Mayor supports making rail tax permanent

Published On: Apr 09 2014 06:58:05 PM HST   Updated On: Apr 09 2014 08:12:37 PM HST
Rail Column Under Construction

A rail column under construction in East Kapolei.


When Oahu voters approved construction of the city's $5.3 billion rail project in 2008, they were told a half percent surcharge to the state's general excise tax would sunset at the end of 2022.  

Six years later, Mayor Kirk Caldwell is floating the idea of making the rail tax permanent as the city struggles to cover services and the escalating cost of labor.

"I do support continuing this excise tax by half a percent," Caldwell told reporters during a conference call Wednesday from Washington, D.C., where he and other city officials are meeting with federal transit planners and Capitol Hill lawmakers. "While I know there is some pain in paying it, I think there's great benefit."

When the 20-mile elevated rail line opens in March, 2019 from East Kapolei to the Ala Moana Shopping Center, the city will have a new line item as part of its annual budget. Operation and maintenance of rail is expected to cost at least $100 million annually, with those costs escalating to $117 million by 2030, according to the project's environmental impact statement.

The rail surcharge began on Jan. 1, 2007 and as of February of this year, the city had collected $1.18 billion, or an average of $170 million per year.

Like the mayor, HART Executive Director and CEO Dan Grabauskas also supports keeping the half percent tax in place. Grabauskas said the additional funds would not only help fund rail operations, but could also be used to build extensions to UH Manoa and the heart of Kapolei. The rail line currently starts 1 mile east of Oahu's so-called second city.

"The locally preferred alternative was actually 6 miles longer, but the project was shrunk to fit this existing funding," said Grabauskas, who's also in Washington D.C.

However, extending the rail tax into perpetuity would not be easy. First, the state Legislature would have to give its approval, followed by the Honolulu City Council. Council chairman Ernie Martin said it's a question all nine council members will have to take to voters.

"I think for the membership of the council, it really is an issue for them to take back to their constituency," said Martin, who was also part of Wednesday's conference call.

In a KITV4 mayoral debate on July 11, 2012, then candidate Caldwell chastised fellow candidate Ben Cayetano for suggesting the rail tax could be used for other purposes other than rail, for example improving the city's sewer system.

"What I'm hearing here is perhaps Ben is in favor of continuing a tax for other kinds of services, which was not the intent for this particular excise tax," said Caldwell. "So, that's very troubling."

Late Wednesday, city spokesman Jesse Broder Van Dyke said the mayor's current position on the rail tax is consistent with what he said during the debate two years ago, since the surcharge can only be used for rail.

"Mayor Caldwell supports removing the sunset so the GET surcharge funds could continue to be used for either rail operations after 2022 or for expanding the rail line to places such as UH Manoa, further into West Oahu, into Central Oahu or elsewhere," Broder Van Dyke said in an email to KITV4.

During Wednesday's phone call, Caldwell also stressed rail would operate at 43 cents per mile, whereas The Bus will move passengers at a cost of 80 cents per mile.

HART board chairman Ivan Lui-Kwan is also in Washington, and came out in support of making the rail tax permanent.

"It enables payment by the visitor industry, by the visitors, by about a third," said Lui-Kwan.

Rail planners also say just like The Bus, 27 to 33-percent of rail operations will be covered at the fare box.

Rail station

PHOTOS: Designs of two Oahu rail stations

Click here for renderings of of some rail stations.


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