Oahu residents will continue to pay an extra half-percent tax for rail through 2027.
The Honolulu City Council approved the bill in a final vote last week and Honolulu Mayor Kirk Caldwell signed it into law Monday.
The measure not only extends the surcharge continue until the year 2027, it also puts a cap of an additional $1.1 billion toward the project.
“Rail is absolutely worth fighting for in my mind, and so many of us look at just tomorrow. But we’re talking about something a decade from now, five decades now, for people we don’t even know yet, who are going to live better,” Caldwell said.
The big concern remains the escalating cost of the project, something HART CEO Dan Grabauskas says he takes seriously.
“We have heard you loud and clear and that we are working diligently every single day to do what we can to try to bring down costs,” he said. “We realize we’re fighting a little bit against the tide with the construction cost escalation that the mayor talked about, but that’s not an excuse for us. It just means we need to work harder and we are doubling down on our efforts to try and minimize those costs.”
The latest projected cost for the rail project is now at $6.57 billion.
Officials say they’re working to get the remaining bids out as quickly as possible, with the City Center bid expected to be released Tuesday.
“What that translates into is that the two final bids will basically be coming in at the end of the March, April time frame for the airport section and the third quarter or so, we’ll get the final bids in for the City Center,” Grabauskas said. “That means we’ll know what these costs are, and we’ll be able to weigh them against the resources we have today.”
The other issue officials continue to discuss is how to pay for rail’s operation, which Caldwell estimates will cost $112 million in 2020.
“I don’t think anyone wants to raise real property taxes to pay for the operation of rail,” he said.
Caldwell says transit-oriented development will produce opportunities for income in advertising, kiosks, possibly naming rights and broadband technology, and officials will maintain an “absolutely critical” dialogue with the public to explore ways to increase revenue.
He also raised concerns over the state’s share of the rail tax. It’s an issue uncovered by our Always Investigating reports, which found that since the tax started, the state has been taking 10 percent off the top as an “administration fee.”
Always Investigating learned nearly $170 million has gone to the state, something the Tax Foundation of Hawaii thinks is unconstitutional.
It filed a class action lawsuit which says the amount given to the state is far more than the cost the state incurs while collecting and distributing the tax.
Caldwell said Monday he wants a straight answer.
“I think 10 percent is too high for collections. I’ve never got an answer. I’ve asked, how much does it actually cost to collect?” he said. “I think they should withhold what it costs to collect, but it should be shared with us.”
Now that the rail tax has been extended, if the state’s share continues, it could top $570 million.