The Hawaii House of Representatives on Friday voted to approve the rail bailout measure, capping a five-day special legislative session marked by acrimonious exchanges between legislators and city officials — including Honolulu Mayor Kirk Caldwell — who wanted more money.

The measure passed by a 31-15 vote, with five members excused.

The vote culminated months of work by legislative leaders who had to pick up the pieces after a previous effort to fund the financially foundering project fell apart in the final hours of the regular legislative session in May.

The bill now goes to Gov. David Ige, who has previously said he would sign a rail financing package.

Closing of extended session, City Council Chair Ron Menor shakes hands with Mayor Kirk Caldwell after the House of Representatives passed 3rd reading of SB4.
They didn’t get everything they wanted, but Honolulu City Council Chair Ron Menor, left, shook hands with Mayor Kirk Caldwell after the final passage of the rail funding bill Friday. Cory Lum/Civil Beat

The bill is projected to raise about $1.3 billion from Hawaii hotel guests by increasing a statewide hotel room tax to 10.25 percent from 9.25 percent for 13 years. It’s also projected to raise $1.046 billion from Oahu taxpayers by extending 0.5 percent general excise tax surcharge for three years, from 2027 to 2030.

House Republican Reps. Andria Tupola and Gene Ward of Oahu introduced amendments to exclude neighbor islands from the hotel tax increase, require the state auditor to perform a “forensic audit” on the project, limit the total funding allocated to rail by the Legislature and require at least 10 percent of the rail’s total cost to be raised through private investment or public-private partnerships.

Those amendments were soundly defeated.

Other opponents repeated arguments that failed to sway most lawmakers during committee hearings, including the assertion that the hotel tax is more volatile than the excise tax and neighbor island tourists shouldn’t be taxed for an Oahu project.

In a marathon speech, Rep. Marcus Oshiro, who is stepping down from the Legislature to become chairman of the Hawaii Labor Relations Board, recited a litany of talking points repeatedly made during hearings before both the Senate and House committees leading up to the final vote.

Oshiro questioned whether the Federal Transit Administration would accept a funding plan that include hotel tax revenue. The FTA has provided $1.55 billion in funding and has given the rail project’s manager until Sept. 15 to submit a funding plan to cover a shortfall estimated at about $2.4 billion.

Oshiro repeated arguments, which Caldwell repeatedly made but backed away from earlier this week, that the FTA would require a “stress test” risk assessment that could show the need for more money than what the Legislature has put together.

“We have received no firm commitments from the FTA,” Oshiro said.

But the bill prevailed in the end.

After the vote, both House Speaker Scott Saiki and House Finance Committee chair Sylvia Luke said that they believed the process had been as open as possible, despite the accelerated timetable. Given the hours spent on the bill during the session and in the weeks leading to it, Saiki said, the measure was hardly given short shrift.

“The number of hours that were spent on this proposal I think outweighed the number of hours that could have been spent in a regular legislative session,” Saiki said.

Luke agreed that the issues discussed were clear at the end of the regular session.

“There was never a secret that we were looking at a combination of GET and TAT,” Luke said, using the abbreviations for the excise and hotel taxes. “It’s not as if any of the issues that came up in the bill were ever a secret.”

Ige said he expected to sign the bill within days.

“My cabinet members and I will be doing a final review as we do for all legislation, but I fully anticipate signing the bill before the Honolulu City Council meets,” the governor said in a statement.

Voting yes were Reps. Henry Aquino, Della Au Belatti, Ty Cullen, Beth Fukumoto, Cedric Gates, Daniel Holt, Linda Ichiyama, Kaniela Ing, Ken Ito, Aaron Ling Johanson, Jarrett Keohokalole, Bertrand Kobayashi, Chris Lee, Matthew LoPresti, Sylvia Luke, John Mizuno, Dee Morikawa, Nadine Nakamura, Takashi Ohno, Richard Onishi, Marcus Oshiro, Scott Saiki, Joy San Buenaventura, Joseph Souki, Gregg Takayama, Roy Takumi, Justin Woodson, Ryan Yamane and Kyle Yamashita.

Voting no were Reps. Tom Brower, Romy Cachola, Richard Creagan, Lynn DeCoite, Cindy Evans, Sam Satoru Kong, Nicle Lowen, Angus McKelvey, Sean Quinlan, Calvin Say, Cynthia Thielen, Chris Todd, James Tokioka, Andria Tupola, and Gene Ward.

Reps. Isaac Choy, Sharon Har, Mark Hashem, Lauren Matsumoto, Scott Nishimoto were excused.

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