Djou: No Tax Increase For Honolulu Rail — Yet
The mayoral challenger says he wants to explore other options before considering whether to extend the tax that goes to pay for rail.
Mayoral candidate Charles Djou is now sounding very much like incumbent Kirk Caldwell when it comes to Honolulu rail.
Djou said Wednesday the federal government’s position on the long-delayed and over-budget project gives Honolulu no choice: It must be built as originally planned, meaning all 20 miles from East Kapolei to Ala Moana Center, with all 21 stations and steel-on-steel technology for the rail cars.
Djou also said he does not at this point support extending Oahu’s surcharge on the general excise tax beyond the 2027 sunset date. Instead, he wants to look at other options first.
The candidate said a GET extension is “a last resort.” As a Republican running in a nonpartisan race, any tax increases have long been anathema to him.
Clarification: An earlier version of this story quoted Djou — accurately — as saying a tax extension should be considered. However, he later clarified his position and said he doesn’t believe it is yet time and may never be time to consider extending the tax. Instead, he wants to see where the project’s finances are if the skim of the GET surcharge by the state is ended and after an audit is done.
Circumstances have shifted significantly as to alter views on rail.
“I think the decision made by the FTA is a complete game-changer,” Djou said. “Now that the FTA is saying we might have to pay back the money that, to be perfectly blunt, we do not have, we have to be realistic. For me it’s about pragmatism and getting the job done. That’s far, far more important here than any sort of ideology.”
Caldwell and other city officials said Tuesday that the would not give the city any more money to complete the rail line, which has a a price tag now hovering as high as $8.3 billion.
And if Honolulu halts the route at Middle Street instead of going the full distance, which Caldwell had proposed to do until more funds could be secured, the city risks having to return $1.55 billion in federal support for the project.
Djou said he longer supports having a portion of the elevated rail line be modified in sections to be “at grade” (level with the ground), or building fewer stations, or possibly using rubber tires on rail vehicles.
“That is not on the table, unfortunately, because of the FTA. They were very firm,” he said. “But I do want to go back to the FTA, and I think with a new mayor and new leadership, we would have a new opportunity. But with things as they are, we have to change here — this is a whole new ball game here.”
Djou wants a new audit of the and all spending to date on the project.
Like Caldwell, Djou would look to approach the FTA again to see if the agency might be open to eventually giving the city more cash. Like Caldwell, Djou is interested in pursuing public-private partnerships to offset the city’s cost of building rail. It’s estimated that $1.5 billion more will be needed to connect Middle Street to Ala Moana Center.
And, like Caldwell, Djou wants to see a 10 percent skim of the surcharge that the Hawaii Legislature takes for its general fund instead go to the city. Caldwell has estimated that the skim amounts to about $450 million over the course of the surcharge’s implementation.
Where Djou still differs from the mayor is that he thinks he is the better pick to lead the city for the next four years. As he said repeatedly during the course of the primary campaign, Caldwell’s “failure of management” had resulted in the project going “from bad to worse.”
“Caldwell simply has no more credibility to do that any longer,” Djou said.
GET Surcharge Extension?
City leaders may have to go back to the Legislature to ask for an extension of the GET beyond 2027, as Caldwell and City Council Chair Ernie Martin said they would Tuesday. Martin previously opposed the idea.
Djou still would prefer not to ask taxpayers to foot more of the bill.
“I am also opposed to extending the general excise tax,” he said.
However, he said, that idea may need to be considered but only after other options are pursued.
“After we look at each and every one of those steps, if there is still no other way to prevent the complete (financial) collapse of our city, then yes, we need to take a look at that here.”
He added, “But I am not supporting it from the get-go here. We can’t keep reaching back to the people. I think that’s unfair.”
The chairs of the money committees at the Legislature remain cool to the idea of giving the city the skim percentage or extending the GET.
“I think that there are still a significantÌý²Ô³Ü³¾²ú±ð°ù of unanswered questions to really be able to take up those questions, to even consider those as possibilities,” said Jill Tokuda, chair of the Senate Ways and Means Committee. “I think the city and HART need to first get things in order, to come up with a budget that is credible, that makes sense, that we can have faith in, and how to maintain and operate the system once it is built, and how to sustain revenue streams for it.”
Tokuda said those are the very same questions legislators had two years ago when Caldwell approached them about a GET extension. They reluctantly approved the proposal, but only after making clear their disappointment with how rail was being managed.
“That feeling is even more pervasive given the state of the deficit that now exists,” said Tokuda. “So until they actually have real numbers for us and explain how any of those two solutions even make sense, or provide some support, I think it is grossly premature to come before us.”
Still, Tokuda pointed out that the tax extension was granted because the Legislature wanted the city to “finish what you started, which is build and complete the minimal operating segment, which is to Ala Moana.”
In a statement late Wednesday, Caldwell said:
I remain committed to building rail to Ala Moana with all 20 miles and 21 stations. Colleen Hanabusa and Mike Formby of HART, Chair Martin, Councilman Manahan and I have established a strong working relationship with the FTA, and we plan to move forward expediently to develop solutions to fund the entire route.
As for Charles Djou, it seems he finally understands the absurdity of all of his so-called ‘transit alternatives’, though it should have only required common sense and not a statement from the FTA. It was always our position that for the amount that it would have cost to pay back the FTA for any of Djou’s schemes, we could complete rail to Ala Moana, and now that’s what we’re going to do.
The mayor has said that he believes changes at HART demonstrate that the agency is heading in the right direction.
The changes include the appointment of insurance executive Colbert Matsumoto and former Congresswoman Hanabusa to the HART board, which Hanabusa now leads. She replaced banking executive Don Horner, who resigned earlier this year under pressure from city officials.
And city transportation director Formby replaced HART executive director Dan Grabauskas, who resigned earlier this month, also under pressure. A search is being conducted to replace Grabauskas.
In a related development Wednesday, Councilman Brandon Elefante introduced a resolution expressing support for the rail project and urging the Legislature to permanently extend the GET surcharge.
“I have always been a strong supporter of our rail transit system and believe that in order for it to be functional, we have to stay committed to finishing the entire project and building all the way to Ala Moana,” Elefante said in a press release.
The Civil Beat Poll in July found that Oahu voters are not happy with how the rail project has proceeded, but a majority still wants it completed.
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