A Honolulu City Council Committee approved a bill that would eliminate the $4.8 billion cap on how much general excise tax money can be used to build the 20-mile rail.

With the cost to build the rail estimated to reach as much as $9.5 billion, council members are worried about what will happen to the project if the cap is reached.

“We don’t know when we’re going to hit that spending in the project. It could come at any point,” said Councilman Joey Manahan, who co-introduced Bill 3 with Councilman Ikaika Anderson. “Would the project stop at that point? That’s what my worry would be.”

Some members of the Budget Committee said they opposed the $4.8 billion cap when it was established in 2015. 

Councilman Brandon Elefante said at Wednesday’s committee meeting that he opposed having a cap because it wouldn’t provide the Honolulu Authority for Rapid Transportation with flexibility to ensure that it has the revenue streams to complete the project.

“This really sets a precedent in terms of us hearing this measure here today in terms of putting more skin in game for the city by removing these caps,” he said.

Honolulu City Council Member Joey Manahan. 8 feb 2017
Councilman Joey Manahan said at Wednesday’s Budget Committee meeting that he has concerns about what would happen to the rail if the $4.8 billion cap on GET surcharge monies is met. Cory Lum/Civil Beat

The 2015 measure that established the cap also allowed the surcharge monies to be used for other purposes, like operating the rail, accessibility improvements that comply with the Americans with Disabilities Act, planning and design costs for route extensions and supporting affordable housing.

Manahan and Anderson’s bill would limit the use of funds to building the rail and ADA improvements. They said they had heard concerns from state legislators who feel that the city was never given the authority to utilize the funds for other purposes.

Michael McGrane, HART’s interim chief financial officer, said revenues from the GET surcharge – in fiscal year 2016, they were $233 million – have not been used for purposes other than rail construction.

Krishniah Murthy, HART’s interim executive director, said the agency does have checks and balances in place for cost containment and cost management and is looking at other options where it can be more efficient in generating additional financial support for the project.

Natalie Iwasa, a certified public accountant and chair of the Hawaii Kai Neighborhood Board, said she was concerned about inconsistencies she found in financial reports given by HART to the Federal Transit Administration, the state, city and the public.

In her testimony at the meeting, she said she thinks it’s important for there to be some kind of cap on how much can be spent on the rail.

“We can’t just keep giving HART money blindly year after year,” she said, adding that she thinks it would be good policy for the council to exercise oversight over HART through both its budgetary process and limiting its income revenues.

Bill 3 now moves to the full council for further consideration.

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