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The Honolulu Advertiser

Posted at 1:59 p.m., Wednesday, June 21, 2006

Agreement reached on transit tax, Hannemann says

Advertiser Staff

State and city officials have reached an agreement on how to collect $150 million a year in taxes to support mass transit improvements on O'ahu, Mayor Mufi Hannemann said today.

The agreement clears the largest single hurdle in the way of establishing a new mass transit system on O'ahu, Hannemann said.

Under the agreement worked out this week, the state Department of Taxation will collect a new surcharge on the general excise tax to pay for transit, Hannemann said.

In recent weeks, state and city officials have been feuding over who would actually collect the tax and pay to administer the costs of the program.

Hannemann said a breakthrough in the dispute came this week when state lawmakers assured him they will work next year to pass a $5 million appropriation to pay administrative costs of implementing the county surcharge.

However, Hannemann also will ask the City Council to approve a $5 million guarantee for the payment should the Legislature fail to approve the funds.