Hawaii lamakers seem poised to bail out Honolulu’s over-budget elevated rail system, but they have yet to find the right tax formula.
On Thursday, a state Senate panel approved a convoluted House measure that could extend Oahu’s 0.5 percent general excise tax surcharge for an additional 25 years.
The tax surcharge is currently set to expire in 2022. City officials say that without an extension they can’t complete the project.
Under the latest proposal the surcharge would be extended to 2027, at which point the Legislature would have to vote to keep it alive for another 10 years. In 2037, lawmakers would again need to approve a 10-year extension.
Sen. Clarence Nishihara, who chairs the Transportation Committee that was part of Thursday’s joint hearing, said the purpose of the reauthorization requirements is to hold the city more accountable.
But he also made clear that the latest iteration of the tax hike will change as House and Senate lawmakers convene in conference committees.
“We have not beat this horse to death,” Nishihara quipped during Thursday’s hearing. “We’ve certainly knocked him unconscious.”
“We have a job to do ourselves and I think we haven’t done it well enough, and that is addressing your concerns and the broader community’s concerns about being open and transparent.” — Mayor Kirk Caldwell
Senators essentially gutted House Bill 134 to put forward the latest proposal. The House version, which passed earlier this month, cut the 0.5 percent rail surcharge to 0.25 percent starting in 2017, but left open the possibility that the surcharge could live on in perpetuity.
The new version of the bill keeps in place the state’s 10 percent administrative take of the city’s 1 percent surcharge. It also allows neighboring counties to implement a 0.5 percent GET surcharge, although officials on those islands can spend the money on the projects of their choosing.
Sen. Sam Slom, the chamber’s lone Republican, was the only dissenting voice Thursday. Slom said the city has broken too many promises, chiefly that the project would come in on time and within budget. He said he didn’t want to place the additional tax burden on residents.
“We are here today, if we support this, enslaving further the taxpayers of the City and County of Honolulu,” Slom said. “People are talking about how they want the union wages to help their families and pay their mortgages and buy their groceries. Well, so do the rest of us.”
City officials have said a five-year extension should provide enough revenue to complete the 20-mile line between East Kapolei and Ala Moana Center that’s currently under construction and facing a nearly $1 billion shortfall.
A 25-year extension, they say, should be enough to expand the system to the University of Hawaii at Manoa and downtown Kapolei. Prior estimates put the cost of those spurs at around $4 billion.
Honolulu Mayor Kirk Caldwell pressed legislators for a 25-year tax extension of the 0.5 percent surcharge so the city could complete the full scope of the project, from Kapolei to the university. In exchange, Caldwell offered to be more transparent with the public and lawmakers.
“We have not beat this horse to death. We’ve certainly knocked him unconscious.” — Sen. Clarence Nishihara
He said the city and the Honolulu Authority for Rapid Transportation have placed tens of thousands of pages of documents on line, but admitted that the deluge might not be the best way to keep the public informed.
Caldwell said he would meet with lawmakers on a quarterly basis in public meetings to discuss construction progress and the cost-containment efforts. He also said the city and HART would perform an annual audit that could also be the subject of a public meeting.
“We have a job to do ourselves and I think we haven’t done it well enough,” Caldwell said, “and that is addressing your concerns and the broader community’s concerns about being open and transparent and providing information to the public.”
The bill now must go the Senate Ways and Means Committee, which is headed by Sen. Jill Tokuda. A Senate version of the GET extension is also awaiting a hearing in the House Finance Committee, chaired by Rep. Sylvia Luke.
That measure, Senate Bill 19, calls for a five-year extension of the GET, which lawmakers say should provide enough cushion to start planning for future legs to UH and downtown Kapolei.