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Rail tax collections reach record high

The $18.6 million raised in June comes amid overall lower transit tax revenue

By Sean Hao

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Transit tax collections rebounded to their strongest month ever in June to top $18.6 million.

The city needs to average only $14.5 million in monthly transit tax collections to meet its target of $174 million for the current fiscal year, which ends March 2011.

Despite the strong showing in June, rail tax collections in the first three months of the fiscal year trailed year-ago figures as well as current-year projections. From April through June, the half-percentage-point general excise tax surcharge raised $36.6 million, or an average of $12.2 million a month, based on figures provided by the state Department of Taxation. During the same period a year ago, the tax raised $41.1 million, or an average of $13.7 million a month.

The city's target for rail tax collections was revised lower last year because revenue was coming in below projections made in 2008.

City officials have downplayed the decline in transit tax collections, saying it will be covered by lower-than-anticipated project costs and a $1.3 billion set-aside in the financial plan for contingencies.

Mayor Mufi Hannemann said yesterday that the city has collected 99.6 percent of forecast revenue.

"Additionally, the state Council on Revenues has said the economic recovery has begun and predicts five years of increasing state tax revenue, which are very promising signs for the rail project," Hannemann said in a news release.

A half-percentage-point, 15-year surcharge was added to the general excise tax in Honolulu in January 2007 to pay for rail. All transit tax collection figures in this story exclude a 10 percent administrative fee retained by the state, which collects the taxes.

The city expects the elevated commuter line to cost $5.5 billion to build.

Money from the local tax will be combined with $1.55 billion in federal money to pay for the project, which is scheduled to open in 2019.

So far the tax has raised $536 million for the city. The city has spent about $148 million on planning and design of the 20-mile rail line from East Kapolei to Ala Moana. Construction of the train was supposed to begin last December but has been delayed by prolonged federal and state reviews of project environmental impacts.

The previous record month for transit tax collections was last August, when $17.4 million was collected.

The city expects transit tax revenues to raise an inflation-adjusted $3.69 billion through 2022, when the surcharge expires, according to an August city financial plan. That is down from the $4.05 billion in transit tax revenues forecast by the city in 2008.

Rail critic Cliff Slater said the tax collection figures indicate that the city cannot afford the rail project.

"The GE tax is just not going to cut it," said Slater, who advocates building a managed-lane highway instead of rail.






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