Honolulu Officials Unlikely To Try To Extend Rail Tax
UPDATED 1/19/2012 5:39 a.m.
WASHINGTON — Honolulu rail planners are unlikely to request an extension to the general excise tax surcharge that’s paying for the bulk of the project.
That was the message that emerged after a lengthy private meeting between Honolulu officials and Federal Transit Administration Administrator Peter Rogoff in Washington on Wednesday.
In an interview before the meeting, Rogoff told Civil Beat that it’s just a matter of “paperwork,” when asked about what the city needed to do to strengthen its financial plan enough to get federal funding. He said he thinks Honolulu is “going to get there.”
Honolulu Mayor Peter Carlisle arranged the meeting. He told Civil Beat it lasted an hour and a half, and focused on ways that Honolulu can shore up the $5.2 billion rail project’s financial plan. Also present, at the mayor’s request, was Don Horner, chairman of the Finance Committee of the Honolulu Authority for Rapid Transportation.
Last month, federal officials told Honolulu that in order to receive $1.55 billion in federal funds for the project it needed to “demonstrate the availability of additional revenue sources” in case of unexpected cost overruns and revenue shortfalls.
This week, Carlisle is in Washington for the winter meeting of the U.S. Conference of Mayors.
“We discussed his concerns and our concerns,” Carlisle told Civil Beat in an interview after Wednesday’s meeting with Rogoff. “We need to be able to show that there is a robust contingency plan in the event that something should go toward the higher end of costs or expenses.”
Carlisle and Horner declined to elaborate on the various options that they outlined for Rogoff, but Carlisle confirmed that officials are only considering steps that the city can take independently. In other words, a tax hike — which would require state legislative approval — appears to be out of the question. All transactions1 on Oahu are taxed an extra 0.5 percent to help pay for the project.
“There are always options within the authority of the city to do,” Horner said.
Carlisle said he will submit a stronger contingency plan to the FTA in as soon as two weeks. He said he doesn’t want people to “speculate” about what that plan might entail until it’s complete.
“We don’t want to talk about that because then you’re going to have people running off saying, ‘The sky is falling, the sky is falling, the sky is falling,’ when it’s not,” he said.
Before the meeting, Rogoff told Civil Beat that getting Honolulu to where it needs to be is simply a matter of “putting the paperwork together.”
“We want to have an adequate buffer to make sure that construction, once we’re in it, can progress at a pace without sudden cash shortfalls,” Rogoff said in an interview. “I think we’re going to get there.”
Establishing a funding source that keeps churning out revenue despite shifts in the economy or changing political leadership is the key, Rogoff said.
“That’s a rule of thumb nationally,” Rogoff said. “Those have been the cities that have been most successful in building out systems, the ones that have tapped a reliable funding source. It’s a lot different than having to go back, hat in hand every year, for an appropriation at a time when they could have severe deficits.”
Carlisle and Horner both said that Rogoff was impressed with Honolulu’s overall financial picture, and that the project is “on track.” Horner told Civil Beat that Rogoff is projecting October as the month that Honolulu will enter into a Full Funding Grant Agreement, which would secure the lion’s share of federal funding for the project.
It’s critical to get the project to that point by the end of the year. Honolulu is up for a portion of $510 million in federal monies for the project, but it can only get the money with a Full Funding Grant Agreement. Honolulu’s eligibility for a portion of the $510 million will expire on Dec. 31, 2012.
