Setting a budget can be hard when you don’t know when your next check will arrive.
But that’s exactly what the Honolulu Authority for Rapid Transportation Board of Directors had to do Tuesday, when its Finance Committee approved a preliminary spending plan for its next fiscal year, which begins July 1, 2016.
Honolulu’s $6.6 billion rail project faces a shortfall of more than $1 billion, and is in need of a cash infusion from the state’s general excise tax. The Honolulu City Council is considering extending, by five years, a 0.5 percent surcharge on the GET to help pay for the deficit.
Until a decision, however, HART is stuck in a sort of budgetary limbo.
For instance, there are still two major contracts outstanding for building the final 10 miles of the rail line, from Aloha Stadium to the city center. Officials have said they can’t sign those contracts — worth an estimated $1.4 billion, according to the latest budget figures — unless the tax extension is approved.
Although those contracts are expected to be executed within the current fiscal year, they will play a role in HART’s future spending plans and in the level of detail that will be made available to the city council, Mayor Kirk Caldwell and the public. The GET extension is expected to generate about $1.5 billion in revenue for the project.
“It’s a little bit of an awkward conversation, which is obvious to everyone,” said Dan Grabauskas, HART’s executive director and CEO.
HART’s fiscal year 2017 capital budget is estimated at $182 million, with most of those funds — roughly $130 million — going into contingency to help cover unanticipated costs on the project. Much of the rest is dedicated to building escalators and elevators for rail stations, paying for insurance and hiring consultants to oversee construction on the rail line, which is expected to be completed by the end of 2021.
HART’s operating budget, meanwhile, is expected to remain steady in fiscal 2017 with operating expenses estimated to be around $21 million, the same as what was budgeted for this fiscal year. The 2017 budget also calls for paying about $10 million in debt service.
Grabauskas said HART will need to make several adjustments to the current year’s budget depending on the City Council’s actions on the GET surcharge. A final vote is expected sometime in January.
Another issue for HART to contend with: what to do about a parking garage located at the Pearl Highlands rail station.
Officials initially hoped that a public-private partnership would help pay for the construction of the parking garage, which is estimated to cost around $110 million. But if no private entities are found to pay for the construction, HART will have to bite the cost.
Meanwhile, HART officials are looking for more ways to cut down on future operating costs by implementing sustainability measures that would reduce the project’s energy consumption. For example, HART is considering a new photovoltaic program that could put solar panels on its rail operations center and 21 stations.
The agency was unable to provide details about exactly how much it expects in costs savings should it move ahead with that plan.