Lawmakers may hold off on extending the rail excise surcharge this year to see what the Trump administration does next.

The city rail authority is supporting a bill at the Legislature to extend the controversial Oʻahu excise tax surcharge for rail, but some board members worry the threat of federal budget cuts may cause the surcharge measure to die next week.

A Senate committee earlier this month gave preliminary approval to Senate Bill 492, which would allow the city to extend the tax surcharge to fund construction of the Honolulu rail project until 2045. The surcharge is currently scheduled to expire at the end of 2030.

But the bill is in a precarious spot as the Legislature approaches a key mid-session deadline. The measure must be scheduled for consideration by the Senate Ways and Means Committee by the middle of next week or it will almost certainly die for the year.

Skyline train Halawa-Aloha Stadium Rail Station media preview tour security camera
A Skyline train arrives at the Aloha Stadium rail station. Rail supporters want the Legislature to extend the excise tax surcharge of one-half of 1% on Oʻahu to finance more rail construction to Ala Moana Center and beyond, but concern about federal budget cuts may cause state lawmakers to defer a decision on the tax issue this year. (Kevin Fujii/Civil Beat/2023)

Anthony Aalto, a board member for the Honolulu Authority for Rapid Transportation, said Friday that lawmakers seem apprehensive about President Donald Trump’s administration in Washington, D.C., and that may affect the surcharge bill.

“There may be huge cuts in areas such as Medicaid, for example, or free school lunches that the (Legislature) may have to step in and plug some gaps,” Aalto said.

If that happens, lawmakers may be forced to scramble to find new revenue.

“We could be looking at potentially well over a billion dollars in cuts in D.C., so it is a point of concern, obviously,” he said.

He added: “I don’t get the sense that they actually want to move to a resolution on this right now,” he said, referring to the excise tax for rail.

The rail surcharge of one-half of 1% is imposed on almost all goods and services sold on Oʻahu on top of the state tax of 4%, for a total of 4.5%. If lawmakers approve a 15-year extension of the surcharge for rail, it would raise an additional $5 billion to $6 billion to fund future extensions of the Honolulu transit line.

But an extension of the tax surcharge for rail may be politically explosive. That is partly because the tax surcharge was originally supposed to be temporary, and partly because city residents are divided over the rail project itself.

When the surcharge was originally approved by the Legislature in 2005, it was supposed to expire at the end of 2022. Lawmakers later extended it in 2015 and again in 2017 to raise more money as costs escalated for the still-unfinished rail project.

Construction of the rail line is now running more than a decade behind schedule, and the cost of the project from East Kapolei to Kakaʻako has nearly doubled to $10 billion since the city broke ground in 2011.

The rail board on Friday voted unanimously to back SB 492 to extend the excise surcharge for rail, but board members did not appear to be especially optimistic about its chances.

Board Chair Colleen Hanabusa said the measure cannot pass unless Ways and Means Committee Chair Donovan Dela Cruz allows it to advance next week. Even if it does clear the Senate, it may encounter serious resistance in the House.

Dela Cruz, a longtime rail supporter, did not respond to a request for comment Friday.

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