Money train

Construction on Oahu’s public rail transit project is moving ahead full speed — but a clear, detailed plan to cover the added costs once the rail line is up and running hasn’t yet been made public.

What is clear is that discussions on how to cover those costs are underway now, and often behind closed doors. But the lack of specifics has the Honolulu City Council’s budget chairwoman concerned.

In recent months, some of rail’s top leadership, including Mayor Kirk Caldwell, have started to publicly float the idea of extending Oahu’s 0.5 percent general excise tax surcharge as the best way to help pay for rail and other local public transit.

"I would like that," Caldwell said in January of keeping the surcharge. "If it goes in perpetuity … It would be applied to operation and maintenance of the rail system, along with our bus system."

"If you eliminated the sunset, there’d be more resources for the city" — and less reliance on city property-tax dollars to subsidize the project, Honolulu Authority for Rapid Transportation board Chairman Ivan Lui Kwan said in a meeting with the Star-Advertiser’s editorial board in February — about two weeks after Caldwell began publicly endorsing the idea.

Lifting the surcharge’s 2022 sunset would ensure that visitors to the island, not just local taxpayers, would subsidize rail operations, supporters of the idea say. It could also raise funds to eventually build extensions to the University of Hawaii’s Manoa campus and Kapolei as originally envisioned, they add.

State legislators, who give the city the authority to collect the GET surcharge, have said they’ll consider the idea. However, a bill that would enable Oahu to collect the surcharge in perpetuity appears to have stalled this year in committee.

City officials approved the surcharge nine years ago as a way to help build Hawaii’s most expensive public works project ever. The island’s residents, visitors and businesses have subsequently been paying the surcharge since 2007. To date, the surcharge has brought in $1.2 billion, an average of about $200 million a year.

Before it sunsets, it’s expected to raise about two-thirds of the dollars necessary to construct the island’s $5.26 billion rail project.

After the full rail line begins running in 2019, from East Kapolei to Ala Moana Center, the annual operation costs for the new system are expected to exceed $110 million.

Transit officials estimate those annual costs will reach $145 million by 2030. And while they have a solid idea of what expenses to expect, how they’re going to pay for those expenses remains far less clear.

To date, the only plan that they’ve put forth consists of about six pages from a rail financial plan released nearly two years ago to help secure more than $1 billion in federal funding.

That six-page summary suggests using a mix of passenger fares, city tax dollars and federal funding as a potential way to fund rail operations, but they don’t go into much detail beyond that.

Keslie Hui, who’s served as finance chairman for HART’s board since July, agrees the plan doesn’t shed much light.

"It was a reasonable … high-level estimation," Hui said Thursday. Now "what we’re trying to get down to is reality and what can we do to improve the situation." He described that 2012 financial plan as a jumping-off point as the HART board considers potential fare policies and how those policies could affect the system’s ridership.

"I think we’ve got at least another year" of work before setting those fare policies, Hui said.

Ann Kobayashi, who runs the Honolulu City Council’s budget committee, is the only council member who was in office in 2005. That year, she joined with the majority in voting to enact Oahu’s rail surcharge.

"If it did not have a sunset date, I would not have voted for it," Kobayashi said Wednesday. "I assumed that that was all the money that was necessary."

The recent talk of lifting the sunset has her concerned, she said.

"Why would they have to ask for that if they have enough money?" Kobayashi said. "That’s another frightening thing that they have to lift that sunset date. If they have enough money, then we shouldn’t have to go to the Legislature."

However, Hui said that there will be enough money to support rail operations — it’s simply a question of who should fund it, he said.

"If I didn’t believe it was affordable, I couldn’t say it’s absolutely the right thing to do," he added. Hui said he supports lifting the surcharge sunset as long as it gets some sort of popular approval.

The rail project can’t rely on passenger fares alone. Typically, such public transit systems rely heavily on subsidies to run because the fares they collect cover only a fraction of those expenses.

That goes for Oahu’s public bus system, TheBus, where passenger fares cover only a third of costs. If fares were raised to cover the full cost, they would be far too expensive for most users to ride those buses and trains — and defeat the whole purpose of those systems, public transportation advocates say.

The nation’s public transit systems on average rely on passenger fares to fund 33 percent of their operations, according to 2011 data provided by the American Public Transportation Association, a D.C.-based advocacy group.

In 2013, California’s Bay Area Rapid Transit system relied on passenger fares to cover 57 percent of its operations and sales tax to cover 30 percent. Property taxes, meanwhile, covered just 5 percent.

Oahu’s 2012 plan suggests relying heavily on city property taxes to pay for bus, rail and paratransit operations. It calls for those revenues to cover no less than 65 percent of public transit costs through 2030.

The proposal to lift the sunset on Oahu’s surcharge "comes up all the time" in Hui’s discussions with other rail officials, he said. The idea could be seen as a "natural progression," now that lawmakers and transit officials have a clearer idea of the rail project and its impacts, he said.

"Certainly it was an increase when it happened, and I think at this point it’s something that folks are used to paying," Hui added.

Kobayashi, meanwhile, said she was frustrated at the lack of details so far.

"I just don’t know. I just have to trust them, what they tell me, that it’s going to be on time and on budget and that the operations will be covered by ridership and whatever else," she said.

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Star-Advertiser reporter Gordon Y.K. Pang contributed to this story.