I want to take this opportunity to explain why I am joining our Hawaii Island Senators in voting “NO” on final reading on SB4 (the Special Session Rail Bill) and to propose an alternative.
The recent struggles between the state house, the senate, and the counties about how to fund rail have been very contentious. There is also still a large percentage of Honolulu residents who would prefer the rail project be stopped altogether or be modified, so neighbor islanders are not alone in not wanting to pay for this project.
The innovative proposal by Finance Chair Sylvia Luke and the finance committee to have the TAT increased to support the rail appeared to make sense in that it would provide up front money that could help alleviate the interest costs of the rail project. But the proposal was not received well by neighbor island mayors and county councils because it would force neighbor islands to fund the rail project. And they were not consulted in a meaningful way.
The hotels also objected, as would be expected. I don’t think the hotel industry’s objections to this 1 percent increase are credible given their rampant and growing resort fees which, in many if not most cases, are mandatory and which to date have not been subjected to any TAT and which often amount to 10 to 15 percent of the room rate, if not more.
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. 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. The neighbor island counties have not consented to this and are not benefiting.
The neighbor island counties are reluctant to have the TAT raised if that TAT increase is going to rail, and I agree. In addition to being a project that primarily benefits Honolulu, the cost of the rail project is ballooning out of control and in need of an immediate forensic audit. At the same time, the counties have been clamoring for a fairer share of the TAT.
As an alternative to Chair Luke’s plan, I propose raising the TAT by the same 1 percent, but allowing each county to use that increase for their own county’s needs. This way, Honolulu can use their increased revenues for their rail project without forcing the neighbor islands to contribute to it. In Honolulu’s case, I would allow them the option to raise their TAT a total of 2 percent to make up for the lost neighbor island revenues. This would be in addition to the 103 million capped TAT proposed by Luke for the counties. I would also reopen the window for the neighbor islands to decide if they might want to increase their GET by 0.5 percent and extend that option to Honolulu for three more years, i.e. until 2030 as provided in the current bill SB4.
In the interests of county autonomy each neighbor island county would have the ability to opt out of this 1 percent TAT increase. They could also selectively exclude from this increase, if desired, the “little guys” who might augment their income by renting out a room or a small dwelling as a transient accommodation.
If SB4 fails to pass in this Special Session, it will not stop the rail. They have plenty of funds to keep going for now. Their existing GET increase continues for at least another 10 years to 2027. There is little likelihood that the Federal Transportation Agency would not understand a time out to do a forensic audit. It is time for a time-out for rail but it is also time to provide another funding source to the neighbor island counties for their OWN needs, not to support a bloated Honolulu rail project.
Let us respect our counties, and empower them to help their own people.