House Transportation Committee Extends GET Surcharge for Rail Transit for an Unspecified Period

Mar 22, 2017

Honolulu Mayor, Kirk Caldwell, testifies before members of the House Transportation Committee.
Credit Wayne Yoshioka

State funding for the Honolulu Rail Transit project cleared a critical hurdle in the House today.  HPR’s Wayne Yoshioka reports.   

The Senate version of the Honolulu Rail Transit funding bill retained the General Excise Tax surcharge at one-half-of-a percentage point, retained the current expiration date of 2027, but gave the City the state’s 10 percent administration fee worth about 300 million dollars over the next decade.    Mayor Kirk Caldwell testified before the House Transportation Committee and said, that amount is not enough.

“We need another $1.7B by April 30th, so we are going to have to look at cutting services and increasing taxes.  And the greatest source of income for the City and county of Honolulu is real property taxes.  And we’re going to have to raise real property taxes somewhere around 12 percent.”

Architect Scott Wilson told lawmakers a GET surcharge extension beyond 2027 would not be necessary if the elevated guide-way is lowered to street level.

“Your total cost for street-level rail from Middle Street to Downtown is approximately $633 million to $688 million.  You have a cushion of funding somewhere in the 200-million range.”

The Honolulu Authority for Rapid Transportation – HART -- explored Public-Private Partnerships as a means to fund the transit project but did not receive any offers.   HART Interim Executive Director and CEO, Krish-NYE-ah Murthy, says partial private funding would have been viable before ground was broken but that option is long gone.

“Where we are today is we have done 15 miles of it already awarded.  What we have left is the last 4-plus miles of alignment -- is all that’s left.  So they don’t have a choice other than to complete what they already started.  They have to follow the same technology; follow the same engineering design.  The opportunity for innovation and creativeness is very minimal.”

Following an hour of public testimony, House Transportation Committee Chair, Henry Aquino, announced the Senate Bill would be amended.

“We’re going to be inserting language to extend the current  Honolulu surcharge to an unspecified sunset date.  However, I want to make very clear that the intention is not to make the surcharge permanent.  But this would allow the Finance Committee to determine if an extension is warranted or not.”

Aquino also left the state’s administration fee percentage blank and also left blank an unspecified percentage share of the surcharge to be used for state highway projects.   Following passage of the amended bill, Mayor Caldwell said the deadline for the City to complete its recovery plan for the Federal Transit Administration is April 30, and his job is to talk to lawmakers.

“We’re trying to impress upon them the importance of this April 30th deadline.  It’s for real and we have a President who has now indicated no new starts money so he’s not a man who looks on the positive way of building more new rail transit systems.  We got a full funding grant agreement; that’s our saving grace.  But, we don’t wanna play “chicken” with this administration because the result may not be positive.”

The amended Transportation Committee version of the bill now goes to the House Finance Committee for consideration.   Wayne Yoshioka, HPR News.