Bill provides needed accountability, extends GET
support on Oahu, raises TAT one percent,
Honolulu, Hawaii – The Hawaii House of Representatives voted
in Special Session today to pass Senate Bill 4 to fund the City’s $8.2 billion rail
project. The vote was 31 yes, 15 no and five excused.
The Senate passed
the measure on Wednesday. The bill now goes to Governor David Ige for his
consideration.
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.
House Speaker Scott
K. Saiki (Kakaako, Downtown) said after passing this funding bill, it is now up
to the City to manage the project in a way that is both accountable to the
taxpayers and completed within its budget.
“The legislature has
taken on the responsibility of finding a way to fund rail and to secure federal
funding,” Saiki said. “I want to thank our lawmakers for working together to
reach this compromise.”
The bill will:
·
Extend the general excise
tax surcharge on Oahu for three additional years, from December 31, 2027
through December 31, 2030. This will provide $1.25 billion.
·
Raise the hotel room tax charged
to visitors (Transient Accommodation Tax) by one percent from 9.25 percent to
10.25 percent for 13 years, from January 1, 2018 to December 31, 2030. This
also applies to timeshares. This will provide $1.25 billion.
·
The hotel room tax is
collected statewide and goes directly into the general fund, not to the island
where it is collected. Each county receives an allocated proportional share of
the tax regardless of total amounts collected. Raising the tax does not change
that amount.
·
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.
The bill also
provides that funds collected for rail go into a new Mass Transit Special Fund
and rather than simply give the money to the City, and requires the State
Comptroller to certify HART’s invoices for capital costs as the project moves
forward. This will allow the state to keep track of both spending and
construction progress.
This bill addresses
the immediate rail construction shortfall by collecting funds upfront through a
small TAT increase instead of adding additional years of GET surcharge on the
back end. This will reduce the financing costs of the project by hundreds of
millions of dollars.
A rail bill that
relies solely on GET will continue to tax the poor and increase the cost to
taxpayers in the long term. By substantially relying on the TAT, visitors will
now bare a significant portion of the financing burden.
Rep. Sylvia Luke (Pauoa,
Punchbowl, Nuuanu), Chair of the House Finance Committee, said careful thought
and consideration went into this bill.
“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,” Rep. Luke said.
Rep. Henry Aquino
(Waipahu) said it is important to support the rail project to relieve traffic
congestion for West Oahu residents.
“This bill is a
compromise that provides the funds to get rail built. When completed, rail will
be a great relief for the thousands of people stuck in traffic every day,” Rep.
Aquino said. “This bill not only provides much needed oversight on spending by
the State Comptroller, it also mandates accountability though audits and
financial reviews.”
