Internal emails from Honolulu’s rapid transit agency raise questions about whether Mayor Kirk Caldwell was being honest with Hawaii lawmakers when pleading for an extension of a 0.5 percent general excise tax surcharge that pays for rail.
The project faces a nearly $1 billion deficit, and in January Caldwell told legislators that if he didn’t get a GET surcharge extension he would have to raise Honolulu property taxes 30 percent to 43 percent to build and maintain the system. Construction costs are now estimated to be about $6 billion.
But emails obtained by the Honolulu Star-Advertiser through a public records request indicate Caldwell overstated the severity of the situation.
The emails, which came from the Honolulu Authority for Rapid Transportation, showed that the city would only have to increase property taxes by 5.6 percent to cover the $1 billion shortfall, a far cry from what Caldwell said in January.
Instead, the Legislature passed a five-year extension of the GET surcharge to complete the 20-mile rail route from East Kapolei to Ala Moana Center while at the same time scolding Caldwell and other city officials for not putting more “skin in the game.”
Gov. David Ige has not acted on the measure and has not indicated whether he will veto it, sign it or let it become law without his signature.
The rail project is being funded by GET revenue and a $1.5 billion grant from the federal government. Several lawmakers said during the debate over a GET surcharge extension that they wanted the city to pony up some of its own money instead of relying on the Legislature.
Rep. Sylvia Luke, who heads the House Finance Committee and was a lead negotiator on the tax extension bill, told Civil Beat on Friday that the new information revealed in the emails is “troubling” and “unfortunate.” She said the Legislature might have acted differently had it known that the city would only need to increase property taxes by 5.6 percent to cover the rail shortfall.
“It puts the mayor’s credibility on the line,” Luke said. “From the pre-session discussions to the end of session when we had to ultimately vote on this bill, we were always led to believe that the equivalent amount of property tax increase that the city would have to increase was 30 to 40 percent. I think the city, the mayor and HART had always been consistent on that number.”
The mayor’s office is defending the statements Caldwell made to the Legislature in January. In a written statement to the Star-Advertiser and released later to Civil Beat, Caldwell spokesman Jesse Broder Van Dyke said the mayor used the 30 percent to 43 percent figure when asking for a GET surcharge extension in perpetuity, and that it would cover building and operating the current 20-mile segment along with future extensions to downtown Kapolei and the University of Hawaii at Manoa.
The mayor’s office provided figures that showed the 5.6 percent property tax increase would only pay for construction of the current estimated shortfall. An additional 8 percent increase in property taxes would be needed to cover operating costs. Property taxes would need to be increased an additional 24.8 percent to pay for the future extensions, which have been estimated to cost $4 billion.
“These figures combined (are) squarely in the range the mayor mentioned that day,” Broder Van Dyke said in the statement.
Luke doesn’t buy that explanation. She said it seemed as if Caldwell, the city and HART were using large numbers to “steer the discussion” away from the possibility of raising city property taxes and toward a GET surcharge extension. Many lawmakers thought that increasing property taxes by as much as 40 percent was too severe to realistically consider, which Luke said limited their options during negotiations.
“Clearly the Legislature didn’t have all the information,” Luke said. “ “We depend on people who are testifying to be truthful and to provide all of the facts. Now that the true facts have come out they’re doubling back to justify what they said.”
Ige is scheduled to release the list of bills he intends to veto Monday. Should the bill pass — with or without his signature — the Honolulu City Council would also have to approve the GET tax extension.