Posted on: Sunday, May 8, 2005

Lawmakers broke logjam on tax hikes for transit, housing

By Gordon Y.K. Pang and Derrick DePledge
Advertiser Capitol Bureau

The pressure was on state lawmakers to do something this session to break the traffic congestion that is eroding the quality of life across the Islands.

But now that they have given counties the option to raise taxes to pay for transportation projects, including a rail line for Honolulu, they are hearing some doubts.

Donald Corbin, a retired professor at the University of Hawai'i-Manoa who lives in Kane'ohe, does not believe all of O'ahu should have to pay for a rail line that will mainly help people on the Leeward side.

"People in areas like Kane'ohe who will not benefit should not be taxed for somebody else's benefit," Corbin said. "People want to ride in their cars. It will take generations to brainwash the children into using it, and I doubt that will work."

Tina Uris, who lives in East Honolulu, also wonders whether enough people would use rail to make it worth building.

"I think it would be a good idea if there were a census taken to ask people who would actually use the rail system," Uris said. "Everybody wants everybody else to use the rail system and the roads will supposedly be less crowded."

House and Senate leaders vowed to deal with traffic and affordable housing when the session began in January and, after adjourning last week, they can legitimately argue that they took action. Along with the new taxing power for counties, the Legislature raised taxes on higher-end real estate purchases to help fund more rental housing.

But just as in the last session when the Legislature approved an education reform package that will unfold over several years, it could take years or even decades before people can tell whether they are better off on traffic or housing.

People would pay higher taxes long before they see any tangible reward, a calculated risk for lawmakers who must answer to voters in the 2006 elections.

Neal Milner, a political science professor at the University of Hawai'i-Manoa, said he was somewhat surprised there was not more opposition to the potential tax hike.

"For a tax increase, if you think about trying to increase the taxes in any other way, that thing went through fairly smoothly," Milner said. "It may be because both the Legislature and the governor were willing to support it to some extent, and they were getting pressure from our congressmen in Washington that they had to do it right now."

Milner noted, however, that rail has a long way to go. The Ho-nolulu City Council has until the end of the year to approve the tax for the project, which would not break ground until 2009. "There is a kind of lingering objection to mass transit that is always around and has always managed in the past to mobilize itself just at the crucial time," he said.

With Honolulu still in the early stages of mapping a route and other key specifics, "the fun is just beginning on mass transit."

Milner thinks that, overall, the session may be remembered for its recognition of affordable housing as a problem, even if it appears that government remedies are elusive.

"Housing issues are tough ones, because there is very little you can do in the short run, even if you pass effective policy," Milner said. "But it's at such high visibility right now I think that it will at least stay important for a while."

Don Clegg, a political consultant, said the session would be defined by the county tax option for rail. Clegg, who worked for Honolulu when previous attempts at rail were stymied, said the tax option "went through and went through in the right way."

"Transit may not improve our traffic today, but it's our savior for our traffic tomorrow — people forget that, that it's going to get worse."

The session lacked the rancor between the Democratic majority and Republican Gov. Linda Lingle that framed the previous two sessions. Republican losses in the House in last November's elections weakened the governor's position at the Legislature, and she chose this year to highlight some of the same issues as Democratic leaders, especially housing.

Lingle said Friday she thought it was a poor session for the business community but has otherwise mostly avoided being negative, even after Democrats floated bills that would limit her power and blocked some of her nominees.

"By and large, they really did stay focused on the major issues. And I feel — and I hope they would agree, most of them — that we worked in a much more collaborative way this session. Part of that is because we're more experienced now. Our directors are more experienced," Lingle said.

Lingle has sent signals that she will likely sign the county tax option for transit but said that collecting the revenue might be difficult for the state. The bill sets aside money for the state Department of Taxation, which would likely collect the revenue and send it back to Honolulu. The governor said she did not want a new tax to interfere with existing collections.

While few people want higher taxes, Nobue Nakamura, of Kapalama, said she would have favored giving counties the choice of raising taxes even higher if it meant that some of the money could have been used for tax relief for the people who can least afford a tax increase.

Tax relief was the major casualty of the session — a victim of a tight state budget and apprehension over the state's long-term economic forecast.

Nakamura said she prefers an increase in the general excise tax — which is what the counties are now reviewing i to raising other taxes because "a lot of the income would come from tourists."

Others, like Helen Nagamine of Pearl City, said they are ready to sacrifice. "I'm willing to pay the higher taxes, especially for my children and grandchildren — for the sake of them," she said.

Reach Gordon Y.K. Pang at gpang@honoluluadvertiser.com. Reach Derrick DePledge at ddepledge@honoluluadvertiser.com. Or reach either at 525-8070.