Caldwell criticized for wrong impression on rail tax

State legislative leaders say Mayor Kirk Caldwell was not as forthright as he should have been in helping them best decide what to do about Honolulu’s cash-strapped rail project, with one key lawmaker calling for the mayor to apologize to help rebuild trust between the city and state.

"I think there should be an apology to the public — and to the Legislature — for creating an incorrect impression," said House Majority Leader Scott Saiki. "That’s the starting point. Rather than being defensive, there should just be an apology."

Conflicts between city and state leaders are hardly new on Oahu, and the latest rift involves the newly passed five-year extension of Oahu’s 0.5 percent general excise tax surcharge to fund rail, valued at $1.8 billion.

It centers on Caldwell’s claim during the last legislative session that the city would have to raise property taxes an estimated 30 percent to 43 percent to "pay and operate rail" if the state didn’t extend that surcharge. Some lawmakers say they believed that the estimate referred to the money needed to cover the rail project’s current roughly $900 million deficit.

They question whether the mayor was clear that the estimate also included helping to pay for extending the rail line beyond the current plan to end at Ala Moana Center, something that hasn’t been approved.

Caldwell provided a detailed record last week that showed the city had given its property tax breakdown in writing to a Senate transportation committee. It’s the same information that Saiki and other top lawmakers are now upset about, saying they never saw it.

The Feb. 11 handout apparently never made it to the Legislature’s powerful money committees, which did the heavy lifting on the rail tax bill.

The chairwomen of those committees, who played a central role in drafting the measure to extend the rail tax five years, say they never saw the handout and that they subsequently could not find it in their records.

Having those estimates on how property tax increases would compare to a GET extension might have changed their deliberations and their decision-making, the lawmakers said.

"We asked throughout the session … we continued to seek that information," said Rep. Sylvia Luke (D, Punchbowl-Pauoa-Nuuanu), chairwoman of the House Finance Committee. "They never came back and corrected. They were never straightforward," she said of the city.

Regardless of the paper trail, Senate Ways and Means Chairwoman Jill Tokuda said she believed Caldwell should have made the details behind those property tax estimates known at some point during his numerous hours of public testimony.

"It should’ve been highlighted in the hearing process when these questions were being publicly asked," Tokuda said last week, as she and several aides combed through binders of rail documents trying unsuccessfully to find the city’s breakdown on a property tax increase.

Tokuda (D, Kailua-Kane­ohe) had pressed rail officials during hearings for details on how the city proposed to fund rail’s annual operations. She said she was frustrated that she never got word that it would require an estimated 8 percent property tax increase to cover those operations costs.

"At the time that we were going through all this, to have all of the options on the table would have been helpful," she said.

Sen. Donna Mercado Kim (D, Kalihi Valley-Moanalua-Halawa Valley), who served as Senate president during most of this year’s session, also said she "never saw it," referring to the city’s property tax details, and that they never came up in the hearings she attended.

Caldwell’s records show that in March the Legislature’s finance members received estimates in writing that the city would need between a 5.6 percent and 19.1 percent property tax increase to cover rail’s approximately $900 million shortfall if it didn’t get a GET extension.

That range depended on how quickly lawmakers would prefer to pay the debt back, anywhere between five and 25 years. The quick- er they would want to pay it back, the more expensive the property tax increase would have to be, it showed.

A March 27 correspondence from the Honolulu Authority for Rapid Transportation contained those figures. HART Executive Director Dan Grabauskas said he also recalled testifying on that range in a March 4 hearing before the House Finance Committee.

The correspondence did not mention the estimated property tax increases needed for operations and line extensions, however.

In an interview Thursday, Caldwell said he respectfully disagreed with the legislative leaders that he had not been forthcoming during the rail debate.

"I think the record speaks for itself," he said.

In late January, when he first mentioned the 30 percent to 43 percent estimate, it was clear that he was lobbying to keep the rail surcharge in perpetuity, Caldwell said. That would include the costs to extend the transit line, so he was being consistent in using that range, he said.

As the session progressed, Caldwell continued to lobby for the surcharge in perpetuity even when it was clear lawmakers wanted to set an expiration date. Thus, he said, the city’s 30 percent to 43 percent estimate remained relevant to the discussion.

"I believe that this process was full and open and transparent. It went on for the entire session," Caldwell said. "I myself testified for about 17 hours." He added that he spent an additional 120 hours or so meeting individually with all but three members of the Legislature.

Though Caldwell’s office released comprehensive records this week on what the city gave the Legislature regarding its property tax estimates, the larger effort to get those details was a challenge during the session.

In March, the Honolulu Star-Advertiser made a formal request to Caldwell’s office for details on the estimated 30 percent to 43 percent increase to "pay and operate" rail, which he had shared in testimony before the Legislature.

About a month later, after repeatedly pushing for a response to that request, the mayor’s office said it could not produce the data supporting the figures.

Several weeks later, a completely separate records request to HART revealed the city’s estimate that it would take a 5.6 percent increase to cover the rail shortfall.

When faced with renewed questions to clarify the matter, Caldwell’s office said the Star-Advertiser’s original request for details should have been directed to HART instead. To date, it’s still not clear why Caldwell’s office handled the original request as it did.

"It’s really about the credibility of the mayor providing forthright information," Luke said of her office’s attempts to get answers. "We expect people who testify to come forward with all the information they have. Hopefully this will be a lesson to legislators as well."

Added Saiki, "These circumstances are unfortunate because they further diminish public confidence for this project — and that’s not good for anyone."