The Honolulu City Council voted Wednesday to keep alive a bill to extend a 0.5 percent general excise tax surcharge by five years, from 2022 to 2027, to help pay for a growing deficit in the municipality’s $6.6 billion rail project.
It was a key vote, but there are still at least two more public hearings that must take place before the extension, expected to raise $1.5 billion, can be finalized.
The council did not resolve whether it will place a cap on the revenues collected from the GET extension. Council Chairman Ernie Martin has proposed limiting the new funds that could be spent on rail to $910 million, while diverting any additional funds to affordable housing.
But officials from the city, the Honolulu Authority for Rapid Transportation and the Federal Transit Administration have said the proposed cap wouldn’t provide enough money to cover the current estimated shortfall and likely would result in the project stalling out.
The FTA has even threatened to withhold money from a $1.5 billion grant if the council doesn’t act soon to pass the tax extension without a cap, or come up with a new source of funds to cover the current deficit.
“I don’t want to set this cap that jeopardizes everything else,” Mayor Kirk Caldwell told council members Wednesday. “There’s nothing more important than funding for this project, and I think you know that.”
Council members Kymberly Pine and Brandon Elefante both proposed amendments that would remove the cap; but they failed to gain the support of their colleagues. One notable exception was Councilman Ikaika Anderson, who voted against Martin’s proposal because it still contained the $910 million limit.
The only other “no” vote Wednesday came from Councilwoman Ann Kobayashi, a long-time rail critic.
Martin’s cap will be debated in the coming month as the tax-extension bill heads back to Kobayashi’s budget committee. Most council members want to see the rail project succeed, but they also want to place tighter reins on the over-budget project and on HART, which is overseeing its construction.
Martin himself acknowledged Wednesday that his $910 million cap is no longer realistic, in light of escalating cost estimates for the project. But he also said that he will not support a tax extension measure that does not include some sort of cap on spending.
The next Budget Committee meeting is scheduled for the week of Jan 11. If a bill is passed out of the committee, the council could take its final vote on the extension Jan. 26, before sending it to Caldwell for his signature.
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