Approve rail tax without cap

When faced with the need to limit spending on the $6.57 billion Oahu rail project, taking action that sends a message of constraint is an appealing option, sometimes even critical to success.

Unfortunately, it can also be counterproductive.

That’s the case with the Honolulu City Council current standoff over extending the tax financing construction.

At the heart of the problem is the fact that the Council’s power here is strictly limited. So taking the proposed action — putting a cap on the added tax funds that go to the rail — likely will land the issue in more uncertainty and delay.

And since delay equals cost, that is the last thing this increasingly expensive project, and the long-suffering taxpayer, really needs.

The legislation at issue is Bill 23, which has passed second reading.

The bill essentially extends the duration of the 0.5 percent general excise tax (GET) surcharge for five years, through 2027.

That extension was enabled last session at the state Capitol, which was needed because the state administers the GET and because legislators passed the bill enabling the tax surcharge in the first place.

As it was designed, the law allows each county council to approve a surcharge dedicated to financing public transportation projects.

Honolulu was the first to adopt the surcharge as the local financing mechanism for its 20-mile fixed-guideway rail project.

Last session, Mayor Kirk Caldwell and officials of the Honolulu Authority for Rapid Transportation (HART) persuaded the legislators that escalating costs probably meant the 2022 end date for the surcharge would not yield enough to complete the work.

At that time they estimated the increased cost at $910 million.

Now Council Chairman Ernie Martin wants to hold them to that limit.

So his preferred version of Bill 23 places the extended-tax cap at $910 million and directs any surplus to go toward initiatives addressing the city’s pressing homelessness and housing needs.

The problem, of course, is that the tax is not authorized for any use other than public transportation, so changing the formula in the way Martin wants would send the whole issue back to the Legislature.

He insists he won’t support a tax extension without the cap.

Council members such as rail supporter Ikaika Anderson oppose the cap because HART since has asserted that it needs more of a cushion to finish construction.

They are right that such rigid controls add a layer of uncertainty to the contracting and planning processes that will likely leave the surplus tax fund in limbo.

A request to allow diversion of the surplus funds to non-rail purposes probably won’t win many lawmaker supporters in an election year, so Martin ultimately wouldn’t be doing the public any favors.

However, the basic instinct to hold the line on HART spending is a good one.

Martin is right to seek additional financial reports, including better information on subcontractor expenditures.

That particular amendment to Bill 23, an effort to improve transparency, is the right way to exercise Council oversight and should pass.

But the Council needs to get beyond this impasse and enact the bill without a cap.

The mayor and HART Executive Director Dan Grabauskas said Federal Transit Administration officials could withhold $250 million — the next installment of the promised $1.55 billion in federal dollars — unless the surcharge extension goes through at Honolulu Hale.

Contrary to what Councilman Trevor Ozawa argued, the FTA is within its rights to do just that. It is the job of the FTA, the agency responsible for those funds, to make certain the money not be spent on a project that, with its funding capped, is bound to land in a state Capitol quagmire.

Now the Council should do its job: Ensure that financing obligations are met, and move this project toward completion.