Honolulu’s rail project has run up against criticism throughout the more than a decade since it was first authorized. Nothing has riled the opponents — indeed, all taxpayers —
more than the broken promises on spending.
This is why Mayor Kirk Caldwell’s proposal to include $44 million of bond funding in the city’s capital improvement project budget must give the City Council pause.
It isn’t merely the amount in question, it is the precedent it sets, and the signal such an action would send concerning the lack of cost controls on this 20-mile elevated rail project, now estimated to cost around $9 billion.
This follows years of insisting that construction of the project would be financed strictly through a $1.55 billion federal grant and local tax surcharges authorized for it: a half-percent added to the general excise tax (GET), and, more recently, funding from an extension of that surcharge and an increase in the transient accommodations tax.
And those sources already were part of a “rescue plan” for the financially struggling project, one enabled by a special legislative session vote only last fall. That plan still is awaiting final approval by the Federal Transit Administration (FTA).
So far, the mayor hasn’t presented the persuasive argument why digging into city coffers is necessary.
The City Council seems not to be convinced, either: It has sent Bill 42 back to committee, a measure needed to eliminate the barrier to the use of the city’s general funds on the construction phase of the project.
So far, the project has been funded by the GET surcharge and the federal subsidy. But when funding fell short for the second time, the FTA demanded a revision to the finance plan, so officials of the city and the Honolulu Rapid Transportation Authority went to the Legislature last year for a second extension of the surcharge.
Ultimately, they prevailed in an August special legislative session. But leading state lawmakers were rightly reticent about letting the city off the hook entirely; they also balked at the notion of directing state funds to cover the deficit in the administrative costs of the rail. Having the city put “skin in the game” became a common refrain in the protracted, contentious debates over the shortfall.
So, to avoid having a property tax increase to cover these costs, the mayor proposes essentially borrowing the $44 million, money that taxpayers would need to repay, with interest.
Even if this were to have no effect on the city’s bond rating, opening the gate to tapping city taxpayers at this time would be irrresponsible. The legislators reviewing the rescue plan’s budget calculations were dubious that there was not extra funding that could be shaken loose to cover some of the shortfall.
Going beyond this particular issue, taxpayers are right to be worried what could follow, should the basic impediment to the use of city general funds be lifted. That barrier was set in place in the 2007 ordinance enacted during the administration of then-Mayor Mufi Hannemann.
If that’s removed now, it would mark the top of a slippery slope toward a new source of money — our money. And creating such an escape hatch in project budgeting would make it tougher than it already is to constrain bidding on construction tasks to their projected costs.
During the heady, optimistic days at the start of construction, city officials predicted there was enough give in the finance plan to save a nest egg that could help underwrite the operations of the system. They stopped saying that long ago.
Assuming the rail project is completed to its Ala Moana terminus, the city may need to turn to general funds for operations of the system. But now — when funding is running short for the provision of trash collection, parks maintenance and other core city services — is not the time for that.
Officials of the city administration and HART should stick to their promises, including this crucial one: We will build to budget.