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Council member wants ‘Plan B’ in case rail funding is short

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Challenging assumptions that the general excise tax surcharge and federal funds would be adequate to support the $5.3 billion rail transit system, City Council members pressed the city administration on proposed backup plans to pay for the system without tapping general fund money.

Yesterday’s special meeting of the Council’s Transportation and Transit Planning Committee came a day after the Council advanced the operating and capital projects budgets for the rail transit authority, which included provisions stating final approval of any spending must first go through the City Council.

The committee held the meeting to give the public a chance to weigh in on the latest draft budget of the Honolulu High-Capacity Transit Corridor Project, submitted by the city last month to the Federal Transit Administration for review. After the review, the project can enter the final design phase.

Committee Chairman Breene Harimoto said his biggest concern about the latest draft budget was the city’s contingency plan should tax revenues not meet expectations.

"I think the public needs to understand what is Plan B," Harimoto said. "There has been no information publicly yet, so we need to have that dialogue with the public."

The half-percent GET surcharge is the main funding source for the project and is expected to generate $3.3 billion before it expires on Dec. 31, 2022. The draft budget for rail, using state Tax Department forecasts, estimates overall GET growth of 4 percent in the current fiscal year, which ends June 30, and between 6.8 percent and 8.5 percent through fiscal year 2017.

But state tax collections have sunk. Through March, total state tax collections were down 5.5 percent from last year, according to the Tax Department.

"Projections are not facts about the future," rail opponent Cliff Slater testified as a lawsuit attempting to stop the rail, to which he is a plaintiff, was being filed in federal court.

City officials noted that the draft budget outlines options that would be pursued in several scenarios in which funding comes up short.

Options include extending the surcharge through September 2023 or recouping some of the money kept by the state for administering the tax surcharge. Both of those options would require an act by the state Legislature, which Councilman Romy Cachola suggested would be a "tough sell."

"Practically, you can throw it out the window," he said.

Other alternatives would be to arrange lease financing for rail vehicles, pursue partnerships with the private sector or tap federal funds set aside for transportation planning that typically go to support TheBus.

The Rev. Bob Nakata, a community organizer for social safety-net groups, urged Council members to maintain bus funding and avoid a situation of "raiding Peter to pay Paul."

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