House speaker wants city to help fund rail

House Speaker Joe Souki says he supports plans to make the half-percent excise tax surcharge for the Honolulu rail project permanent, and wants to use money from the surcharge to extend the rail line to the University of Hawaii at Manoa, but only on one condition: Souki says the city must contribute its own funding to help pay to build the project.

State lawmakers reconvene next week for the 2017 session of the Legislature, and Souki said in an interview that money from the excise tax surcharge on Oahu should be used only for construction, and not to cover the cost of operating the 20-mile rail system.

Souki also said he supports reducing the 10 percent administrative fee the state charges the city for collecting the excise surcharge to 5 percent. The state has earned hundreds of millions of dollars from that fee since the surcharge went into effect in 2007.

Souki stressed that he is speaking only for himself because his fellow Democrats have not yet agreed on a formal position on the rail excise tax. However, at 83 years old, Souki is a veteran political operator who has served as speaker twice, and has a history of getting his way on some important political issues.

The excise tax surcharge was originally supposed to be a temporary source of funding for rail but was extended once already to cover the skyrocketing cost of the project. The surcharge is scheduled to expire at the end of 2027, but it will not cover the cost of rail unless it is extended.

Total costs for the rail line could now reach $9.5 billion, according to the latest financial plan, and the surcharge currently provides about $230 million a year for the project.

Souki declined to say exactly how much money he thinks the city should contribute toward rail construction, but said he believes thus far the city has gotten a “free ride” on the project because none of the funding for construction is coming from Honolulu property taxes.

If the city contributes some its own funds, that will make the tax surcharge extension more palatable to legislators when it is time for them to vote on it, Souki said. He also suggested the city can afford to help with the construction costs, noting the city has enjoyed a property tax windfall from the new condominiums that are popping up in urban Honolulu.

Jesse Broder Van Dyke, spokesman for Honolulu Mayor Kirk Caldwell, said in a written statement that Caldwell met with Souki to discuss the issue and agreed to find more city revenue sources for operations and maintenance of bus and rail. Broder Van Dyke did not make any reference to Souki’s proposal that the city help fund construction of the rail project.

On another subject, Souki said he will not throw his support behind Gov. David Ige’s proposal for increases in the state’s gasoline tax, vehicle weight tax and registration fees to boost funding for state highway maintenance and construction.

“That won’t be one of my recommendations, because every poll shows that the public doesn’t want the registration tax increase and the gasoline tax increase,” Souki said. “If the governor can push it, good and well.”

In describing the attitude of the public, Souki said, “Traffic is the major concern, but they don’t want to pay for it.”

Ige proposed increases in the gasoline tax, weight tax and and registration fees last year, but lawmakers rejected them all. The governor says he will again ask lawmakers to approve those tax increases this year because he sees few alternatives for funding highway construction.

Ige has said that his administration will defer almost all major new projects to increase highway capacity and reduce traffic congestion on state roadways because the state Highway Fund does not have enough money to finance the large-scale projects.