Most of the action so far regarding finding more money for Honolulu’s rail project has taken place in the state Senate, but now the House of Representatives is getting involved.
On Wednesday, two Senate committees advanced legislation that could allow Oahu to extend its surcharge on the general excise tax in perpetuity. It’s currently set to expire in 2027.
But before that happened, the House moved its own GET rail bill out of a committee. It would extend the surcharge for another 30 years.
The significant differences in the bills suggest that reaching agreement on the $8.2 billion rail project, which is underfunded by at least $2 billion and several years behind schedule, remains a work in progress.
The Honolulu rail guideway near Aiea in 2016. The city is asking the state to allow it to collect more money to pay for the troubled project.
Cory Lum/Civil Beat
For one thing, Senate Bill 1183 is now more than 40 pages long (its first iteration was a mere four pages), compared with House Bill 349, a modest six pages.
The House bill is focused mostly on rail, although it will be adjusted with language to try to clear up long-standing confusion over what are known as “limbo roads” — that is, whether a road is controlled by the state or the counties.
House Transportation Committee Chairman Henry Aquino said the measure would also be tweaked to require the Honolulu Authority for Rapid Transportation to provide regular updates on the project to lawmakers. If it fails, the state could withholding quarterly payments from the surcharge.
Under the House plan, the state would still levy an administrative fee (it’s currently 10 percent), but the amount for now is left blank in the bill. Some of what’s known as the state’s “skim” could also go to the state highway fund.
SB 1183 is so loaded with different options that it is being called the “kitchen sink” bill by some around the Capitol.
Under one proviso, an unspecified amount of the surcharge revenue would go to things that have little to do with transportation: state education, affordable housing and elder care (and also transportation).
This provision, in Part IV of the bill, would actually repeal a county’s surcharge (right now only Oahu has one) and increase the GET from 4 percent to 4.5 percent. The catch is that a county would have to partly match that increased revenue stream from the state tax. A county would also have to update the Legislature annually on revenue and expenditures.
“It is the Legislature’s intent that the repeal of the county surcharge, coupled with the increase in the general excise tax and use tax will even the disparity in generating tax revenues for the state across all counties,” the bill states.
Natalie Iwasa, in the Senate hearing room where a rail tax bill was heard Wednesday, made clear where she stands on the rail tax.
Chad Blair/Civil Beat
As well, there could be an income tax credit for low-salary earners under the Senate bill, in recognition that the GET is regressive and disproportionately hurts poorer people.
Like the House bill, the Senate version also calls for directing some funds to state highways, with the precise amount left blank for now.
But, by Senate Transportation and Energy Chairwoman Lorraine Inouye’s admission, the bill contains a number of “inconsistencies” and conflicting language. Such discrepancies, she said, will have to be worked out.
Honolulu City Council Chairman Ron Menor cautioned that if they are not, the bill could invite future legal challenges as well as be fiscally unworkable. Mayor Kirk Caldwell described the Part IV section as “detailed” and “complicated.”
The Senate bill could halt Oahu’s surcharge in 2032 unless “certain conditions” are met, as Inouye put it. The main condition is that the Hawaii Community Development Authority transfer specific land parcels to the City and County of Honolulu to help develop land around rail stations.
The Senate bill will almost certainly be scaled back. But senators, who, like representatives, will have to justify their votes on the rail tax to their constituents, want to keep their options open.
The discussions on the proposed GET rail tax extension have packed legislative hearing rooms.
Chad Blair/Civil Beat
What is clear, though, is that a rail tax bill remains important to both chambers, and there is a lot of discussion to come.
Before decision-making in the House, Speaker Joe Souki showed up to chat up members. Senate President Ron Kouchi also stopped by to talk to fellow Kauai legislator Nadine Nakamura.
Meanwhile, Caldwell, Menor and Councilman Joey Manahan continue to testify for the city.
They want lawmakers to extend the GET indefinitely, and they would like to see the skim reduced. Both Menor and Caldwell warned that raising Oahu property taxes to help pay for rail was not palatable.
There is a long way to go yet. Both bills now head to the respective money committees, where the scrutiny is expected to be intense.
At least one opponent of both bills suggested a far simpler solution to funding rail, at least in his mind.
Larry Friedheim, who unsuccessfully challenged Caldwell in the 2016 primary, said lawmakers should legalize gambling and a lottery and decriminalize marijuana to increase tax revenue.
Such proposals, however, have always failed at the Legislature.
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