Money from Oahu’s general excise tax surcharge has fallen $33 million short of anticipated this fiscal year for the city’s $5.26 billion transit project despite growth in overall state GET collections, leading rail officials to believe the state has made mistakes on payments it should have received.
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.
The GET is 4 percent statewide except on Oahu, where a half-percent surcharge is imposed to help pay for rail. The excise surcharge went into effect in 2007, and from 2010 until it expires Dec. 31, 2022, is expected to generate more than $3.29 billion.
The state collects the GET and keeps 10 percent of Oahu’s surcharge in administrative fees.
If there is no mistake in this year’s payments, rail officials might have to consider trimming costs or dipping further into the project’s contingency fund.
Generally "it depends on the size and scope of the shortfall," HART spokeswoman Jeanne Mariani-Belding said Friday.
However, HART questions the shortfall, saying the state should have given it more money because general excise tax revenues are up this year.
The GET represents the largest funding source for Honolulu’s transit project. Rail officials have repeatedly pointed to growth in GET revenues as evidence the transit project is on firm financial ground. GET collections are up 11.3 percent overall in the first seven months of this year compared with the same period in the previous fiscal year.
The state Department of Taxation is looking into the situation, at HART’s request, to make sure it didn’t mistakenly underpay the rail authority.
So far, state tax officials haven’t found any errors with accounting, department spokeswoman Mallory Fujitani said Friday.
Nearly $10 million of the shortfall in HART’s estimate was intentionally withheld after the state realized it overpaid that amount in December 2011, she said.
While HART officials say DOT has already informed them the payment amounts this year were "incorrect," the state has not acknowledged that.
"We’re still looking into it. We can’t confirm it’s incorrect," Fujitani said Friday.
DOT employees are now looking into other possible factors outside of their department that could have led to the discrepancy, such as whether all activities covered by the GET are being properly taxed. How long that process takes depends on what the two employees in charge of the review find, Fujitani added.
"Historically, the GET has grown by 5.04 percent each year and that is the rate we use in our revenue forecasts," Mariani-Belding said in an email Friday. "This growth rate is also what the Federal Transit Administration has asked us to use." That agency is providing $1.55 billion to help build rail in Honolulu.
In 2011 former HART interim Executive Director Toro Hamayasu said steady GET growth "positions us well to complete the project."
