Committee OKs tax hike to pay for rail line
By Mike Leidemann
Advertiser Transportation Writer
A bill to increase the state excise tax in Honolulu to help pay for a rail transit line passed its first hurdle at the Legislature yesterday, but lawmakers said the measure still faces an uphill fight.
Advertiser library photo
Despite opposition from the Department of Transportation, Chamber of Commerce and others, the Senate Transportation, Military Affairs and Government Operations Committee passed SB 2052, which would raise the excise tax from 4 percent to 4.5 percent in Honolulu only.
U.S. Rep. Neil Abercrombie said the state has missed any realistic opportunity of being included in the next round of federal money.
"It's something we've got to do now," committee chairman Cal Kawamoto said. "It can't wait."
Minutes later, however, House Transportation Committee chairman Joe Souki said he heard nothing in his own committee's hearing on rail transit yesterday that required rushing into a tax increase.
"It's a long-term project and I'm open to it, but it's unlikely that we will go against the will of the House speaker (Calvin Say), who opposes any tax increase this year," said Souki, D-8th (Wailuku, Waiehu).
The state needs to have a local financing plan in place by the end of February if a rail project has any hope of winning federal money in the next six years, said Kawamoto, D-18th (Waipa-hu, Crestview, Pearl City).
U.S. Rep. Neil Abercrombie, however, told Souki's committee that the state has missed any realistic opportunity of being included in the next round of federal money.
"The chances are essentially nil," he said.
Still, Abercrombie said the state should not make any plans for rail transit until it puts a local financing mechanism in place.
"You shouldn't spend one more cent or one more bit of energy on transit plans until you have local funding in place," he said. "Without it, you are going absolutely nowhere."
In 1992, the Legislature passed a bill giving Honolulu the authority to increase the excise, but it failed at the City Council level. This time, the Legislature should take counties out of the decision-making process, Kawamoto said.
"I would do it on the statewide level," Abercrombie said. "If you go to the counties, you are going to be too dependent on the vicissitudes of political will to get anything done."
Many state and city officials late last year agreed on a plan to build a $2.8 billion rail line from Iwilei to Kapolei.
City Transportation Services Director Cheryl Soon told the House committee that Mayor Jeremy Harris still prefers a smaller "starter system that we could pay for on our own" without federal money. The beginning line could then be expanded as more money becomes available, she said.
Former Mayor Frank Fasi, who spearheaded the 1992 drive for rail transit, said officials should seek other financial sources for a new rail line. He suggested selling Aloha Stadium, opening the possibility of gambling on Midway Island, or giving counties a full share of the state's hotel room tax.
Because merchants are allowed to pass on the total effect of the excise tax on to consumers, the actual effect on consumers could be to increase the "sales tax" they pay from 4.166 percent to 4.712 percent.
Reach Mike Leidemann at or mleidemann@honoluluadvertiser.com or 525-5460.
