The rail deal is a done deal. But is it a good deal?
Depends. On who you are. Where you live. Your degree of commitment to this Oahu project.
It passed House of Representatives in special session last week. It passed the Senate. Gov. David Ige signed Senate Bill 4 this week to fund the city’s troubled $8.2 billion rail project. The bill will provide about $2.39 billion to complete construction of the rail project to Ala Moana and provide a secure funding source to ensure continued federal support.
The governor called it “a strategic investment in Hawaii’s future” and said this project must be completed. He’s right that it must be completed. It can’t be left unfinished. This is one of the projects that despite its costs, must be carried out. Because it’s become a financial boondoggle with insane cost overruns and poor planning and terrible management, all Hawaii taxpayers, not just those on Oahu, will have to foot the bill and bail out this train wreck (excuse the pun).
Before we go further, let’s recap what SB 4 does:
• Extend the general excise tax surcharge on Oahu for three additional years, from Dec. 31, 2027 through Dec. 31, 2030. This will provide $1.25 billion.
• Raise the hotel room tax charged to visitors (Transient Accommodation Tax) by 1 percent from 9.25 percent to 10.25 percent for 13 years, from Jan. 1, 2018 to Dec. 31, 2030. This also applies to timeshares. This will provide $1.25 billion.
• Permanently increase the counties share of the TAT from its current $93 million base to $103 million.
• Reduce the State Department of Taxation’s administrative fee on the GET surcharge from 10 percent to one percent.
• Require a state run forensic audit of the rail project and annual financial reviews.
Now, for the pros and cons.
Some argue Kauai receives more revenues from the state than it generates in taxes, so it’s only fair Kauai residents help pay for this, as they benefit from tax money. Count Reps. Nadine Nakamura and Dee Morikawa among them.
“Most importantly, as State Legislators, we must balance the need to provide basic services such as public education, human services, and access to health care to every resident in the State while addressing special needs as they arise,” they wrote in a letter to the editor.
They have good points.
Others will argue that residents on the Neighbor Islands should not be paying for a rail project on Oahu. They question what benefit they will receive from it. Count Rep. Jimmy Tokioka among them. He took a stand against the rail deal and was promptly punished by being reassigned from the House Finance Committee, where he had been for 11 years.
We have to give Tokioka credit for going against the grain, voting no, when he knew there were be repercussions.
He said he supports the rail project and its completion, but not SB 4.
“On this particular vote, I just could not support it,” he told TGI.
Because taxes didn’t generate enough money on Oahu to fund the rail didn’t justify making Neighbor Islands pay for it.
“To me, that made no sense at all,” he said.
Tokioka said what was most important was that he received many text messages, emails and voicemails on the issue, nearly all of them questioning why Kauai and other islands would help pay for an Oahu transportation project. To many, that also made no sense.
“I received almost as much on the rail bill that I did with the same sex marriage,” he said. “People on Kauai just did not understand why Kauai had to pay for rail.”
He said it’s his job to represent his constituents, so when he voted no, that’s what he was doing.
We applaud Tokioka for standing strong, even when he certainly was aware the votes were there to carry the rail deal. He did what the people of his district elected him to do, represent their best interests, while knowing it was not popular with his colleagues. Sometimes, you have to stand alone, win or lose.
That said, we also believe this rail project has to be finished and the Legislature found the least painful way to do that. By spreading the burden across the state, including our tourists through the TAT, the financial impact on taxpayers will be lessened. The bill, as has been said, is a good compromise and will move this necessary rail project forward.
We do hope our friends on Oahu budget better on future projects.