Few questions this legislative session — and before the Honolulu City Council — are as consequential as the one about financing the rail project, now approaching $10 billion in projected costs.
Ultimately, how much the city’s 20-mile system costs the taxpayers will depend on how it finances the 5 miles of guideway that’s left to build when existing funds run out about $3 billion short of the mark.
And how much money the city can secure — as opposed to how much it must borrow, at extra cost — hinges on getting more money from the 0.5 percent surcharge on the general excise tax (GET). In addition to federal subsidy, that’s what’s been providing the cash flow.
So far, elected leaders seem hesitant simply to take the step that’s required: Extend the GET surcharge to complete construction. The broad-based tax, which is assessed of tourists as well as Oahu residents, remains the most efficient way to raise the needed funds.
A number of those most influential to the budget-making process have balked at the prospect of taking the unpopular vote. They’ve told Mayor Kirk Caldwell that, if state legislators are going to stick their necks out on the issue, that he and other city leaders need to see that the city, too, has “skin in the game.”
Last week Caldwell came to them presenting that “skin”: a proposal for increases in city taxes and fees.
From the politician’s side of the deal, this might seem like a reasonable bargaining chip. The mayor hopes the Legislature will then extend the GET surcharge indefinitely, not only to finish the construction but for operations and maintenance needs.
But the taxpayers aren’t politicians. All they know is that a brand-new array of taxes would be charged, well in advance of any clarity about how it’s to be spent.
And as for “skin,” the taxpayers of Oahu, now paying the excise tax increase beyond its promised expiration date, already are in the game up to their eyeballs. What they see is the prospect of taxation by both state and city governments, which can hardly seem like an improvement.
Caldwell on Monday told members of the Senate Ways and Means Committee that he would propose an increase in fuel and vehicle weight taxes, parking fees and other assessments. Here are some of the details of his $65 million revenue-raising plan, also submitted to the City Council:
>> Increasing the motor vehicle weight tax rate by 1 cent per pound starting Jan. 1 and then an additional 1 cent per pound in 2019. That would yield $25 million more each year from passenger vehicles and $50 million annually for heavier vehicles.
>> Boosting the fuel tax rate to 20 cents per gallon of nonbiodiesel fuel would raise another $10.85 million a year.
>> Doubling parking rates in parts of downtown Honolulu, the Honolulu civic center and Waikiki to $3 an hour. That would net about $4-5 million a year.
>> Other steps could include higher bus fares, garbage fees and a hike in property tax for the high-priced Residential A classification, which excludes owner-occupants.
This all seems like an attempt to spread around the financial pain. But for the long-suffering residents of high-cost Honolulu, every added fee stings.
Added revenue drivers likely will be needed to fund operations and maintenance for the long term. Perhaps Caldwell’s proposal for city tax and fee increases could provide the opening for a larger discussion at Honolulu Hale about how transit operations will work, once the system finally opens for ridership.
That’s a discussion that’s long overdue.
The city needs to firm up its plans for how bus routes would be realigned to complement the east-west alignment served by the rail. It has taken one small step in that direction.
The city plans for TheBus to transition to an all-day unlimited fare system, moving away from the paper transfers allowing an additional hop on a bus to a destination. This would seem a good way to raise some additional funds from occasional users without penalizing regular commuters who use monthly passes.
It also could transform easily into a single-fare ticket for a ride combining rail and bus transit. But that demands an answer to a key question: How much could riders expect to pay for their daily commute?
To answer that, much more public engagement needs to happen on the issues of preferred routes, bus-rail transfer points and fare schemes.
When such questions are addressed, it should become clearer how much more in resources the system requires. At that juncture there would be justification to discuss new ways to underwrite the operation.
For now, lawmakers should simply do their duty to vet rail-construction estimates to justify extending the GET surcharge, allowing the city to focus on its job: Finishing the project so it can serve the public.
Correction: The estimated cost for Oahu’s rail project is now approaching $10 billion, not $10 million as was misstated in an earlier version of this editorial.