Supporting Rail Tax Legislation: Here’s Why

Rep’n Mililani …Rep. Beth Fukumoto Chang

Like many of you, I’ve been frustrated by the rail project’s delays and cost overruns. It’s the City and County of Honolulu’s project, but the state does have a say in the availability of a source of revenue that’s set to expire in 2022.

The state allows the counties to implement up to a 0.5 percent surcharge onto the state’s general excise tax (GET) for the rail project until 2022. Because of cost overruns, this is no longer expected to provide the city with enough revenue to finance its project.

Without the surcharge, the city plans to use alternative sources of funding, such as city property taxes, which the mayor has said could be increased from 33 percent to 43 percent, and city fuel taxes.

Ending the project, an option that city officials are committed against, would cost the city around $2 billion. None of the options, including canceling the project, costs nothing.

The state Legislature currently is considering a proposal, House Bill 134, to extend the county’s authorization to implement this surcharge. Effectively, this measure would keep the GET at its current rate of 4.5 percent for at least five more years. For those expecting the GET to drop to 4 percent in 2022, this extension will feel like a tax increase.

If you know me, you know that I think the cost of living is already too high. So, it might be surprising that I voted to allow the city to continue the GET surcharge, and I want to explain why.

First and foremost, most of my constituents have told me that they want the rail project completed. In Central Oahu, traffic negatively impacts our quality of life, and we all want relief. Rail can’t be the only solution, but it will help. If my district wants rail, then I will work to find the best means to fund the project.

In this case, extending the GET surcharge may be the best of a number of bad options. The federal government has said that we can’t significantly reduce the scope of the project. If we do, or if we end it, we’ll need to pay back the money and likely fight expensive lawsuits. For these reasons, the city probably won’t choose either option and will need to figure out how to pay for it.

Taking the GET surcharge off the table as an option for the city wouldn’t necessarily end the project or even force the city to cut spending. All it would do is push the city to use a different tax, which may end up being a greater burden.

Whatever the city chooses, there should be an audit of the project, and the state should reduce its 10 percent administrative fee so more money goes directly to the project. When we vote on the final bill, I hope these changes also will be included.

There’s still time before that vote takes place, so please share your opinion by emailing me at Remember, I am your representative, and I always want to hear from you before I make final decisions on this or any other vote.

Contact Rep. Fukumoto Chang at Capital Room 333, or call 586-9460.