Councilman Charles Djou has found an unlikely ally in his battle to delay collection of the half-percent excise tax increase for O'ahu rail transit — former Gov. Ben Cayetano.
Djou, who as a Republican state legislator seldom found reason to agree with the Democrat Cayetano, finds common ground on his Bill 83 to postpone the collection of the city transit tax, which is scheduled to start on Jan. 1, for six months or a year, depending on when the council selects a specific transit alternative.
Cayetano would go even further than that and hold up on collecting the tax until an O'ahu transit system receives federal approval, which could take two or three years.
Mayor Mufi Hannemann, the leading proponent of a rail line between Kapolei and Honolulu, says Djou's bill Bill 83 "is ludicrous and a sham and will kill rail." The measure passed first reading on Nov. 15 over the strenuous objections of Hannemann, businesses and unions in the construction trades. But its chances of becoming law are considered slim as the majority of the council rushes to select a transit alternative before the new tax kicks in.
Hannemann has argued that failure to start collecting the excise tax on schedule would jeopardize federal support by raising doubts about a dedicated source of local funding.
He's pressing the council to move quickly by limiting its choices to one of the two options proposed by the mayor's consultants — a 20-mile line from Kapolei to Iwilei or a more expensive 26-mile line extending to the University of Hawai'i and possibly Waikiki.
Cayetano insists there is no rush to start collecting the transit tax to lock in federal money because the Legislature, governor and council did enough to demonstrate a dedicated local funding simply by passing laws authorizing the general excise tax increase when it is needed.
He said the federal government does not require that tax collections actually start before final approval of a Honolulu rail plan.
"Somehow, the mayor has conned everyone into thinking that the GET should be collected in advance of federal approval of the proposed rail system," Cayetano said.
"The feds do not require collecting the taxes in advance. I spent half my 12 years in the Legislature chairing the transportation committees in the House and Senate. I know there is no requirement to collect monies in advance."
He said that if the rules have changed since he helped lead the Legislature's inquiry into former Mayor Frank Fasi's failed Honolulu Area Rapid Transit proposal, the city should point out which specific federal law or regulation requires advance collection of local funding.
The former governor said it is foolish to take hundreds of millions of dollars out of O'ahu's economy before the federal government commits to backing a Honolulu transit system.
"What sense does it make to take $200 million to $300 million out of the pockets of small business and taxpayers while the funds sit in the city's coffers collecting interest?" Cayetano asked. "Historically, the feds take two to three years to approve funding for rail projects."
"Regardless of how one feels about the rail proposal, it doesn't make sense to tax the public in advance of federal approval," he said.
Cayetano also questioned the wisdom of collecting taxes before an environmental impact statement is done to determine the cost of noise and pollution mitigation, and expressed alarm that the city and state are not exercising more caution in developing the biggest public works project in Hawai'i's history.
"I've never seen a project rammed through like this one," he said. "The Legislature, governor and City Council owed the public due diligence and they failed miserably."