Rail transit tax could bring in $50M extra
Revenues from the newly enacted tax to finance construction of the city's mass transit system could be about $50 million higher than originally thought.
Some on the City Council are among those who say the current projection of $150 million a year is outdated and that the figure is likely closer to $200 million a year.
"I don't think anyone can stand here and tell us that the true revenue estimate is $150 million," Council Budget Chairman Todd Apo said.
But Mayor Mufi Hannemann's administration is using the lower figure to formulate next fiscal year's budget.
"These are projections that we feel very comfortable with," Budget Director Mary Pat Waterhouse told Apo's committee this week.
City spokesman Bill Brennan said there is a good reason why the city is sticking with the more conservative number.
"The bottom line is we don't know what that number will be until a little later this year, when the state lets us know how much they have in fact collected," Brennan said. "In the absence of any other number, I think it's prudent for the city to plan and budget on the conservative side and on the number that is out there."
Brennan also said when city planners drafted their study of transit alternatives last year, they predicted that 2007 revenues would range from $164 million to $172 million.
The city administration is using $135 million for the transit tax revenue in the budget after taking out the required 10 percent or $15 million for state administrative costs. Of that $135 million, the city is appropriating all but $56 million for transit-related costs.
The one-half percentage point increase in the state's 4 percent general excise tax went into effect on Oahu on Jan. 1.
The $150 million revenue figure for the city was estimated in 2005 when the state Legislature was debating whether to grant the counties the authority to impose the county surcharge of 0.5 percent to fund transportation projects in their respective jurisdictions.
But since then, Apo and others contend, the rate of growth for general excise tax collections has gone up.
"It's been about a 10 to 11 percent increase annually," he said. "If you take your $150 (million) estimate and increase it 10 percent over two years, and ... after we took off the (state's administrative share), it came out to about $170 million as opposed to $135 million."
That number could go even higher if this week's 6 percent increase in tax growth predicted by the state Council on Revenues is calculated for the next fiscal year, he said.
Lowell Kalapa, president of the Tax Foundation of Hawaii, also agrees that $150 million is not accurate.
"The (general excise tax) last year, for example, before the half-percent, I mean there was tremendous growth, it outpaced everything. ... So the growth rate alone has outdated the antiquated $150 million," he said.
Apo said that for the next budget it might not be that important to know the exact figure, but as the city continues to plan mass transit, that number will become increasingly important in how federal funds are calculated.
"We ought to have a reasonable estimate on what that number is going to be," he said.
Brennan said the city expects to get some indication on actual tax collections for the first few months of this year.
"We can adjust that number once we know the county's share of the GET surcharge, and that should be in the next month or two. So I think if everybody sits patient, everybody will have a better grasp of what that number is," Brennan said.