comscore Don't borrow to build rental-car facility | Honolulu Star-Advertiser
Editorial | Our View

Don’t borrow to build rental-car facility

[ AD HAS BEEN REMOVED FROM THIS STORY ]

The expression "the lesser of two evils" has been around as long as there’s been politics, but it fits the current debate over car rental surcharges as if it had been coined for the purpose. Redirecting money being collected for a new rental-car facility into the general fund qualifies among the more palatable options the Legislature is facing in a difficult year.

Here’s the problem: Lawmakers are desperately scratching around for funds to close a $1.3 billion budgetary hole, but the post-recession economy is still weak and threatened by the prospect of broad tax increases.

So the solution, still being cobbled together, is to strive for a difficult balance. The state is trying to cut spending without making the unemployment problem significantly worse, seeking to save on labor agreements, reducing services where that’s possible. On the revenue side, new sources must be tapped without putting the economic recovery in peril.

The proposal that would generate additional dollars from the rental-car industry — without adding to the bottom line paid by tourists — seems a lesser evil. Lawmakers should pass House Bill 1039, Senate Draft 2, but with one caveat.

The bill would pour the money yielded by the $4.50 daily airports facility surcharge into the general fund by combining it with a separate, $3 rental fee that does go to the general fund. To assure rental car companies that plans to build the improved facility will proceed, the bill would also authorize the state to float general obligation bonds to finance the project.

The bond sale should be avoided, if at all possible. The fund already established for the planned facility now holds about $29 million; that money should be used to underwrite the project’s early stages, rather than borrowing money and adding to financing charges the state must pay.

This bill’s creative financing would generate about $60 million annually for the general fund, the second-largest potential chunk of new revenue behind the temporary suspension of some businesses’ general excise tax exemptions.

The bill also includes language that would give discretion to the state administration to adjust rental rates to concessionaires such as the rental companies who do not already have adjustment formulas built into the lease. This sounds reasonable, because the recent shocks to the tourism industry have not yet played out, and businesses are fearful of further declines in the visitor arrivals.

Principally, it’s rising fuel prices driving up airfares that are cause for greatest concern; additionally, the devastating tsunami in Japan has depressed Hawaii’s visitor counts from that country in particular.

The bill currently would end the diversion of funds after June 30, 2013. There must be no further extensions; the rental facility fund then could resume banking funds for the project.

The state has an enormous backlog of infrastructure improvement work that needs to be financed with borrowed money; the rental car facility is in demand by tourists and should be built, but on a pay-as-we-go basis. That’s how more of state and city government should be financed, anyway. The less that the state can pile onto its credit card, the better off taxpayers will be.

Comments have been disabled for this story...

Click here to see our full coverage of the coronavirus outbreak. Submit your coronavirus news tip.

Be the first to know
Get web push notifications from Star-Advertiser when the next breaking story happens — it's FREE! You just need a supported web browser.
Subscribe for this feature

Scroll Up