Rail debate overshadows Martin’s return as Council chairman

The City Council switched leaders Monday, reinstating Ernie Martin as chairman after a 15-month absence, and debated how to fund some $44 million in potential administrative costs for Honolulu’s contentious rail project.

Martin replaced Ron Menor, who in January 2017 ousted Martin.

Martin has been among Mayor Kirk Caldwell’s sharpest critics on the Council, while Menor described himself as more collaborative with the mayor.

In a 5-4 vote Monday, Martin was supported by Carol Fukunaga, Ann Kobayashi, Trevor Ozawa and Kymberly Pine.

Those who voted Monday against reinstating Martin were Menor, Ikaika Anderson, Brandon Elefante and Joey Manahan.

Menor’s supporters said they were troubled by comments from Martin’s supporters questioning Caldwell’s proposal to use bond money to pay $44 million in administrative costs tied to the city’s $9 billion rail project.

Before the leadership vote, Manahan called on city Budget Director Nelson Koyanagi to explain the use of bond money for rail.

Koyanagi said there is a projected $214 million hole in the current city plan to pay for the $9 billion rail project. That plan was submitted to the Federal Transit Administration last fall. The $44 million in bond money would cover part of the shortfall, specifically administrative costs for fiscal years 2018 and 2019.

The shortfall was created because a state law extending Oahu’s 0.5 percent general excise tax until 2030, which was supposed to cover rail costs, used a more generous revenue projection.

The state law also said the city could use only general funds to cover budget shortfalls related to rail.

“The FTA is insisting that unless you put the money in the budget, they may not approve the (city’s rail) plan,” Koyanagi said, noting that more than $700 million of a promised $1.55 billion federal grant for rail has yet to be collected.

“HART (Honolulu Authority for Rapid Transit), on the other hand, says they don’t need the money in 2019,” Koyanagi said, “so why impact taxpayers” with an immediate tax increase instead of a proposed bond sale? Meanwhile, cutting $44 million out of the city budget “could impact operations and possibly core city services.”

Pine grilled Koyanagi, noting that the operating budget is expected to finish the year with a $113 million surplus. The Council could use the money from that if necessary, she said, “since HART is not going to be spending that money.”

Koyanagi said if the Council chose that route, it would still need to find ways to replenish the fund balance. Otherwise, “it would make it much harder for the departments to operate because there would be all kinds of restrictions during the year,” he said.

Martin said Council members need to listen to all the facts before making a final decision on dealing with the FTA’s demand for assurances. “It was helpful to hear the budget director today, to hear the rationale behind the administration’s proposal (to raise $44 million via bonds),” he said. “That would’ve been helpful if we’d heard that last week. Now we know what we’re dealing with. There’s various options on the table.”

Under the new leadership lineup, Pine will be vice chairwoman, replacing Ikaika Anderson. Fukunaga replaces Pine as floor leader.

New committee assignments have not been announced.