Lawmakers pass bill to extend rail tax for 5 years

The Hawaii state Legislature has approved a five-year extension of Oahu’s rail tax surcharge, sending a bill to Gov. David Ige that aims to complete the largest public works project in the state’s history.

House Bill 134 would generate some $1.8 billion in additional rail funding from Oahu’s 0.5 percent general excise tax surcharge by allowing it to expire in 2027 instead of 2022. Transit leaders say that’s more than enough for the project to climb out of a budget hole that could be as deep as $910 million — plus it would provide a large contingency to address any problems in the future.

The Senate voted 21-4, while the House voted 39-12. It’s now up to Ige to decide whether to make the bill law. He could sign it by July 14 or the bill would become law after that date if he takes no action. Ige would have to let the Legislature know by June 29 if he plans to veto the bill.

The dollars raised under HB 134 could only go toward the capital costs of building rail and not toward future system operations once rail is up and running. If there’s any contingency left over it would likely go toward design and planning of route extensions to University of Hawaii at Manoa and central Kapolei, Honolulu Mayor Kirk Caldwell said.

Caldwell has spent much of the past three months or so at the state Capitol lobbying for a tax extension to at least complete the project. Caldwell and other rail leaders initially pitched lifting the tax’s 2022 in perpetuity so that those GET dollars could help fund operations and future route extensions.

Opponents of the measure have pointed out that the GET is a highly regressive tax that burdens low-income residents much more than higher earners.