Tuesday, July 12, 2005

Late deal avoids
transit veto

Gov. Lingle will let the tax bill
to pass without her signature
under a compromise

State and city officials compromised -- using a bit of shuttle diplomacy -- to grant the counties the power to increase the general excise tax to fund transportation projects.

Mayor Mufi Hannemann cut short his trip to Japan last weekend and flew back to meet with Gov. Linda Lingle's chief of staff, Bob Awana, and legislative leaders about the governor's promise to veto House Bill 1309.

By the end of the day, the governor said she would allow the measure to become law without her signature.

"I hope it teaches everyone involved in politics not to get personal in the positions you take, not to get too hardened in the positions to a point where it becomes a matter of pride and you just can't back off," Lingle said.

House Speaker Calvin Say noted, "It's also a great show of cooperation between the Legislature, the governor and the mayor that together we will work to ... solve our traffic problems and improve the quality of life for Hawaii's people."

The bill gives the counties the power to raise the excise tax to 4.5 percent from 4 percent to finance transportation projects. For Honolulu that would mean up to $150 million annually to fund mass transit, which could include a rail system.

The bill also says that the state would collect the tax and charge a 10 percent administrative fee.

Lingle said the counties should collect the tax, and she threatened to veto the bill by today's deadline if the Legislature did not amend the bill to reflect that change in a special session also scheduled for today.

Under the agreement between state and city officials:

» Lingle did not get her amendments today. Instead, Bunda and Say agreed to introduce legislation during next year's regular session to have the counties, instead of the state, collect the tax. Bunda and Say also agreed in a letter to "publicly support and work with our respective members to seek their support and subsequent vote for prompt passage of the amendments."

» Hannemann initially said that it would be a financial burden for the city to collect the tax. But he said with a pledge from Lingle that the state will share information and technology and possibly get state funding, he believes the city will be able to take over the function at a substantially lower cost than the $50 million to $60 million he initially estimated.

» Senate President Robert Bunda (D, Kaena-Wahiawa-Pupukea) and Say (D, St. Louis Heights-Wilhelmina Rise) advocated that the counties take over collection of the county excise tax surcharge.

All the leaders involved in the compromise appeared pleased with the outcome.

"I believe that you just never give up," said Hannemann, who at one point flashed a thumbs-up sign to a supporter.

"Hurrah for the agreement," said a smiling Bunda, who also bemoaned his daily commuting battle with traffic congestion.

Now, the focus will be on the City Council, which is scheduled to take a final vote on its Bill 40, which would enact the tax increase in January 2007.

"I'm very happy that she's not going to veto it," Councilman Gary Okino said, "because it will allow us to proceed with trying to find a solution to the congestion problem."

Critics lashed out at the agreement.

"If this is tax hell, then this is a deal with the devil. The last thing the state needs is a tax increase," said Senate Minority Leader Fred Hemmings (R, Lanikai-Waimanalo).

"It ain't over yet," Republican Sen. Sam Slom (R, Diamond Head-Hawaii Kai) said. "I was disappointed but it doesn't change my position. I am opposed to a tax -- period."

Rail opponent Cliff Slater said his job will be to educate the public on the impact of the tax. "There are a lot of other ways to fight this battle."

Even members of the City Council were a bit nervous at the thought of the county taking over.

Council Budget Chairwoman Ann Kobayashi, who has voted in support of Bill 40 so far, said she worries about the impact the new duties will have on the city and on businesses who might be burdened by paying portions of the general excise tax to both the city and state. "If the mayor feels that it can be worked out, I certainly trust his judgment."

Hannemann was seen shuttling between House and Senate offices yesterday morning and also talking to union leaders who were at the state Capitol to lobby lawmakers in favor of the bill.

Some credited Hannemann with working out the compromise.

"You know me, even though I heard the votes weren't there, I was prepared to get the votes," Hannemann said, "because it seemed like ... the veto was coming down. But I also said to myself, 'It ain't over till it's over.'"

State of Hawaii

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