Hawaii Gov. David Ige isn’t saying whether he will approve or veto any extension of a General Excise Tax surcharge that is being earmarked for Honolulu’s $6 billion rail project.

But he does acknowledge that he’s worried an estimated $910 million shortfall in construction costs will continue to balloon. And he’s not sure taxpayers should be penalized for potential mismanagement.

At an editorial board meeting with Civil Beat editors and reporters last week, Ige noted that until very recently rail project officials had assured the public that the project was on time and within budget. But a few months ago, Honolulu Authority for Rapid Transportation officials said the project was coming up significantly short of money.

“There’s a big difference between on budget and on schedule and a $1 billion shortfall,” Ige said. “That’s a concern. An extension would essentially embrace the notion that if in fact the project was mismanaged from a financial perspective, that we are authorizing or condoning that activity.”

Governor David Ige editorial board. 2 april 2015. photograph Cory Lum/Civil Beat

Hawaii Gov. David Ige says he has many concerns about Honolulu’s rail project including the cost and how it will be paid for.

Cory Lum/Civil Beat

Although Ige supports rail, he’s skeptical about extending the 0.5 percent GET surcharge this legislative session.  The Legislature is considering two proposals that would keep the tax going beyond its Dec. 31, 2022 sunset date to pay for the growing deficit.

Some lawmakers have expressed similar concerns over extending the GET surcharge and Sen. Jill Tokuda, who chairs the Senate Ways and Means Committee, wants to limit the extension to five years, not the 25 years that city officials have asked for.

City and HART officials say the money is needed to avoid a construction shut down. They’ve estimated that without the extension the project would run out of money by the first quarter of 2016.

But Ige says there are still too many unanswered questions about the project, many of which are already being asked by legislators. He’s just not sure the city and HART have provided all the answers.

The governor is particularly focused on what HART has done to rein in costs on the project. The Federal Transit Administration’s own oversight consultant, Jacobs Engineering Group, has called HART’s lack of cost-containment “alarming,” a fact that’s not lost on Ige.

He also questions whether the city exhausted all of its financing options before coming to the state for more money. Ige pointed to the dearth of discussion about public-private partnerships, particularly as it relates to building the project’s 21 train stations.

Honolulu Mayor Kirk Caldwell has said he would explore such possibilities after first revealing the project’s financial struggles, but so far there is nothing to indicate anything is in the works.

Like lawmakers, Ige wants to see the city take more ownership of the project and its finances. At the very least, he said it should be a point of debate since the project is funded with state and federal money.

“They’re seeking an extension to the tax so that we can pay cash for the project,” Ige said. “(But) the City Council has talked about floating bonds as short-term financing. Should we have a conversation that the city can be floating bonds to fund a portion of the construction costs rather than paying all cash for the project?”

Ige says there’s no question that the 20-mile rail line from East Kapolei to Ala Moana Center should be completed. But he’s not willing to commit to expanding the system to the University of Hawaii at Manoa or downtown Kapolei, as some proponents have suggested, at least not yet.

“There are lots of issues in and around the proposed expansion that I think only begin to muddy the water,” Ige said. “I would prefer that we focus on what was agreed to and was was agreed to with the federal government and what was agreed to between the city and the state when we authorized the tax.”


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