The Honolulu City Council is closer to approving a five-year extension of a general excise tax surcharge to pay for cost increases on the municipal rail system, but there are still questions about just how much revenue will actually go to the project.
On Wednesday, the Budget Committee voted 4-1 to approve a proposal put forth by Honolulu City Council Chairman Ernie Martin that would cap the new GET surcharge revenues that can be spent on the cash-strapped project at $1.1 billion. Chair Ann Kobayashi cast the lone dissenting vote.
Martin had previously suggested a spending cap of $910 million, but officials from the Honolulu Authority for Rapid Transportation said that would not be enough to cover the latest cost projections, which put the final price tag at $6.6 billion.
The new $1.1 billion cap, however, allows additional GET revenues to be used as part of a contingency fund should more money be needed to build out the 20-mile, 21-station project that will run from East Kapolei to Ala Moana Center.
Additional revenues could also be used for Americans with Disability Act improvements along the rail route, planning for future system expansions, such as to the University of Hawaii at Manoa, and other infrastructure work around train stations that would support affordable housing.
Honolulu Authority for Rapid Transportation officials who are overseeing the rail project estimate that the five-year tax extension — which will move the 0.5 percent surcharge sunset date from 2022 to 2027 — will generate an additional $1.2 billion to $1.8 billion in revenues.
HART Board of Directors Chairman Don Horner said the new proposal is an improvement over the $910 million cap, and should give officials the leeway they need to move ahead on construction.
Horner noted that the Federal Transit Administration will still need to sign off on the measure to ensure the city doesn’t violate its $1.5 billion grant agreement with the agency. The FTA has already threatened to withhold the portion of those funds that it hasn’t already dispensed should the city not find additional revenues to pay for the rail project’s growing shortfall.
“As an agency we prefer no cap,” Horner said during Wednesday’s meeting. “It’s not as simple, but I think we can work with the council and this committee to move this forward.”
Honolulu Department of Transportation Services Director Mike Formby told council members Wednesday that Mayor Kirk Caldwell’s administration had similar concerns about the cap and would prefer that it be removed.
Formby added that the administration has supported other provisions that call for more city oversight of HART and the project, including a requirement that subcontractor payments be made public.
The full City Council is expected to cast a final vote on the tax extension at its Jan. 27 meeting.