A double-whammy of taxes to pay for Honolulu’s ‘over priced, over budget’ rail system

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You could call it a double-whammy of taxes to pay for Oahu’s rail system. State lawmakers are closer to extending the rail surcharge just two years, instead of permanently like the city wanted.

Now Mayor Kirk Caldwell said property taxes could go up this year to cover the rising cost of rail.

On Tuesday, Caldwell proposed revising city ordinance so that the City can use its general funds for rail construction, instead of just general excise taxes as is currently allowed.

So how does this impact us, the taxpayers?

“This was an honest attempt to once again provide sufficient funds for the city’s over priced, over budget rail project,” said Representative Sylvia Luke, Chair of the Finance Committee.

The two year tax extension until 2029 will generate about $1.2 billion in additional revenue for rail.

The measure also reduces the state’s administrative cost to 1% from 10%. But that still leaves a shortage of nearly $2 billion for the entire project.

“If we don’t get an extension of the surcharge to the full 10 years I’m asking, then we have to find other sources of revenue to build the project if we are going to continue to build all the way to Ala Moana,” said Mayor of Honolulu Kirk Caldwell.

The City is still hopeful it will get the full ten year extension it needs when the measure gets negotiated in committee with the House and Senate.

But the Mayor said the next option to close the gap is to raise the property tax rate between 8% and 14%, and he said it would have to start this fiscal year.

“I rather pay the half percent surcharge than to say ‘taxpayers of Honolulu you are going to pay the half percent and you’re going to pay more to complete the project all the way to Ala Moana Center’,” said Mayor Caldwell.

Councilmember Kymberly Pine said the Council would also have to look at cutting city services.

She said it’s important for taxpayers to tell the City and State if they want to continue the rail line to Ala Moana.

“If they say to us stop this completely, and we hear from enough people then that is what we’ll be forced to do,” said Councilmember Pine.

Representative Sylvia Luke hopes the State’s current proposal will bring more accountability.

“Threatening the public with property tax increase is doing a disservice to our citizens. The City must first do whatever they can do instill confidence and trust in this project, and i’m certain if given the opportunity, they would do that.”

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