project’s completion to Ala Moana. The public’s and the legislature’s patience has been exhausted due to ballooning costs and delays.

“To make the rail project successful, the City (inclusive of HART) must do two things: First, it must contain costs. Second, it must increase public confidence in the rail project by substantially stronger oversight and management.”

About the Author