State Lawmakers conducted a joint legislative hearing today on Honolulu’s cash-strapped Rail Transit Project. The hearing comes two weeks before the legislature meets in special session to provide a method of funding for the project. HPR’s Wayne Yoshioka reports.
The 8.2 billion dollar Honolulu rail transit project needs 2.5 billion to complete the last segment of the system to Ala Moana Center. The city prefers extending the half-a-percentage general excise tax surcharge to raise the money. Mayor Kirk Caldwell.
“I support GET. I think it is a source of funding that is assured and it generates the revenue sufficient to complete the project. And I’ve asked for 10 additional years to get us to Ala Moana with provisos that once the project is completed in 2025 or 2026, that perhaps there would be a reduction in the tax or an elimination of the tax or somehow the state using the tax.”
But, House Finance Committee Chair, Sylvia Luke, says a 10-year GET extension would result in a cash surplus. Instead, she says… using the hotel room tax or Transient Accommodations Tax – TAT --could save taxpayers billions in finance charges.
“By year 2021, the expenses that HART projects is close to a billion dollars. Whereas GET collections will be about $350-million. What I don’t understand, is why isn’t the city be more aggressive in closing that gap between expenditure and revenue and leaving the O’ahu taxpayers the burden of additional $2-billion of financing charges.”
Luke says using more than one tax mechanism, the GET and TAT, would provide a broader base of funding. But, former Congressman, Ed Case, now represents Outrigger Hotels Hawai’i, which employs 4-thousand people. He says over the last 5 years lawmakers have targeted the hotel industry with increasingly higher taxes.
"We have seen our TAT increase by 10 percent per year for 5 years. We have seen our real property tax increase by 10 percent per year for 5 years. We have also, of course, paid the GET. And so we have seen our taxes increase directly on the industry about a billion dollars a year in real property taxes and TAT and not to mention the GET.”
The Honolulu Authority for Rapid Transportation, HART, has a September 15th deadline to submit its financial plan to the Federal Transit Administration. Senator Donna Mercado Kim asked Interim HART executive director and CEO, Krishniah Murthy, if HART was looking at other sources of funding. He said they are not.
“You guys are so arrogant, that you think we’re going to give you the whole amount and you’re not planning on any alternative in the event it doesn’t happen. We understand your frustration. We are trying our best.”
The State Legislature is scheduled to convene in special session for the rail funding August 28th. Wayne Yoshioka, HPR News.