Rail tax bills roll

Amid a day packed with blunt questions and impassioned testimony on the future of Oahu rail, state lawmakers advanced bills Wednesday that would extend the state tax funding most of the cash-strapped project.

With an 8-2 vote, the Senate Ways and Means Committee advanced the rail tax extension measure — Senate Bill 19 — but not before members trimmed the extension period from 25 years down to five years.

Both senators and rail officials agreed that the shorter tax extension would still raise the dollars needed to get the largest public works project in Hawaii’s history through its current cash crisis.

New financial documents that rail officials recently provided to the senators showed that a five-year extension would appear to get the project out of the projected $896 million "hole" that it faces when the tax surcharge is set to expire, in 2022, Ways and Means Chairwoman Jill Tokuda said.

The move would also leave the project with a $192 million balance to work with, Tokuda (D, Kailua-Kaneohe) added.

In testimony before the committee, Honolulu Mayor Kirk Caldwell agreed with Tokuda’s assessment — but he still lobbied for a 25-year extension that would allow officials to build the rail line farther east to the University of Hawaii-Manoa campus and west to downtown Kapolei.

"I don’t want to be back in five years, whether I’m here or not" needing another vote on funding for those route extensions, Caldwell said. "To put the community" through that kind of "pain" would be difficult, he said.

Besides, Caldwell added, "If you listen to everyone in this community, they say it’s crazy" that the rail route doesn’t go to Manoa.

Nonetheless, Tokuda and other senators insisted Wednesday that extending the rail line was a separate issue from ensuring that the project has enough funds to complete the original 20-mile line. They further questioned why the state should provide dollars for the UH and Kapolei spurs when the Honolulu City Council hasn’t approved those extensions yet.

The Ways and Means Committee also removed language that had been added to the bill earlier this month to divert half of the state’s 10 percent administrative take on the GET surcharge collection to transit-oriented development efforts.

Sens. Sam Slom (R, Diamond Head-Kahala-Hawaii Kai) and Gil Riviere (D, Heeia-Laie-Waialua) voted against the bill. "If any of us in here were asked to put up our own money" for the rail project, Slom said, "we would not do it. The fact of the matter is we’re putting up the money of the taxpayers."

Riviere, a North Shore Democrat, criticized the city’s pitches for extending the rail tax as being "all over the board." He said Honolulu Authority for Rapid Transportation should show some fiscal responsibility first and come back with the extension request next year.

The measure now goes before the full Senate for a vote. If it passes, it advances to the House.

House lawmakers, meanwhile, expressed more discomfort than the senators Wednesday toward rail officials’ tax extension proposals — but they still passed a bill by a slim margin.

With an 8-7 vote, the House Finance Committee advanced House Bill 134 to extend the surcharge but also to cut it in half — from a 0.5 percent surcharge to 0.25 percent.

The committee intentionally did not specify whether the measure would make the surcharge permanent. Finance Chairwoman Sylvia Luke said House officials are still struggling with how long to extend the rail tax, if at all.

The bill at this point is a conversation-starter on how best to deal with the rail budget crisis, Luke said. It now goes before the House for a floor vote. If passed, it goes to the Senate.

Earlier Tuesday, during the Ways and Means hearing, some senators took turns grilling Caldwell, HART Executive Director Dan Grabauskas and other rail leaders.

Senate President Donna Mercado Kim sat in and said that HART officials should have alerted the agency’s board months earlier than they did of the financial hardships ahead.

HART officials first made the looming shortfall public in December.

"You’re saying everything happened at the beginning of December? … It didn’t all happen overnight," Kim (D, Kalihi Valley-Halawa) said Wednesday. "If somebody’s paying attention, you know that something’s happening."

Grabauskas responded that rail officials realized the project could face significant cost overruns when they opened bids in August, but that they couldn’t meet with construction companies to get a clearer idea of what cost increases the project faced until after one of its bidders dropped a protest to its canceled bid in October.

Sen. Donovan Dela Cruz went further than Kim, calling the HART board a "rubber stamp" that hasn’t taken sufficient cost-cutting measures of its own to help address the cost overruns. Rail officials, Dela Cruz said, are making it difficult for lawmakers to support extending the rail tax. "It’s about the perception of these things," Dela Cruz (D, Wahiawa-Mililani Mauka) added.

HART board Chairman Ivan Lui Kwan disagreed with that depiction. Later, before House members, Grabauskas added: "We’re not wasting money — we’re not spending it in a reckless fashion. We have nothing to hide and I think we do a very good job."

Tokuda further noted that the City Council has not submitted any written testimony lending its support to SB19 — and she wondered why. "This is a big deal and we don’t even have a piece of testimony," she said.

Earlier this week, City Councilman Brandon Elefante introduced Resolution 15-61 urging the Legislature to extend or make permanent rail’s GET surcharge. That resolution has yet to be considered by a Council committee — the first step to pass it.

Honolulu resident Natalie Iwasa was among those who implored the committee not to pass the bill. "The people that are asking for this surcharge, they’re set," Iwasa said. "They don’t know what it’s like to live paycheck to paycheck."

In its testimony criticizing the Senate bill, the Tax Foundation of Hawaii called the GET a regressive tax that takes a "larger percentage of a poorer family’s budget than a high-income family’s budget."

Caldwell, meanwhile, has said building rail is critical to ensure that all of the island’s residents, including middle-class families in Ewa, have "transportation equity," or sufficient options to avoid traffic regardless of that person’s income.

Councilwoman Kymberly Pine, speaking in support of the measure and the project, described Ewa working-class families to the committee. They typically wake up at 4 a.m. to get to work on time, then when they return home "it’s dark already, the kids have had their dinner and it’s time to go to bed again."