10-year tax idea for rail falters

Key state lawmakers gathered Wednesday to discuss a new plan to extend the Oahu excise tax surcharge for rail by another 10 years, but it isn’t clear whether the idea has the support it would need to win approval in either the Senate or the House.

The 10-year tax extension idea was offered up at a conference committee meeting by Senate Transportation and Energy Committee Chairwoman Lorraine Inouye, and the proposal has the backing of Senate President Ron Kouchi.

However, Senate Ways and Means Chairwoman Jill Tokuda has refused to endorse the 10-year plan, which under Senate rules means it is not an “official” Senate position. The official Senate position, which was approved by senators in a 25-0 vote in March, is there will be no extension of the surcharge.

Tokuda is key to the rail debate because as chairwoman of the Ways and Means Committee, she controls appropriations and tax measures in the Senate.

While there was talk by some senators last week of removing Tokuda if she won’t agree to a 10-year rail tax extension, Senate Majority Leader J. Kalani English said Wednesday that is “not a discussion that we’re having in leadership; that’s not a discussion that’s happening amongst ourselves. Maybe a few senators have said it, but the majority of us, absolutely not.”

Tokuda said in an interview after the hearing that lawmakers for years have asked questions about the cost of rail and now city officials are “asking the Legislature to make these tough decisions, for what? For you to be back here next year, or two years from now?”

“The public is tired of the lies, and so should the Legislature, but more so the public and the taxpayer,” Tokuda said. “They’re tired of the lies, they’re tired of coming back here and saying ‘Don’t worry, we’ll never be back here again,’ only to be back here one more time to say, ‘OK, we need another extension.’”

In another twist in the rail debate, city officials now say even the 10-year extension proposed by Inouye and Kouchi would not provide enough money to complete the 20-mile, 21-station rail line from East Kapolei to Ala Moana.

Krishniah Murthy, executive director of the Honolulu Authority for Rapid Transportation, said after Wednesday’s hearing he did not immediately know how much money the 10-year extension proposed by Inouye would raise, but said the total is expected to be $600 million to $800 million short of what the city needs to finance and build the project.

Staff for Honolulu Mayor Kirk Caldwell and for HART also said they were unable to say how much money would be raised by a 10-year extension of the rail surcharge.

The half-built rail line is hugely over budget, with the estimated price tag for the project increasing from $5.26 billion in late 2014 to nearly $10 billion today, including financing costs. The project is funded mostly from the excise tax surcharge, which generates about $250 million per year and is scheduled to end in 2027.

The Legislature already extended the tax surcharge once in 2015 at Caldwell’s request, but the latest cost overruns forced the city to return to the Legislature this year to seek another extension.

Caldwell has said he is worried lawmakers may not extend the tax this time, adding that “I think we’re having a harder time than two years ago, and it’s all based on the fact that there’s no trust, that the numbers given have changed dramatically.”

Earlier this month the House approved a version of Senate Bill 1183 that would extend the surcharge for two more years to raise an extra $1.2 billion for rail, but Caldwell says that won’t provide enough money to complete the project. If the House proposal passes, Caldwell said that could force the city to raise property taxes by 8 to 14 percent to make up the difference.

Last month the Senate voted on another version of SB 1183 that would not extend the tax surcharge for rail at all. Instead, that Senate draft of the bill would reduce the state’s share of the rail tax surcharge to provide about $300 million in additional funding for the rail project.

Lawmakers are now meeting in conference committee sessions to decide which version of the rail tax bill will win final approval. The third version of the bill that would extend the rail tax by 10 years was proposed by Inouye at a Wednesday conference meeting.

In a sometimes heated exchange between lawmakers Wednesday, House Finance Committee Chairwoman Sylvia Luke urged Inouye at least four times to disclose publicly how much money the proposed 10-year surcharge extension would raise.

Inouye offered to provide that information later, but Luke replied that “we hope that you can come back with specific numbers, because if we’re going to continue to tax the working poor and the elderly, you at least have an obligation to tell us exactly what those amounts are.”

Luke also questioned why Inouye was suddenly offering a new proposal. Inouye replied that “as far as we know … and the majority in the Senate as well, we concur with the city and county … that we need to continue the rail, and that’s our position. Two years will not work out.”

She said a 10-year extension of the tax surcharge would allow the city to submit a recovery plan for the project to the Federal Transit Administration in time to meet an April 30 deadline. The FTA has pledged $1.55 billion in federal money to help fund rail but is demanding that the city demonstrate it has enough money to finish the project.

Tyler Dos Santos-Tam, executive director of the Hawaii Construction Alliance, said lawmakers need to “do the prudent and responsible thing, which is get us to where we need to be.” The alliance, which represents the Hawaii Carpenters Union and four other construction unions, supports extending the excise tax surcharge to fully fund rail.

“It’s very frustrating that the House and Senate are so far apart, and it’s even more frustrating that it seems like there’s a lot of stonewalling, brinksmanship and political theater,” Dos Santos-Tam said.

The conference committee on SB 1183 will meet again Friday morning, just hours before the deadline to finalize each of the bills that will pass this year.