HILO — There was no stopping the $2.4 billion train bailout Friday, when a House majority of 31 overpowered 15 opponents to pass a bill hiking the hotel tax on all islands to pay for an over-budget Honolulu rail project as an intense five-day special session concluded.
Big Island Reps. Richard Creagan, Cindy Evans, Nicole Lowen and Chris Todd, all Democrats, voted no.
Reps. Mark Nakashima, Richard Onishi and Joy San Buenaventura, also Democrats, voted yes, although Onishi and San Buenaventura said they had reservations.
Gov. David Ige said he’ll quickly sign the measure.
“The special session has not been easy, but the Legislature did not give up,” Ige said in a statement. “My cabinet members and I will be doing a final review as we do for all legislation, but I fully anticipate signing the bill before the Honolulu City Council meets on Tuesday.”
The special session was especially difficult for Evans, who won re-election last year by a slim 176-vote margin to primary challenger David Tarnas, who’s announced he’ll try again next year.
Evans, named in May as majority leader — the third most important position in the 51-member House — informed House Speaker Scott Saiki before Friday’s floor session that she was voting no, and she offered to step down as majority leader, several sources close to the process told the newspaper.
Neither Evans nor a spokeswoman for Saiki returned messages by press time Friday. Saiki is expected to make a decision next week, sources said.
Senate Bill 4 increases the transient accommodations tax statewide by 1 percent, with the proceeds earmarked for the rail project. It also permanently caps the four counties’ share of the TAT at $103 million.
The bill also gives neighbor islands the option of raising their general excise tax by one-half percent to be used for roads, while extending Honolulu’s current half-percent general excise tax surcharge for three years, to 2030. And, it reduces how much the state takes as administrative fees and requires an audit and more oversight for the rail project.
Proponents said it’s essential that transient rentals and hotels from all islands bear the tax hike to help rescue the rail project. The project is 40 percent complete and costs have burgeoned to $9.5 billion.
They said Oahu’s economic engine also helps neighbor island communities, such as during natural disasters like Hurricane Iniki on Kauai and the Big Island’s lava flow emergency.
“When an island needs help, we step up,” said Rep. Dee Morikawa, a Kauai Democrat. “In many ways, Oahu residents help the neighbor islands.”
Rep. Sylvia Luke, an Oahu Democrat who chairs the Finance Committee, said a lot of work went into the compromise measure.
“After hearing testimony from city officials, neighbor island residents and the public, we looked in detail at how to fund rail while creating the least amount of increase on our taxpayers,” Luke said in a statement.
Neighbor island officials and some state representatives, however, decried having a tax imposed with no public meetings on their islands to help explain the issue to constituents. Adding insult to injury was the county officials’ treatment by some members of the House committees taking testimony Wednesday evening.
“The counties have not been respected in this current process, and I watched on Wednesday night as the county representatives were abused and insulted by some of the House legislators,” Creagan said in a letter to the editor.
“This lack of respect for the counties and their representatives all through this process, the lack of decision making, and the lack of county benefit has led many neighbor island legislators to decide to vote no on this bill, and I am one of them,” he added. “The neighbor island counties have not consented to this and are not benefiting.”
Rep. Gene Ward, an Oahu Republican, said he hadn’t seen such rude treatment of county officials by legislators in his almost 10 terms in the Legislature.
Ward, along with fellow GOP Rep. Andria Tupola, tried unsuccessfully to amend the bill to exclude neighbor islands from the TAT increase. It was defeated on a voice vote.
San Buenaventura railed at county officials for pushing back against the bill.
“I hate that the county council is pitting us against you folks,” San Buenaventura said. “It’s easy for us neighbor islanders to vote no … and I applaud those who vote yes.”
That didn’t sit well with Hawaii County Council Chairwoman Valerie Poindexter, who had already borne a thorough public scolding at the committee hearing.
“Shame on her,” Poindexter texted shortly after San Buenaventura’s statement.
Poindexter later clarified.
“The most difficult thing to swallow was when we were called liars for posting our information and comments on Facebook. They tried to put words in my mouth and took things out of context,” she said. “I leave the judgment of my postings on Facebook in the hands of my constituents. At least my discussions are transparent.”
Lowen said she sees the advantage of using TAT funds over GET, but she disagreed it’s an easy choice for neighbor islanders to vote no.
“There are no easy choices for any one of us here,” Lowen said. “This helps shift the tax burden from our poorest residents to those who can afford a little more.”