A Proposal To Amend The Rail Tax

Rick Hamada
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Wednesday - August 18, 2005

The Honolulu City Council passed Bill 40 last week authorizing an increase in the General Excise Tax of 12.5 percent.

During past council hearings regarding Bill 40, supporters of rail failed time and time again to answer basic questions and, in some cases, completely misled the general public when they did respond. There is no proof a train vs. additional lane miles will alleviate traffic congestion. There is no proof enough people will ride it to alleviate traffic congestion. There is no proof the proposed tax increase will cover the cost of the life of the project. There is no proof Honolulu will get substantial, if any, federal money.

The only consistent justification for the tax increase and rail project was, as Councilwoman Ann Kobayashi would often say, “We need to do something.”

Is this sufficient when authorizing a $3 billion public works project? Of course not.

This illogical and reckless position with your tax dollars is troubling. I would not be surprised if a concerted effort were launched to recall the seven councilmembers who have given their thumbs up to a spending plan that benefits the few at the expense of the many.

Unfortunately, the “few” are not the approximate 5 percent to 7 percent of our population estimated to ride the “Trillion Dollar Train.” The “few” are those construction and design firms which will directly benefit from the hundreds of millions of dollars to inevitably be awarded by Mayor Mufi Hannemann’s administration, and landowners along the rail line who will profit. The “few” are those public and private unions that will have guaranteed livelihoods for the rest of their natural lives. The “few” are those politicians who will curry tremendous support from the aforementioned entities in their pursuit of re-election and higher office.

Meanwhile, you will be paying from your paychecks. You will be paying from the tight margin of your small business. You will be paying from your savings accounts. For what? A government-sanctioned money grab with no plan, let alone details.

There are, however, a few wrinkles in the transit tax/plan firmament. There is the real possibility the federal government will deny funding for the Honolulu transit proposal. Why? Because of the expense of construction and maintenance, the cost per rider for Honolulu transit will far exceed federal benchmarks.

David Hartgen, professor of transportation at the University of North Carolina at Charlotte, says in a recent article about federal transit funding: “All the cities vying for transit dollars are required to make careful estimates of what traffic will be. Those numbers are compared against costs, so that the feds will have some measure of the overall cost-effectiveness of these investments across the country.”

One important number is the cost to attract one new rider to the transit system, says Hartgen. Anything above $25 is going to be suspect. Always, the feds are looking for projects that have some reasonable expectation of persuading automobile drivers to switch to mass transit. (Bob Fliss, contributing editor, Carolina Journal)

Reasonable calculations based on cost of construction and potential ridership fall far short of the $25 threshold. Plus, Honolulu has the attention of the Federal Transit Authority in the aftermath of the Bus Rapid Transit debacle.

So what if the city misses out on federal money? No problem. Simply raise the GET again and — voila! — you get more money! Remember, the original figure Mayor Mufi wanted from the Legislature was a full 1 percent increase. He got half that. It tells me the plan has always been to go it alone and tax the Hawaii public to the max. A full 1 percent bump (a 25 percent increase) to 5 percent will generate approximately $320 million per year. Over a 10 year period that comes to, oh my, $3.2 billion, which just so happens to be the estimated cost of the rail system.

We have learned the federal requirement to have a “funding mechanism” in place to qualify for federal dollars does not include the actual collection of any tax monies. I spoke with Gov. Linda Lingle on my radio program last week and asked if it were possible to amend HB1309 to read, “Collection of any GET revenue is contingent upon federal approval of Honolulu’s Environmental Impact Statement and complete transit proposal.” She said yes.

I am calling on thoughtful leaders, like Gov. Lingle, to advance this amendment, or a new piece of legislation, calling for exactly that. At least taxpayers will know that tax money will indeed fund a viable project. If the Federal Transit Authority signs off on the rail plan, fine. Let the tax be levied and begin construction. However, if the FTA rejects the Honolulu proposal, then the rail project and the associated tax dies.

If rail/tax supporters are truly interested in a transit system of tomorrow that delivers on promises made today, they should express confidence in their claims and welcome this opportunity to demonstrate the veracity of their position.

I urge both sides of the rail/tax debate to support this proposed amendment to HB1309.

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