The 2017 legislative session may have come to an end, but the battle over how to fund Honolulu’s costly rail project is far from over.
State lawmakers ended the session Thursday without a funding bill for the project (Senate Bill 1183).
The Senate wanted to extend the General Excise Tax surcharge for another 10 years. The House wants to extend the GET one year and raise the visitor-based Transient Accommodations Tax (TAT) one percent for 11 years. The session ended with neither proposal.
State lawmakers tell us there’s still the possibility of a special session if they can come up with a compromise, and Honolulu Mayor Kirk Caldwell is hopeful that it can happen.
But one city council member says that as of today, the project is dead.
Councilwoman Kymberly Pine says the $3 billion shortfall to complete the project is too deep to make up without a funding bill from state lawmakers, and there’s now the possibility of losing funds from the federal government.
So, Pine said, it’s time to consider killing rail altogether.
In a statement, she wrote: “Today, I am asking the Mayor to send down a new budget. One that will include cuts needed to fund rail construction to Ala Moana and another to include taxes and fees that need to be raised to fund the construction to Ala Moana. The legislature has stated their position to not to agree to fund rail and it is time for the Honolulu City Council and the Mayor to make some very tough decisions, including the possibility of stopping the project completely. Rail as of today is dead. We simply cannot pay for a project that we do not have the funds to complete.”
Pine says the city council and the mayor will need to put together a different budget to come up with an extra $3 billion for rail, and it would mean drastic cuts or raising property taxes from $600 to $1,000 per family.
“As of today rail is dead, and people need to know that, but I’m really hoping that once we all realize what happened, maybe we can think about and maybe cooler heads will prevail,” Pine said. “It’s not a scare tactic. It’s the reality of what we have to decide. Is rail dead or are we going to stretch the taxpayer to property tax increases?”
State lawmakers say a special session can still happen, but not anytime soon.
“Our position is that we need a cooling-off period before the House and the Senate get together to try and resolve this,” said Rep. Scott Saiki, the new Speaker of the House.
“People out there are going to say you had a whole session to deal with this rail funding issue, and in the end, nothing gets done. What do you say to them?” KHON2 asked Senate President Ron Kouchi.
“I’m sorry, and we’ll try better the next time,” he replied.
“Will the next time be sooner, meaning before the next session?” KHON2 asked.
“I hope so,” Kouchi said.
State lawmakers add the city put them in a bad spot in having to make this decision in the first place.
“The city never gave us good numbers, numbers that we could trust, numbers that we could work with. It kept on changing. Even up until yesterday, it was changing, so it’s bad information in, bad information out,” said Senate Majority Leader Kalani English.
“I think we’ve been consistent on the cost of the project at $8.2 billion,” said Caldwell. “I haven’t heard that number change in the past four months.”
Caldwell adds that he will keep working with state lawmakers to push for a special session. For now, he says there’s enough funding for rail until the end of the summer.
The following statement was issued by the Hawaii State Association of Counties, which represents Hawaii’s four county councils:
“HSAC, which represents the four counties, is extremely disappointed at the state House’s decision not to settle their differences with the Senate on SB 1183. By shelving both versions of this measure, this reduces the counties’ share of the hotel tax by $10 million back down to $93 million for next year.
“This cut will most definitely hurt the counties financially, particularly with us already providing much needed fire, police and parks services to serve and protect our tourists. This will further burden our residents who are already unfairly paying for visitors’ expenses.
“HSAC still supports a 55-45 percent split of the hotel tax revenue between the state and four counties, which was recommended by comprehensive research from the State-County TAT Functions Working Group. We will continue to fight for a more equitable share of the hotel tax during the next legislative session for the benefit of local residents and visitors.”