The Honolulu City Council voted Wednesday to temporarily shelve a bill allowing the use of property tax revenue for construction of the $10 billion rail line.

Budget Committee Chairman Joey Manahan suggested putting Bill 42 on the back burner for consideration after the Legislature meets again to discuss other means for paying for the rail project.

The House and Senate couldn’t agree last week on a rail tax bill before adjournment, throwing the future of the project into question.

There’s no word yet on whether a special session will be held, and Gov. David Ige said that he won’t call one until the House and Senate are ready to compromise.

Rail guideway HART Pearl City. 8 may 2017
Honolulu is struggling with how to pay for the ballooning costs of its rail project. Cory Lum/Civil Beat

City officials, including Mayor Kirk Caldwell, are urging the Legislature to adopt a Senate proposal to allow the city to use more general excise tax surcharge revenue to pay for the cost of the project. The House would prefer to raise the hotel tax rate.

Councilman Ernie Martin argued that Bill 42 should be killed entirely and said he doesn’t support using property taxes for rail. Councilman Trevor Ozawa agreed, saying the measure could put funding for the city’s core services at risk.

Gary Kurokawa, Caldwell’s chief of staff, said that according to the city’s most recent analysis, if the city relied only upon property tax revenue to pay for rail, the tax may need to increase at least 13 percent for 11 years to pay for the project.

But the majority of the council agreed that a temporary deferral was preferable to killing the bill entirely, given the uncertainty of legislative negotiations.

“It’s important to keep all options open,” said Councilman Brandon Elefante.

“It’s appropriate to hit the pause button as the legislative session has just adjourned,” said Councilman Ikaika Andrerson.

Council Chairman Ron Menor noted that Bill 42 was only considered because lawmakers said it was a condition for receiving approval to extend the general excise tax surcharge.

Menor said he hoped the council won’t have to pass Bill 42 because it has “major concerns with having to raise real property tax to fund rail construction.” But he didn’t think it would be a good idea to kill the bill before the Legislature came to an agreement.

“Things are fluid over there,” Menor said, referring to the Capitol “I believe that deferring would be the safe and wise thing to do.”

After deferring Bill 42, council members advanced Bill 45 to allow the city to spend more general excise tax revenue for the rail project in case the Legislature agrees to extend the surcharge. That bill goes next to the Budget Committee for further consideration.

About the Author