Oahu tax for rail
clears first hurdle

The City Council hears
mixed public response
to a 12.5 percent hike

For the first time in more than 12 years, the City Council heard debate yesterday on whether to raise the general excise tax to build a rail transit system.

City & County of Honolulu "This is going to have a negative impact on so many people. It's going to increase the cost of living significantly, and we don't need it," testified real estate agent Helen Carroll.

But Dan Davidson of Kapolei Property Development, a subsidiary of Campbell Estate, said, "It's time to develop and build a mass-transit system for Oahu."

The Council voted 7-2 yesterday to give preliminary approval to Bill 40, which would hike the general excise tax on Oahu by half a percentage point, to 4.5 percent. Council members Charles Djou and Barbara Marshall objected to the bill.

"I understand the passionate arguments on both sides; however, I believe Bill 40 is premature," Marshall said.

"Believe me, this is needed, this is critically needed," countered Councilman Gary Okino. "We cannot wait until we end up in gridlock and say, 'Now we should do something.'"

The measure must be approved two more times by the Council for passage. The Council meets next on June 6 and July 6.

In 1992 the City Council was one vote shy of approving a tax hike to finance construction of a rail system. The lack of approval led to the loss of more than $600 million in federal funding.

About $150 million in tax revenue would be collected annually under the proposed tax hike beginning Jan. 1, 2007.

The Council bill was introduced the day after the Legislature approved House Bill 1309, which authorized Councils to raise the tax in their respective counties to fund rail transit on Oahu and transportation on the neighbor islands.

The counties have until the end of the year to approve the tax increase if the bill is approved by Gov. Linda Lingle. The governor has yet to decide what she will do with the bill.

Mayor Mufi Hannemann said: "They (residents) want to use a ferry, they want to use a bus, they want to use a train, they want to walk to work, they want to bike, they want work out of their home, and that's what we're suggesting here: Let's give the residents of Honolulu a choice."

Jim Tollefson, president and chief executive officer of the Chamber of Commerce of Hawaii, said traffic congestion has a negative impact on businesses and their employees, "many of which I know are stuck in traffic a good portion of their time. So we're looking at not only the economic development opportunity that this would provide, but also a quality-of-life opportunity."

Other business people disagreed with Tollefson.

"Apparently the (chamber) board cares more about their political connections. Big business is insensitive to the plight of the majority of chamber members," said Dale Evans, president of Charley's Taxi.

Paul Smith, a resident of Pacific Heights, said that before the Council increases the tax and embarks on a "sophisticated" rail system, the city needs to repair roads and make other traffic fixes.

"You are embarking on the largest tax increase in Hawaii's history. I ask you to consider it carefully and to please vote no on increasing our taxes," Smith said.

Marshall said she had heard from constituents who are uneasy about increasing taxes without a transit plan.

But Hannemann said the city still has the 1992 plan to be used as a base as the city seeks community feedback to update the information as part of the federal funding process.

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