Senate panel approves raiding transit fund


POSTED: Friday, March 06, 2009

Over the objections of city officials, unions and developers, the Senate Ways and Means Committee has approved a bill to take $150 million out of the city's $300 million rapid transit fund.

Almost all of the senators on the money committee described their vote as “;with reservations,”; indicating that it has little support.

Sen. Donna Mercado Kim, committee chairwoman, said the bill is “;not intended to stop rail or jeopardize it in any way.”;

She described the measure, Senate Bill 1626, as a safeguard to be used if the Legislature cannot balance the state budget, which has a $650 million shortfall.

Committee members said they did not like the idea because the city has increased the general excise tax on Oahu to 4.5 from 4 percent to pay for rapid transit, not to balance the state budget.

In testimony on the measure, the Building Industry Association said there are fears that if state revenues continue to lag, the Legislature will “;borrow additional funds from the transit project or other dedicated funding sources.”;

The Tax Foundation of Hawaii said the bill will hurt taxpayers because it allows the city to extend the tax from 2022 to 2024.

And the pro-rail transit organization, GoRailGo, said the bill would “;balance the state budget on the backs of Oahu taxpayers.”;

Honolulu Mayor Mufi Hannemann also objected to the bill, saying he was worried that the city would not be repaid. To address those concerns, the bill was changed to require the state to issue a bond to the city for $250 million.

The Ways and Means Committee also approved a bill that will increase the state's tourist tax, with the additional money to be put in the state general fund.

Today the tourist tax money goes to the counties, but the proposal in SB 1111 would give more money to the state.