If there was one message state lawmakers wanted to send Wednesday to Honolulu Mayor Kirk Caldwell and others trying to build the city’s $6 billion rail system, it was this: Show us some skin.
Committees in the House and Senate passed different measures that would severely limit how much tax revenue the city can collect for its beleaguered rail project, which is now facing a nearly $1 billion deficit.
Neither bill would provide what city officials hoped for, which was a long-term extension of the General Excise Tax surcharge that currently funds most of the project.
The House Finance Committee was much more punitive, passing a measure that would cut the city’s 0.5 percent surcharge on the GET to 0.25 percent starting in 2017.
On the bright side for Caldwell, GET bills did clear both committees, and ultimately a measure more to the city’s liking may emerge from the Legislature. But Wednesday’s votes demonstrated the level of discomfort lawmakers have with raising taxes to bail out the rail project.
It was also clear Wednesday that legislators want the city to put some of its own money on the line. The current rail construction budget relies on federal grant funds and GET dollars.
As many lawmakers said during nearly 10 hours of hearings Wednesday, they want city officials to “put some skin in the game,” whether it’s through property taxes or other fees, so that the state isn’t the only one cutting a check.
“I don’t want to have to be back here in five years.” — Honolulu Mayor Kirk Caldwell
“It could be argued that these amendments are pretty hardball,” State Rep. Gene Ward said after the House Finance Committee passed its version of the GET bill. “But at the same time we could say that instead of putting us farther apart it should bring us closer together because now it belongs to both the city as well as the state. We’ve got to sit and put our heads together.”
For most of the day, lawmakers pummeled Caldwell and Honolulu Authority for Rapid Transportation Executive Director and CEO Dan Grabauskas with pointed questions about rail’s budget and why the city was asking for more money when construction is in such an early stage.
Senators said during Wednesday morning’s Ways and Means Committee hearing that they want to see Honolulu complete its 20-mile railroad from East Kapolei to Ala Moana Center, but they don’t want to cut a blank check backed by the state’s General Excise Tax just yet.
The senators said a five-year extension should provide enough revenue to keep construction moving as well as pay for the projected deficit. But they also acknowledged the proposed tax hike would not be enough to expand the system to other locations, such as the University of Hawaii at Manoa and downtown Kapolei.
Caldwell pleaded with lawmakers to keep the extension at 25 years, but to no avail. Several senators seemed miffed about being asked to increase taxes to help cover an over-budget city project, and used the opportunity to take political swipes at Caldwell and other city officials.
The mayor said that such tension could be avoided if the GET extension were simply approved for a longer term than five years. More money would also ensure a UH Manoa extension is included in future plans.
“I don’t want to have to be back here in five years,” Caldwell told the senators. “To put this community through that kind of pain repeatedly is hard.”
Senate President Donna Mercado Kim refused to follow Caldwell’s logic. She said the only way to “hold the city accountable” was to force it to come back to the Legislature yet again if it’s seeking more GET revenue after the five-year extension. Kim chided both Caldwell and Grabauskas over their failure to manage the project’s finances.
Several senators seemed miffed about being asked to increase taxes to help cover an over-budget city project.
She even questioned how the HART Board of Directors could approve a raise for Grabauskas last October given that the project was already facing steep financial challenges.
“It’s very troubling when you think about HART giving a raise to your director when this project is not on time and not on budget,” Kim said. “I don’t understand who would get a raise based on that.”
The Honolulu City Council did not escape criticism. Sen. Jill Tokuda, who chairs the Ways and Means Committee, said it’s too soon to guarantee billions of dollars more in revenue for rail when it’s unclear where the council stands.
Tokuda said she was baffled by the lack of testimony from council members, noting that the only one who spoke up was Councilwoman Kymberly Pine, who represents West Oahu. The senator said in order for the city leaders to convince state lawmakers they’re serious she wants them to put “all of their skin and flesh on the table” when it comes to committing to an expanded rail project.
“This is a big deal and we don’t have even a piece of testimony,” Tokuda said. “We’re looking for the public, political will to back those two (additional routes), and we don’t see necessarily what we need to see.”
Council Chairman Ernie Martin responded to Tokuda by saying that he believes the majority of the council is pro-rail, and would support a tax hike.
The Senate measure passed 8-2 with Sens. Gil Riviere and Sam Slom opposed. Slom, the lone Republican in the Senate, has long been a critic of rail.
“It could be argued that these amendments are pretty hardball.” — State Rep. Gene Ward
The vote was much closer in the House, with representatives splitting 8-7 on cutting the city’s GET surcharge in half. Representatives voting against the measure included Aaron Johanson, Lynn DeCoite, Nicole Lowen, Bertrand Kobayashi, Kyle Yamashita, Scott Nishimoto and Gene Ward.
The House panel included a provision in the measure that would limit how much the state takes as an administrative fee for collecting the GET on behalf of the city. The current take is 10 percent, but the committee proposed lowering that amount to 3 percent.
Both the House and Senate versions of the bills would allow the other counties — Hawaii, Kauai and Maui — to enact similar transportation surcharges for transportation projects.