County transit tax proposals debated

By Gordon Y.K. Pang
Advertiser Capitol Bureau

Honolulu and the other counties would have the option of imposing up to a one-half percent surcharge on top of the 4 percent state excise tax to pay for rail transit and other transportation improvements, under a proposal expected to be heard by the Senate Ways and Means Committee today.

Majority Democrats in the Senate told Mayor Mufi Hannemann and Honolulu City Council leaders yesterday that they prefer the half-percent addition over the House plan, which calls for a 1 percent surcharge. If the Senate advances the half-percent surcharge, the issue will need to be resolved at the end of session in conference committee.

Congressional leaders have been warning that immediate commitment for the project by state and city leaders is critical if they expect federal funding to help pay for it.

"Our intention all along (in the Senate) has been that a full 1 percent, which would be $300 million annually, is more than what is needed," said Ways and Means Chairman Brian Taniguchi, D-10th (Manoa, McCully). "We're anticipating 50 percent funding from the feds."

The counties would have the power to impose the additional tax for up to 10 years, Taniguchi said, which is similar to the House plan.

"We're looking at what it is the city needs to get this off the ground," said Senate President Robert Bunda, D-22nd (North Shore, Wahiawa). "I think it's a work in progress."

Councilman Nestor Garcia said city officials prefer a 1 percent surcharge, and will ask that the authority to impose the additional tax be given for a longer period of time if the Legislature goes with a half-percent tax.

Taniguchi said the proposal would include an income tax credit that would help offset the burden on taxpayers saddled with the additional excise tax. Under the plan to be discussed today, those who make the least would see a larger percentage tax credit than those with higher incomes. The credit would trim about $22 million from the estimated $150 million generated annually, but should leave enough for the city to cover its share of a rail project, Taniguchi said.

Reach Gordon Y.K. Pang at gpang@honoluluadvertiser.com or at 525-8070.