The Hawaii Supreme Court is considering a lawsuit challenging the rail tax.
Both sides made their arguments before the justices on Thursday.
Right now, the state takes 10 percent of the rail general excise surcharge, before dispersing the rest to the county.
A watchdog group called the Tax Foundation of Hawaii sued saying that’s far more than the true cost to administer it and the city should get its fair share.
“The city doesn’t care because it’s not paying the money, and as long as the money continues to flow it doesn’t care that money is being skimmed. it is only the taxpayers who are being harmed by what is happening here,” said Paul Alston, an attorney for Tax Foundation of Hawaii.
“If the court does what Tax Foundation wants, the cure may end up worse than the disease,” said Deputy State Attorney General Robert Nagatsuji. “The possibility of government shutdown becomes very real.”
The Hawaii Supreme Court has not yet issued a ruling.