A proposal to extend Oahu’s rail tax has cleared its biggest hurdle yet, with state House and Senate negotiators agreeing to a new finance deal for the island’s cash-strapped public transit project.
Legislative conferees voted unanimously Friday to approve House Bill 134 — the rail tax measure that has helped spur new scrutiny and debate over the 20-mile, 21-station system being built across Oahu’s South Shore.
Following several months of proposals, counterproposals and debate, the lawmakers decided to go with a Senate idea: extend Oahu’s 0.5 percent general excise tax surcharge for an additional five years through 2027.
"I think there is a recognition that rail is, at this point in time, is not going to stop," House Finance Chairwoman Rep. Sylvia Luke (D, Punchbowl-Pauoa-Makiki) said Friday. Approving the deal, she said, would allow the city to finish what it started without having to "penalize" its residents with a "substantial" property tax increase.
The bill would also allow neighbor island counties to enact a 0.5 percent GET surcharge to fund their own transportation-related projects from 2018 through 2027.
Honolulu Mayor Kirk Caldwell, arguably rail’s strongest and most vocal local leader, estimated he’s spent about 90 hours at the Capitol this session visiting with lawmakers to push for a tax extension.
IT’S A WRAP
State legislative committees wrapped up their work for this session Friday. Here’s a look at how some key bills fared. Bills approved by the committees will go to the full House and Senate for final votes next week.
>> A 5-year extension of the rail excise tax surcharge
>> Extension of requirement for reporting vacation rentals
>> State purchase of 55 acres at Turtle Bay
>> Pursue state purchase of Alii Place
>> Funding for Open Doors preschools
>> Excise tax credit for low-income families
>> Mandate insurance coverage for autism
>> Payday lending controls
>> Voting by mail-in ballot
>> Regulate ride-hailing companies
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"I’m very grateful for the political courage shown," Caldwell said after Friday’s vote. "Anytime a politician has to vote to give authority to extend a tax or actually vote for a tax, (it’s) highly unpopular."
A mix of several dozen rail advocates, opponents and project staff attended Friday’s hearing at the Capitol, which, like many of the day’s whirlwind conference sessions, lasted only several minutes. When it became clear lawmakers had a deal and were poised to vote, an audience member in the Capitol hearing room exclaimed, "Say no!"
Lawmakers did remove a bargaining chip introduced late in the process that would have required any counties adopting the tax to take ownership of so-called "roads in limbo" — the hundreds of miles of roads across Hawaii whose jurisdiction is disputed by county and state officials. But they kept an 11th-hour provision in the bill for the state to claim the "air rights" above the 20-mile elevated rail system. The move would give the state control over future development there — and a chance to keep advertising in check along the rail line.
The state will also retain its 10 percent portion for administering the rail surcharge. It’s a lucrative collection deal that goes back to the surcharge’s original passage which has reaped $163 million for the state so far. An earlier rail tax plan considered by the Senate proposed using half of the fee to fund what’s known as "transit-oriented development" efforts.
That provision was later removed.
The full House and Senate are expected to vote on HB 134 sometime next week. If they pass it, the bill goes to Gov. David Ige for consideration.
Honolulu’s City Council would also have to vote to approve the rail tax extension, and so would any of the neighbor island counties looking to use the surcharge for their local transportation projects.
"We’re not out of the woods yet," Caldwell said Friday.
The bill aims to help Oahu’s rail transit project climb out of a budget hole that could be as deep as $910 million, according to officials’ estimates. The bill passed Friday would give the project the extra dollars it needs to close that gap, said Honolulu Authority for Rapid Transportation Executive Director Dan Grabauskas.
He said a tax extension during this session would ensure that construction doesn’t stall before the final four miles or so and eight stations can be completed. He and other top rail officials have further pointed to the island’s hot building market and escalating construction prices as a need to lock in those contracts’ prices as soon as possible.
Rail officials initially proposed lifting the 2022 surcharge sunset in perpetuity, arguing that the GET, despite being a regressive tax, would be the best way to fund system operations once it opened. They also called on the Legislature to lift the sunset to help fund extensions to the heart of Kapolei and the University of Hawaii-Manoa campus — as originally envisioned. However, legislators such as Ways and Means Chairwoman Sen. Jill Tokuda (D, Kailua-Kaneohe) insisted that city officials stay focused on completing the original project.
Under HB 134 the city can use rail tax dollars only to fund rail construction — not to operate the system after it starts running.
