RICHARD WALKER / RWALKER@STARBULLETIN.COM Mayor Mufi Hannemann, right center, along with heads of various city departments, met yesterday with the editorial board of the Honolulu Star-Bulletin at the newspaper's offices.

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Hannemann says
rail plan requires
excise tax hike to 5%

Mayor Mufi Hannemann said that a hike of one-half of 1 percentage point in the general excise tax to fund a $2.6 billion rail transit project is not enough.

Mayor says he likes making things happen Mufi Hannemann says being mayor is a lot different from being on the City Council -- and he likes the change. "One of the things I appreciate about being in the executive branch is that you actually get to make things happen," he told Star-Bulletin editors and reporters. "As opposed to when you're in the legislative branch, you have a good idea, you pass a good piece of legislation and then you hope and pray that the executive branch sort of follows suit." Hannemann marks his first 100 days in office next week. The former City Council chairman said now he gets to put into play things he has spoken about while on the Council and on the campaign trail. "Now I get to actually influence what I've talked about for years as opposed to hoping, wishing, desiring certain things to happen," he said. Crystal Kua, Star-Bulletin

"We want 1 percent," Hannemann told the Star-Bulletin yesterday.

Hannemann's comments came the day after the Senate Ways and Means Committee amended House Bill 1309, which originally authorized the counties to hike the excise tax, currently at 4 percent, by up to 1 percent.

The House supports the 1 percentage point increase, but the amendment now shrinks the increase to one-half of a percentage point.

If the full Senate approves the measure, the bill will be headed to conference committee.

"I think the Senate's position at half of 1 percent is a better position," said Senate Majority Floor Leader Clayton Hee (D, Kahuku-Kaneohe). "The mayor is aware that we have also talked about one-third of 1 percent. I am not sure that at the end of the day if that might make more sense. One percent is too much."

While they might not agree on the amount, all sides agree that some sort of tax increase to fund rail is headed for approval this legislative session.

"I think rail looks in pretty good position for passage," said House Transportation Chairman Joe Souki (D, Waihee-Wailuku).

City Transportation Director Ed Hirata said that if not enough revenue is generated from the excise tax, the funding is going to have to be made up in other ways.

"I think the 1 percent is vital because if it's half a percent, then it's going to put a lot of load on other taxes that would have to be raised, like the weight tax," Hirata said. "It's going to result in significant increases on those taxes."

Hannemann said the city will have to collect taxes for a longer period of time if the lesser percentage is approved.

Hannemann also said that a full 1 percent will restore Honolulu's credibility with federal officials who are sheepish about pledging money for mass transit after the City Council voted a decade ago against a tax hike to fund a rail project.

Hee said that he is not sure the city needs that much money upfront.

Current state Tax Department estimates show that the city would get about $300 million a year from a 1 percent excise tax increase.

Hee said that means after the first seven years, Honolulu would amass $2.1 billion.

Senate Transportation Chairwoman Lorraine Inouye (D, Hilo-Hamakua) said: "I would tend to support the Legislature's wishes if it remains at a half of a percent. I doubt that the House will change their position. It will be a debate. I think that the end result, however, will be that they need the full 1 percent."