Rail transit tax increase
gets political momentum

Federal and local lawmakers
agree to revisit funding options

Rail transit plans may be rolling again for Honolulu as key federal, state and city officials appear to be getting on board to support a tax increase to fund the $2.6 billion project.

"We will be moving forward to support the transit system," said state Senate Transportation Chairwoman Lorraine Inouye (D, Hilo-Hamakua). "We'll be looking at the increase in the general excise tax."

U.S. Reps. Ed Case and Neil Abercrombie wrote a letter to transportation leaders in the U.S. House asking that Honolulu's mass transit system be included in the reauthorization of federal transit spending, after receiving signs that local government was ready to move ahead.

"We can't wait until the stars align perfectly to communicate to the necessary committees in Congress the interest of the city and county of Honolulu in a mass transit system," said Case, who along with Inouye attended yesterday's meeting of the Hawaii State Association of Counties, where transportation was discussed. "(The letter) was specifically designed to say, 'Hey, we're ready to go again.'"

The state House and Senate both have proposals to increase the 4 percent general excise tax by up to 1 percent, revenues that could be used to fund mass transit on Oahu.

Inouye's staff said preliminary tax figures show the increase could generate an estimated $340 million to $400 million in additional annual revenues.

Inouye said she's going to recommend that the Legislature mandate the tax increase for the city while giving the neighbor island counties the option of raising taxes to pay for their transportation projects. She said Hawaii's congressional delegations need assurances that local governments are committed to funding rail.

"In my discussions with the city and county, it seems like to move transit along, perhaps letting us (levy the tax) because of the timetable," she said. "We have to bite the bullet."

The state House, however, wants to give Honolulu and all the counties the option of raising the tax.

"I don't want to mandate anything," said House Transportation Chairman Joseph Souki (D, Waihee-Wailuku). "Some counties may want it and some counties may not."

Souki said the state should not be levying the tax for rail transit because the state is "not going to operate and run it."

Inouye said she would be open to considering having the city or the Legislature levy the tax.

When Souki was asked if he thought rail could get off the ground again this session, he responded, "I hope so. This is the third or fourth time."

Inouye also suggested that a proposal to create a transit authority that could raise taxes is in trouble, based on "mixed feelings" she's been receiving on the proposal.

"It's a home-rule issue. It seems like we will be mandating them to create another agency, and I think the city and county should be making that decision," the former Big Island mayor said.

The position taken by the congressional delegation is different from last year, when Abercrombie refused to commit federal dollars to mass transit until a local financing mechanism was in place.

"The stars weren't close enough last year," Case said. "There's no way to construct a mass transit system for the island of Oahu at the level necessary without some supplemental funding, and that's up to my colleagues in the state government. If they're not going to go there, then forget about it."

Abercrombie and U.S. Sen. Dan Inouye have been reluctant to support rail transit for Honolulu in Washington, Case said, since losing more than $600 million in federal funding in 1992 when the City Council failed to approve a needed tax increase to secure the funding.

"They ... have been gun shy about committing the tremendous amount of political capital. What it took in the 1990s to get the level of federal contribution for mass transit for Hawaii, that was an incredible job by them, so scars of that run deep," Case said.

Still, the climate appears to be changing.

"This is a rare opportunity to be given taxing authority, if they are going to grant it to us," said City Councilman Nestor Garcia, chairman of the Transportation and Planning Committee. "We should take advantage of that."

But Garcia cautioned that nothing is final until the vote on a tax increase is called. He said talk of raising the excise tax is prompting concerns about whether the city might have to give up other funding sources, such as the hotel room tax, and how the tax revenue would be divvied up among the counties.