House speaker challenges Ige’s rail tax position

House Speaker Scott Saiki is publicly criticizing Gov. David Ige for saying earlier this month he is “open” to another extension of the half-percent state excise tax to help finance extending the city’s rail project to Manoa.

The excise tax surcharge on Oahu already has been extended twice to cover cost increases, but Ige said Friday he has not endorsed extending the tax for the third time.

However, Saiki noted Ige has received a great deal of political support this year from Honolulu Mayor Kirk Caldwell, and a number of Caldwell’s key political supporters are working to get Ige re-elected. Caldwell has advocated for the half-percent excise tax surcharge on Oahu to be made permanent.

“Caldwell has taken a very public and prominent role in the governor’s re-election campaign,” Saiki said. “I think that the next governor, whoever that person is, needs to take a very strong role in managing rail and not simply defer to the city on what the city wants.”

The latest public statements by Saiki, the top- ranking Democrat in the state House, are an effort to steer the primary election debate into the hot-button issues of rail and the taxes needed to support it, subjects that have for years divided Hawaii voters.

Saiki and several other leading state lawmakers are supporting U.S. Rep. Colleen Hanabusa’s challenge of Ige in the Democratic primary for governor this year and have helped raise money for her campaign.

In an interview Friday, Ige said he thinks there should be no additional funds provided for the 20-mile rail line now under construction, but “yes, in terms of extending the rail system on to Manoa, I would be open to considering an excise tax extension.”

Ige dismissed any suggestion that Caldwell’s political support this year has or could influence him to support another excise tax extension for rail, saying the two have never discussed the matter.

“There is no quid pro quo,” Ige said. “Everybody knows that that’s who I am. I don’t exchange favors like they do, and there is no conversation about that. We’ve never, (the) mayor and I have never had a conversation about how to fund to Manoa or what that would entail.”

The rail project is a city initiative, but Saiki contends it is the most important issue in the governor’s race, and said he wants to focus more public attention on the candidates’ positions on rail.

Completion of the 20-mile rail line now under construction from East Kapolei to Ala Moana Center is years behind the city’s original schedule and is now expected to cost about $9 billion, including financing costs.

Saiki said Ige was “absent” last year when lawmakers debated the controversial proposal to extend the excise tax surcharge for the second time as a financial bailout of rail, and “this is why I was so disappointed to read that Gov. Ige is now ‘open’ to a permanent rail tax.”

Ige indicated in public statements during the 2017 special session that he wanted lawmakers to authorize more funding for the project, but did not say how lawmakers should do that. He then signed into law the bill that lawmakers approved to extend the rail tax for a second time to provide additional rail funding.

During a July 5 candidates forum on public television, Ige was asked whether he thought the rail line should be extended to the University of Hawaii at Manoa and whether he supported increasing taxes to accomplish that.

Ige replied that “definitely, we need to get to UH Manoa eventually, and whether that’s fixed rail or whether that’s at-street light rail, I do believe that the system has to extend to the University of Hawaii and into Waikiki in order for it to really get the maximum benefit.”

Forum moderator Daryl Huff then asked, “So, would that tax, the excise tax surcharge, just have to be indefinitely extended? Isn’t that what would have to happen?”

Ige replied, “I think that that’s one of the options, you know, and I think that that’s important; and we’ve seen every single transit system in the county has, once it gets established, has gotten a lot of support for expansion into new communities to make it more functional.”

Hanabusa remarked at the forum that the city’s full-funding grant agreement between the city and the Federal Transit Administration requires the city to extend the rail line to Manoa.

“So, we’re going to have to deal with what do we do with the rest,” she said. “Honestly, what I’ve seen as to how the city and HART has operated, I do not believe that we should extend any kind of GET or funding on the people of this City and County of Honolulu or the rest of the state until we know for sure that it is the only way to fund. I am not for that, I can tell you that right now, having been there and understanding the finances.”

Hanabusa added in a written statement Friday, “I would absolutely not support an indefinite extension of the GET.”

“The City and HART have an obligation to manage to the budget, and now is not the time for the governor to be talking about an indefinite GET surcharge. It shows a lack of leadership, strength and resolve,” she said in her statement.

“I firmly believe that Honolulu must manage to a budget and they cannot expect to come back to taxpayers time and time again for a project that is still in construction. I will insist that the City makes tough decisions necessary to complete this project before talking about more taxes,” she said in her statement.

Hanabusa served on the HART board in 2014 and 2015, and says she brought transparency to the board.

However, Ige has criticized Hanabusa’s tenure on HART. “Colleen left her position as chairman of the board of HART exactly when the project costs exploded, and really did not take any action to contain the cost of the project while she was serving on the HART board.”

Lawmakers so far have refused to make the rail excise surcharge permanent, but in August the Legislature approved a three-year extension of the half-percent surcharge on Oahu to raise another $1.32 billion for rail. Lawmakers also voted to raise the statewide hotel room tax by 1 percentage point for 13 years to raise another $1.04 billion for rail.

Both of the tax provisions in that rail bailout bill are scheduled to expire in 2030.

Lawmakers also took steps last year to involve the state more deeply in oversight of the rail project, and Saiki said it will be up to the next governor to execute that oversight.

The bailout bill requires HART to submit invoices for its construction costs to the state and have them approved before the city can draw down money from the state from excise or hotel room taxes.

The bill also added four nonvoting members to the HART board, with two each appointed by the House speaker and the Senate president, and provided $1 million to the state auditor to audit previous rail spending.

“The legislation we passed in last year’s special session required the state’s Department of Accounting and General Services to review all receipts and then reimburse the City for the acceptable expenditures rather than just being a pass-through for rail tax money,” Saiki said in a written statement.

“The Legislature intended for this review and reimbursement process to act as a check on costs. Unfortunately, we have received reports that DAGS is currently only acting as a rubber stamp. The next governor must fulfill his or her responsibility and insist that the state’s department follow the intent of the law,” Saiki wrote.

But Ige said DAGS has been scrutinizing the expenditures for rail and has rejected some. “We’ve rejected invoices when we felt it wasn’t well documented or justified,” he said. “It hasn’t been a rubber stamp.”