A lag in processing tax returns led to Honolulu’s rail project receiving $33 million less than it anticipated in the first half of this fiscal year — even though state GET collections are up this year, state Department of Taxation officials say.
Honolulu Authority for Rapid Transportation officials estimated they would receive $102 million in GET payments through the first two quarters of fiscal year 2013. Instead, they received $69 million. Concerns over this discrepancy surfaced publicly in March.
In an April 1 letter, Dan Grabauskas, HART’s CEO, asked tax department Director Frederick Pablo to explain the "fluctuations that we have experienced since the inception of the GET surcharge," a collection that started in 2007 and has garnered about $1 billion for the rail project. HART further wanted a better idea of how the state disburses the GET revenues.
Internal department promotions of 11 employees have left the tax department short-staffed on its document processors, department officials say. That, along with the loss of temporary tax season employees in summer 2012, has led to tax returns being processed two to four months after they’re received, department spokeswoman Mallory Fujitani said Friday.
HART gets its GET share only after the returns are processed, so it also sees a months-long delay between what the state reports collecting and what the rail agency receives, Fujitani said.
The GET numbers coming in for the rest of the year for HART "are going up substantially" compared with the first six months, Fujitani added.
"It’s a good general explanation," Grabauskas said Friday, but HART wants to learn specifics about the tax department’s "collection, reporting and disbursement" process so rail officials can better manage the project’s finances. "We still need to understand how it’s paid out. Cash flow is important."
HART’s questions require the department to sift through a lot of data, and "we’re still in the process of responding" to Grabauskas’ April 1 letter, Fujitani said Friday.
The GET is 4 percent statewide except on Oahu, where a half-percentage point surcharge is imposed to help pay for rail. The rail surcharge is expected to generate more than $3.29 billion through Dec. 31, 2022, when it expires.
GET collections are up 10.6 percent overall in the first nine months of this year compared with the same period in the previous fiscal year, according to tax department reports.
HART’s finance plan is based on a 5.05 percent GET annual growth rate, Grabauskas said. "The fact that it’s coming in 11 percent higher … is terrific," and Grabauskas said he’s confident HART will get its full share — but he added that it’s important to know when to expect those dollars.
