Most of the action so far regarding finding more money for Honolulu鈥檚 rail project has taken place in the state Senate, but now the House of Representatives is getting involved.
On Wednesday, two Senate committees advanced legislation that could allow Oahu to extend its surcharge on the general excise tax in perpetuity. It鈥檚 currently set to expire in 2027.
But before that happened, the House moved its own GET rail bill out of a committee. It would extend the surcharge for another 30 years.
The significant differences in the bills suggest that reaching agreement on the $8.2 billion rail project, which is underfunded by at least $2 billion and several years behind schedule, remains a work in progress.
For one thing, is now more than 40 pages long (its first聽iteration was a mere four pages), compared with , a modest six pages.
The House聽bill is focused mostly on rail, although it will be adjusted with language to try to聽clear up long-standing confusion over what are known as 鈥渓imbo roads鈥 鈥 that is, whether a road is controlled by the state or the counties.
House Transportation Committee Chairman Henry Aquino said the measure would also be tweaked to require the to provide regular updates on the project to lawmakers. If it fails, the state could withholding quarterly payments from the surcharge.
Under the House plan, the state would still levy an administrative fee (it鈥檚 currently 10 percent), but the amount for now is left blank in the bill. Some of what’s known as the state’s 鈥渟kim鈥 could also go to the state highway fund.
SB 1183 is so loaded with different options that it is being called the 鈥渒itchen sink鈥 bill by some around the Capitol.
Under one proviso, an unspecified amount of the surcharge revenue would go to things that have little to do with transportation: state education, affordable housing and elder care (and also transportation).
This provision, in Part IV of the bill, would actually repeal a county鈥檚 surcharge (right now only Oahu has one) and increase the GET from 4 percent to 4.5 percent. The catch is that a county would have to partly match that increased revenue stream from the state tax. A county would also have to update the Legislature聽annually on revenue and expenditures.
鈥淚t is the Legislature’s intent that the repeal of the county surcharge, coupled with the increase in the general excise tax and use tax will even the disparity in generating tax revenues for the state across all counties,鈥 the bill states.
As well, there could be an income tax credit for low-salary earners under the Senate bill, in recognition that the GET is regressive and disproportionately hurts poorer people.
Like the House bill, the Senate version also calls for directing some funds to state highways, with the precise amount left blank for now.
But, by Senate Transportation and Energy Chairwoman Lorraine Inouye鈥檚 admission, the bill contains a number of 鈥渋nconsistencies鈥 and conflicting language. Such discrepancies, she said, will have to be worked out.
Honolulu City Council Chairman Ron Menor cautioned that if they are not, the bill could invite future legal challenges as well as be fiscally unworkable. Mayor Kirk Caldwell described聽the Part IV section as “detailed” and “complicated.”
The Senate bill could halt Oahu鈥檚 surcharge in 2032 unless 鈥渃ertain conditions鈥 are met, as Inouye put it. The main condition is that the Hawaii Community Development Authority transfer specific land parcels to the City and County of Honolulu to help develop land around rail stations.
The Senate bill will almost certainly be scaled back. But senators, who, like representatives, will have to justify their votes on the rail tax to their constituents, want to keep their options open.
What is clear, though, is that a rail tax bill remains important to both chambers, and there is a lot of discussion to come.
Before decision-making in the House, Speaker Joe Souki showed up to chat up members. Senate President Ron Kouchi also stopped by to talk to fellow Kauai legislator Nadine Nakamura.
Meanwhile, Caldwell, Menor and Councilman Joey Manahan continue to testify for the city.
They want lawmakers to extend the GET indefinitely, and they would like to see the skim reduced. Both Menor and Caldwell warned that raising Oahu property taxes to help pay for rail was not palatable.
There is a long way to go yet. Both bills now head to the respective money committees, where the scrutiny is expected to be intense.
At least one opponent of both bills suggested a far simpler solution to funding rail, at least in his mind.
Larry Friedheim, who unsuccessfully challenged Caldwell in the 2016 primary, said lawmakers should legalize gambling and a lottery and decriminalize marijuana to increase tax revenue.
Such proposals, however, have always failed at the Legislature.
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About the Author
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Chad Blair is the politics editor for Civil Beat. You can reach him by email at cblair@civilbeat.org or follow him on X at .