City rail, state highways to vie for tax hike funds

News

Gov. David Ige says both city and state transportation projects need more from taxpayers, but how that tab is collected is up in the air for now, though he’s committed to making a federal deadline on the rail project coming up this spring.

The City and County of Honolulu wants to cover billions in the rail project shortage with a general excise tax surcharge extension the state must approve. A federal recovery plan depends on it, with a deadline of April 30 even though the legislative session runs into May and the governor’s deadline to sign bills comes even later.

Always Investigating asked the governor, “Will you be expediting any signature on a bill if they send one to you for an extension of tax for the city?”

“We definitely will be working with the Legislature and the county to make sure that we can take the necessary actions to comply with the federal deadlines,” Ige said.

“Are you in general supportive of a tax extension at this point?” Always Investigating asked.

“I am committed to finding a way to finance the transit system so we can build it all the way to Ala Moana,” Ige said. “I think that’s fundamentally important.”

Last session, the Ige administration tried and failed to get a hike in the weight, motor vehicle and fuel taxes to patch what it says are shortages in the highway fund to back big infrastructure projects. The governor tells us that need has not gone away.

“We know that we need additional revenues to fund the highway system,” Ige said, “or else we will not be able to make the investments to increase capacity especially on the neighbor islands.”

The governor’s biennial budget includes a handful of capital transportation projects, but he says they’re still working on the best approach to take on more, and how to pay for it. That’s where the state’s highway fund quandary may intersect with the city’s rail money pickle.

“I know people are just really trying to push just do this extension, just do this, maybe combine them all together saying that’s the easiest way forward,” said Sen. Jill Tokuda, chair of the Senate Ways and Means Committee, “but I think we need to take a step back and pause and take a look at what is the best thing to do for the sake of the taxpayer and to ultimately get these projects done.”

Could the extended city transit tax somehow make up for the deficiencies in the numbers on the state highway fund?

“We are looking, and our transportation department has gone out to community meetings,” Ige said. “We’ll be working with the Legislature and the county to find the best way to fund all of the transportation needs.”

Asked what he thinks would be most fair and transparent to the taxpayer — one extended tax and a new tax or raised tax on the highway fees, or maybe a transit type of tax that covers everything – Ige replied, “I think we’re open to both of those. We definitely know that transportation costs impact each and every person in our community and we need to arrive at something that is fair to the constituents as well as generates enough revenues for us to do these vital infrastructure projects.”

Always Investigating asked lawmakers, is passage of a city transit tax extension all but guaranteed or a long-shot?

“I don’t think anything is ever guaranteed unless we have good answers and we have information that we can count on,” Tokuda said. “Remember, we have been at this point before, not once, not twice, and so we really need to make sure for the stake of the people’s trust, we know whatever comes before us, we will be able to say with confidence these are the numbers. We can count on them.”

Whether the rail tax would be extended in its current formula remains to be seen. The state takes one-tenth off the top as an administration fee, but that’s been far in excess of the true cost of collecting it and distributing it back to the city.

Always Investigating asked the governor, it’s been pretty clear in the past that what’s been collected has funded not only the cost of collecting the surcharge but indeed more than the whole budget of the tax department. Is it possible that surcharge could be less?

“We’ll look at that,” Ige said, “what the actual cost is to collect the surcharge and then make appropriate adjustments.”

That adjustment might not change immediately, though. The governor says he’s looking to the state’s cut of the excise tax surcharge to pay for an $80 million tax system that’s replacing a previous $80 million tax system.

“That system does enable execution of the tax surcharge, so we are looking at what is a fair compensation for what we do to collect the transit surcharge,” Ige said. “So it really is about how do we apportion what the cost is for the state to collect the tax and make an arrangement with the county.”

Copyright 2021 Nexstar Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

Trending Stories