Wielding a scalpel the size of an axe, the Hawaii Senate’s budget committee on Monday sliced off scores of pages from a bill intended to help Honolulu fund its troubled rail project.

What was left on the cutting room floor — at least for now — was the hope of city and rail officials to extend in perpetuity a tax to raise revenue for rail. The project is currently projected to fall $2 billion short of an estimated $8.2 billion construction price tag.

In the latest draft of the legislation, Senate Bill 1183, the general excise tax surcharge of 0.5 percent levied on Oahu taxpayers would still expire in 2027.

Gone as well were many suggested provisos, such as using an undetermined portion of GET revenue to pay for the state’s highways, education and other pressing needs.

In their place was something Honolulu Mayor Kirk Caldwell and the Honolulu Authority for Rapid Transportation do want: a return of the 10 percent administrative fee the state takes from the Oahu surcharge. But they say it’s not enough money to complete the rail line as planned.

Chair WAM Senator Jill Tokuda points to MAYOR and HART when grilling them about making cuts and going thru their 2016 budget. 27 feb 2017

Ways and Means Chairwoman Jill Tokuda told city and rail officials that legislators feel burned by past rail cost projections that have proven inaccurate.

Cory Lum/Civil Beat

Senate Ways and Means Chairwoman Jill Tokuda also insisted that the city repeal a law that prohibits using city funds to pay for rail’s construction costs. If Caldwell and the City Council don’t make that happen this year, she said they can forget about the state returning its administrative fee, the so-called “skim.”

And, the bill would require the mayor to submit periodic operation and maintenance plans for rail, something lawmakers had previously called for.

Tokuda said legislators felt misled by the city and HART when they agreed to extend the surcharge in 2015. It amounted to lying to taxpayers, she suggested, and was intolerable.

She said the skim amounts to $300 million over the life of the surcharge, or $30 million a year. She described it as a lot of money that the state would have to make up for elsewhere.

But Tokuda had another message for the mayor and the Council: If the city managed its own budget better, it would see that there are several possible revenue streams it could use to fund rail without raising taxes and fees.

She told Caldwell, Council Budget Chair Joey Manahan and Budget and Fiscal Services Deputy Director Gary Kurokawa that they had not looked carefully over their own finances.

Mayor Kirk Caldwell looks on as HART Director Krishniah Murthy gets grilled by WAM chair Jill Tokuda. 27 feb 2017

Mayor Kirk Caldwell listens to HART head Krishniah Murthy on Monday. Caldwell continues to argue that a GET surcharge extension into perpetuity is the best way to fund rail.

Cory Lum/Civil Beat

If they had “taken the time to dig through” their budget, said Tokuda, they would find ways to pay for rail without excessively burdening taxpayers. She described the city’s concern that it would have to raise property taxes as a hollow threat.

“As we are looking to make sacrifices, so too should the city,” Tokuda said after the hearing.

Afterward, Caldwell told Tokuda and her committee that city leaders had just received “a little bit of a scorching.”

It was a long afternoon for the mayor, who nonetheless kept his cool in the face of unrelenting attacks.

Early on in the hearing, Tokuda asked Caldwell if he would mind waiting until members of the public testified on SB 1183. While it’s customary for committees to first hear from departments and agencies as well as elected officials, Tokuda wanted Caldwell to hear what citizens had to say.

The comments went on for about two hours, many of them centered on how rail was too expensive and suggesting the city should pursue other options such as building the project at street level through town.

Elaine Kam held a yellow handmade sign stating her view that the city had not been financially accountable to taxpayers, and that a perpetual surcharge amounted to a blank check.

When it was his time to speak, Caldwell attempted to rebut some of the criticism. For instance, he said that building rail at street level would not save money and could invite new challenges such as having to produce another environmental impact statement.

Elaine Kam holds her sign ’Financial accountability before additional Taxes’ during WAM meeting after testifying in 211 Capitol. Chair Tokuda listened to testimony from the public, dept heads and Mayor Caldwell and HART. 27 feb 2017

Elaine Kam holds a sign reading, “Financial accountability before additional taxes” after testifying against SB 1183 Monday.

Cory Lum/Civil Beat

HART’s interim director and CEO, Krishniah Murthy, echoed the mayor’s comments. He also noted that the Federal Transit Administration had approved the existing rail plan, all 20 miles and 21 stations.

And Councilwoman Kymberly Pine, whose district is on the west side of Oahu, pointed to a massive traffic jam Monday morning that caused commuters (including her) to be hours late getting to work. Rail, she said, would give people another transportation choice.

There is still a lot of time left in the legislative session, which concludes in early May. Based on what has happened to SB 1183 thus far, more changes are likely.

The amended bill passed on an 8-0 vote. Assuming it passes the full Senate this week or next, the House of Representatives will take its own crack at it.

As of Monday evening, Rep. Sylvia Luke had yet to schedule that chamber’s own GET plan, House Bill 349, for a hearing in the House Finance Committee ahead of a Friday deadline.

In all likelihood, SB 1183 will be settled in the conference committee period at the end of April. That’s where, despite having gone through significant changes, language in the previous incarnations of the measure could be resurrected.

Ways and Means Committee member Sen. Lorraine Inouye was absent from Monday’s hearing. She is the author of the original bill and its second draft that was shredded by the committee.

About the Author