Caldwell is accused of padding rail budget

With hostilities escalating over rail this week, state lawmakers are accusing Honolulu Mayor Kirk Caldwell and city leaders of “padding the budget” with an 11th-hour increase to their estimated costs that could derail the project.

As late as May 26, the financial reports provided to the Legislature put the total project cost at $8.16 billion. On Wednesday — a day before lawmakers were to announce their tentative deal to bail out the project — city and rail officials gave them a new report. It put rail’s total cost at $8.71 billion, documents provided by legislative leaders show.

Caldwell and members of his Cabinet say the city needs the extra $548 million to show its federal partners that rail can handle the “stress test” of a 10 percent increase to the remaining capital costs.

But legislative leaders, including House Finance Chairwoman Sylvia Luke (D, Punchbowl-Pauoa-Nuuanu), say that for years they’ve been assured the city included the stress test in rail’s final cost.

“We were told a few years ago when there were different players … that, ‘Yes, we accounted for those contingencies and we built them in,’” Luke said Friday.

“So, that’s why we think it’s disingenuous that now they’re coming in with this new figure of 10 percent contingency, because we knew where that was,” she added. “It was embedded into the budget.”

LEGISLATORS STICK TO DEAL

Caldwell’s office late Friday provided the written testimony that rail officials sent to lawmakers this year briefly referencing the stress test. None of it explicitly stated the $8.71 billion figure.

The mayor’s office also pointed to various media reports mentioning rail’s approximately $3 billion shortfall as evidence the city still needs more money. However, that figure was often based on rail’s estimated $8.16 billion cost plus about $1.5 billion in financing — not a stress test.

Nonetheless, Luke and other state leaders remain confident that their draft $2.38 billion funding deal would be enough to finish rail. On Friday the leaders in both chambers said they can’t change that deal other than to make technical fixes.

Later in the day Luke, along with Senate Ways and Means Chairman Donovan Dela Cruz (D, Wahiawa-Whitmore-Mililani Mauka) and House Transportation Chairman Henry Aquino (D, Waipahu) sent a memo to their legislative colleagues to try to ease any concerns over Caldwell’s claims that the city needs more rail money.

“We felt it was important to provide you with justification of the Legislature’s methodology in determining the project’s ultimate cost and its budget shortfall,” the memo stated. It further noted that Caldwell and rail officials put the final cost at $8.2 billion during an Aug. 14 informational briefing.

The last-minute dispute follows months of negotiations on rail that shook up leadership in the Senate. It also comes as the Legislature prepares to meet next week in special session, where it will vote whether to approve the deal. It starts with a 3 p.m. hearing Monday before the Ways and Means Committee.

The final vote in the Senate is expected to be tight.

Caldwell has previously said that he’s staked his political career on rail’s success. However, the doubts that he and other city leaders raised this week over funding could jeopardize the project if it convinces the Federal Transit Administration that the deal is insufficient, legislative leaders say. The city faces a Sept. 15 deadline to finally submit its funding plan to build the full 20-mile rail line to Ala Moana Center, and the date was timed to follow the special session.

‘CAUTIOUSLY OPTIMISTIC’

At a news conference Thursday, two members of Hawaii’s federal delegation, Sen. Brian Schatz and Rep. Colleen Hanabusa, said that despite Caldwell’s warnings they would work to assure FTA officials that the funding deal is solid. Both Schatz and Hanabusa, onetime political rivals, said they were “cautiously optimistic” the federal agency would approve it.

“With all due respect to the mayor and the city, they can’t come out as they’ve done in the past and pick numbers out of the air,” said Hanabusa, who was appointed by Caldwell to the rail oversight board in 2015. She served as the board’s chairwoman last year before getting re-elected to Congress.

Following a meeting with the Honolulu Star-Advertiser editorial board Friday, Luke said Hanabusa and Schatz would have to persuade the FTA to “not listen to this idiot.”

There’s been an undercurrent of hostility and mistrust in the relationship between Caldwell and several House leaders, in particular Luke and House Speaker Scott Saiki (D, Downtown- Kakaako-McCully), dating back to the mayor’s time in the Legislature.

Caldwell, however, has repeatedly argued that the state needs to ensure it provides enough money so that city and rail leaders don’t have to return for a third bailout.

In 2015, shortly before state lawmakers approved the five-year tax extension that Honolulu rail leaders said would likely be more than enough to finish the project, Caldwell pressed for more money — just in case. “We can’t come back again,” he told state lawmakers at the time.

On Thursday he repeated that sentiment. “I’m not going back again to the Legislature. They’re not going to have us come back, I don’t think, even if they say, ‘Yeah, just come back later.’ No way,” Caldwell said.

SHOUTING MATCH ERUPTS

During the previous night the already tense rail debate reportedly erupted into a shouting match when lawmakers gathered with Caldwell in the office of Senate President Ron Kouchi (D, Kauai-Niihau).

Luke asked Caldwell to accept the terms of the proposed rail bailout package, and Caldwell said he took that to mean lawmakers were offering a “take-it-or-leave-it” proposition.

Tempers flared, and Caldwell said he and his chief of staff, Gary Kurokawa, walked out of the room abruptly.

The exchange ended “with one of the members, I think who had maybe drank a little too much, was getting belligerent. And I listened for a while, and then I said, ‘I don’t need to take this,’” Caldwell said.

Caldwell declined to identify the lawmaker.

Saiki said several lawmakers including Saiki drank “a glass of wine” that evening, but no one was intoxicated. And he described the 90-minute exchange between frustrated lawmakers and Caldwell in stronger terms.

“I think that several people yelled at him that night,” Saiki said, including him. “In fact, I think everybody in the room yelled at him that night. Everyone yelled at him at some point.”

Caldwell yelled back during the exchange, and “in the end Caldwell was red-faced and left,” Saiki said.

Dela Cruz and Luke said lawmakers have already made allowances considering the unique nature of the rail project, which is the largest public works project in state history.

“This is the third time at the trough — the third time,” Dela Cruz said.

Rail Project Costs (May 26) by Honolulu Star-Advertiser on Scribd

Rail Project Costs (August 23) by Honolulu Star-Advertiser on Scribd