Transit tax impasse ends

Hannemann credits Lingle for meeting with the City Council on the collection flap

The impasse between the state and city over how to fund collection of the new transit tax that begins Jan. 1 has apparently been broken, Mayor Mufi Hannemann announced yesterday.

"There was a series of back and forth with the Lingle administration (Tuesday) to fashion a compromise that we have today," Hannemann, flanked by about a dozen city and state Leeward and Central Oahu lawmakers, told reporters and a packed room of community leaders, labor representatives and other transit supporters at Kapolei Hale. "The governor gave it her OK."

Bob Awana, Gov. Linda Lingle's chief of staff, said last night that some of the last-minute details were still being worked out.

"We agree with the concept," Awana said.

The governor and mayor have been feuding over the funding of the tax collection duties for the 0.5 percent general excise tax surcharge for city mass transit projects. The law says the state is responsible for collecting the tax.

Lingle sought to instead have the city collect the tax, but the Legislature declined to make the change this past session. Then, a bill that would have funded the state's tax collection duties for the new tax also did not make it out of the Legislature.

To fund the tax collection duties, Hannemann is proposing the city put up a $5 million guarantee of payment to allow a private technology firm, CGI-AMS, to upgrade the state's computerized tax collection system to move forward with the collection.

The city might not have to spend any money if the Legislature approves a $5 million appropriation next session to fund the collection of the tax, which is projected to generate $150 million a year, with the state taking 10 percent.

Hannemann said he has confidence that the Legislature will approve the appropriation.

Hannemann's current proposal is essentially the same one that he tried to get through the City Council two weeks ago. The Council rejected it.

The difference this time, Hannemann said, is that since that vote the governor has become personally involved in talks with the City Council over the funding issue, and the mayor has brought state legislators into the discussion to answer questions.

"I was pleased when she chose to get involved with the City Council. That was great. That was a sign to me that, you know what, the light bulb is going on, she's going to start paying attention to this issue and, therefore, we may be able to break this impasse," Hannemann said.

The mayor said he will call the City Council into a special meeting on July 7 to approve the $5 million guarantee that will be funded in next fiscal year's budget, which starts July 1.

The City Council meets today in a special meeting to take up a measure that supports a plan the Lingle administration discussed with Council leadership last week, a plan that calls for the city to enter into a $5 million contract with the computer vendor.

Hannemann said having the city contract directly with the vendor was a deal breaker.

And that is apparently now off the table, Awana said.

"We have no problem signing the contract with the vendor," Awana said. "So we agree on the concepts. There are a couple of more steps that are needed before this thing is done, but we're optimistic and hopeful that we'll clear those hurdles through a collaborative effort."