Rail funding details needed

Honolulu taxpayers were told the surcharge tacked onto the general excise tax on Oahu would finance the construction, now underway, of the $5.26 billion rail project. The implication at the outset was clear: When the work ends, so would the tax.

Now it seems the administration of Mayor Kirk Caldwell, as well as the Honolulu Authority for Rapid Transportation, see the tax as the best means of subsidizing operations and maintenance as well.

Ultimately, a broad-based tax like the GET may, indeed, offer the fairest way to provide the support, beyond the fare box collection, that a rail system will need.

But even if that’s so, officials still will need to do more detailed financial planning to come up with the appropriate tax scheme, instead of simply making the current surcharge permanent with the stroke of a pen.

That was the intent of a bill, seemingly stalled at the state Capitol, that would have canceled the 2022 expiration of Oahu’s 0.5 percent surcharge atop the 4 percent statewide GET. And the measure should not pass until authorities deliver a plan for achieving the greatest efficiencies possible.

If proven necessary to sustain operations for the long term, the surcharge may not need to be as high as it is.

Some city leaders have begun to air concerns about the lack of detail about operational costs, including Ann Kobayashi, who chairs the City Council budget committee.

While such worries may be premature — the focus until very recently has been on clearing major hurdles blocking the construction of rail — they should spur the city to apply some of its current "zero-base budgeting" methods to planning how the system should run.

There are lots of models for HART and for present and future city administrations to study. The overall governance structure — operations by a single municipality — is the most common, especially for small-to-medium cities. And it seems the primary impetus for restructuring, an expansion of the service area beyond a city’s limits, is not on the horizon.

But what the city must do is plan for maximum efficiency in the coordination of its rail and bus components. This presents challenges in itself, because the rail would be run by HART, while TheBus operations are handled by Oahu Transit Services Inc.

OTS functions as a quasi-public agency that is subject to some city oversight but it is a private nonprofit.

Decades ago, when city governments across the country took over what had been private bus companies, federal regulations required terms to protect the incumbent unions (at OTS, it was the Teamsters).

OTS staffers are not city employees; among other things, this means they are not held to city ethics laws. The Council has considered various bills aimed at bringing the agency under more city control, but no major changes have resulted.

HART officials have said other rail-bus systems have been coordinated success-fully by separate agencies — San Francisco is one familiar example. Some kind of coordination of governance and acquisitions would be an optimal approach, but in any case the authority will have to outline how it intends to fulfill a promise to deliver an efficient, unified service to the public.

Further, the authority will need to clearly project its ridership before setting fare schemes that are marketable.

The percentage of rail riders that will be visitors seems likely to be higher than on TheBus; assuming that’s so, the funding mechanism should include a way for tourists to pay a share of the subsidy.

That suggests that a share of the GET would provide a more rational source of fare subsidy than the property tax receipts.

At a later date — and armed with better information than has been presented so far — HART should be called to persuade taxpayers that their money can be put to its best use this way.