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The Honolulu Advertiser
Posted on: Sunday, May 3, 2009

Transit tax collections still short of projections

 •  Move sought for rail station

By Sean Hao
Advertiser Staff Writer

Tax collections needed to fund Honolulu's planned commuter rail system continued to lag behind expectations in March.

During March, net transit tax collections fell 19 percent to $13.4 million, versus the $16.5 million collected in March 2008, according to the state Department of Taxation. Overall tax collections remain below projections because of the state's flagging economy.

City officials expect to raise $188 million, or an average of $15.7 million a month, during the fiscal year ending June 30. However, through the first nine months of the fiscal year, monthly collections are averaging about $13.6 million.

If that trend continues, the city could be short about $25 million in transit funds by June 30. In the fiscal year starting July 1, the city's rail plan anticipates transit tax revenue growing to an inflation-adjusted $198 million, or $16.5 million a month.

City officials hope to use the tax to raise nearly $4.1 billion, on an inflation-adjusted basis, from 2007 through 2022 to pay for the 20-mile rail system linking East Kapolei to Ala Moana. That, coupled with about $1.4 billion in anticipated federal money, is expected to pay the estimated $5.4 billion in capital costs associated with rail, according to the city's financial plan.

City officials maintain that any near-term revenue shortfall should be offset by an economic rebound in future years.

The state began collecting a half-percentage point general excise tax surcharge for transit in January 2007. The tax is scheduled to expire in 2022. Overall, the tax has raised $337.3 million during the first 27 months.

That figure, and all figures in this story, do not include the 10 percent the state takes off the top to pay for administering the tax.

During the first nine months of the current fiscal year, the transit tax generated $122.7 million for the city, which is down 2 percent from the $125.2 million raised during the first nine months of the prior fiscal year.

Officials want to begin construction in December, contingent on federal approval, and launch service between 2013 and 2019.

Reach Sean Hao at shao@honoluluadvertiser.com.