Rail funding bill gets final approval from Senate, transfers to the House

Local News

A bill to fund Honolulu’s rail project passed out of the Hawaii State Senate Wednesday.

The 16-9 vote on Senate Bill 4 took place as lawmakers expressed their opinions on the Senate floor.

“As leaders, we are tasked with making tough decisions that can bring about real progress for our people. In doing so, as a state, we have always prided ourselves in how we look out for each other,” said Sen. Jill Tokuda. “Even supporting a very short-term extension of the GET surcharge, it is not lost on me how difficult this is for our people, for our small businesses. … That burdens working families, our men, our women. We had to consider other immediate funding sources.”

“Now is the time to step up and show some leadership, because we know we can’t please 100 percent of the population 100 percent of the time,” said Sen. Will Espero. “We’re not taxing our local people’s income tax. We’re not asking them to pay an increased general excise tax. Now of course if a neighbor islander is staying on a neighbor island, they will pay the tax. That’s a given. But generally speaking, the majority of people paying this tax, this extra tax for 13 years will be visitors. … We can’t turn back. We’re not going to tear down what’s been built. We need to complete this for the sake of Oahu, Honolulu’s economy, and for future generations. Our backs are against the wall.”

The nine senators who voted no were: Rosalyn Baker, J. Kalani English, Josh Green, Breene Harimoto, Lorraine Inouye, Kaialii Kahele, Gil Riviere, Russell Ruderman, and Laura Thielen.

“I’m disappointed that the focus is so much on funding, because to me, funding is an issue, but it’s a spending problem. I think throwing more money at something that has a spending problem is not addressing the symptoms to cure the problem,” said Riviere. “While this is all well-intentioned, this isn’t going to be the last time. I don’t think there’s a person in this room or in this state that believes $8.2 billion is going to finish this project. So the question is, what then, right? We’re hoping, we’re hoping, we’re hoping this is the last time, but that’s what we said the last time.”

“This bill was crafted behind closed doors and presented to us with the instructions that there would be no changes before we ever heard from the public,” said Ruderman. “So we had a public hearing on Monday after the bill was written in its final form. I don’t know what they think that we were doing listening to them, but it was not legitimate public input. We have a major new tax being enacted, and we never heard from the public before we wrote the bill.”

SB4 addresses the City and County of Honolulu’s rail construction shortfall of $2.378 billion by proposing the following:

  • Extend the General Excise Tax on Oahu for three additional years through December 31, 2030 which will provide $1.046 billion.
  • Raise the Transient Accommodation Tax (TAT) by one percent to 10.25 percent for 13 years, to December 31, 2030, which will provide $1.326 billion.
  • Permanently increase the counties’ share of the TAT from $93 million to $103 million.
  • Reduce the state Department of Taxation’s administrative fee on the GET surcharge from 10 percent to one percent.
  • Create a Mass Transit Special Fund to review and disburse funds to the city for its costs on the rail project.
  • Require a state run audit of the rail project and annual financial reviews.

The bill then crossed over to the House for representatives’ consideration, which began with a public hearing.

Honolulu Mayor Kirk Caldwell faced more than a dozen representatives on the finance and transportation committees.

Lawmakers did not mince words. They told the mayor they did not trust figures the city recently put out over the troubled rail project, bringing up the $600 million to $900 million figure the mayor declared on Monday, along with $548 million to cover a stress test he initially said the Federal Transit Administration needed.

Congresswoman Colleen Hanabusa, who previously served as chair for the Honolulu Authority for Rapid Transportation’s board of directors, told lawmakers she went directly to the FTA and verified what Always Investigating first reported Monday.

The FTA is not requiring $548 million that the mayor said federal authorities needed by Sept. 15, which is the deadline for the government to hear how the rest of rail will get funded.

“The purpose of the telephone conference was to verify what I believe Gina Mangieri spoke to about the requirements of the stress test and what is it that the FTA is looking to. I’d like to say the FTA has concurred with the testimony that I presented before the Senate, which is the stress test is something that is usually done at the beginning stages, and it has not been called for or even required at this point in time,” Hanabusa said.

Caldwell clarified that that number was calculated in case the bill falls short of getting the money needed to complete the rail to Ala Moana, and says the burden of paying $600 million to $900 million for rail will fall onto the taxpayers of Oahu.

Meanwhile, state Attorney General Doug Chin is refuting claims that there could be legal issues with the bill.

“If there were any legal claims, we believe it’s been addressed by Senate Bill 4 and we would defend it if it’s what gets passed the Legislature,” Chin said. “I think there’s been some talk within the Legislative hearing about possible policy decisions … but the Legislature, they’re the right governing body to pass laws and to also be deciding how to raise revenues from the people of the state, so we are ready to defend whatever the Legislature passes.”

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