Senator: It's 'too early' to cut state's share of transit tax

It's too early to talk about reducing the state's take from a new tax to fund Honolulu's mass transit system, a state senator said yesterday.

"The increase in tax has just begun, and I think it's a little too early to make adjustments," said Sen. Lorraine Inouye, chairwoman of the Intergovernmental and Military Affairs Committee.

The committee decided yesterday to hold on to Senate Bill 930, which would have cut in half the amount of money the state needs to administer the new transit tax -- to 5 percent or $5 million, whichever is less.

Collection of the half-percentage-point increase in the general excise tax started on Jan. 1. State and city leaders expect to collect an estimated $150 million annually for rail transit.

Inouye (D, Hilo-Honokaa) said she wants to make sure that the state Tax Department, which administers the collection of the tax, has enough to cover its costs before any decision is made to reduce its share to administer it.

In a related matter, the committee approved Senate Bill 1500 for an emergency appropriation of $5 million to pay for the state Tax Department's costs of collecting the tax.

State Tax Director Kurt Kawafuchi said his department incurred $4.5 million to set up the computer system, hire the personnel and complete other operational needs to collect the new tax for the city but that costs could rise as his staff implements other measures.

The city approved a $5 million guarantee last year that would be used to pay the costs should the Legislature not approve the appropriation.

The bill has several more obstacles to overcome, and a similar measure in the House is scheduled for a hearing tomorrow.