A bill raising the statewide hotel tax to pay for the struggling Honolulu rail project cleared another hurdle Tuesday when the Senate advanced it on a 17-7 procedural vote.
A bill raising the statewide hotel tax to pay for the struggling Honolulu rail project cleared another hurdle Tuesday when the Senate advanced it on a 17-7 procedural vote.
Three Oahu senators joined all four Big Island members voting no. The final Senate vote scheduled for this morning is expected to be closer, following a 6-5 committee decision Monday that barely moved it to the floor of the chamber.
If it passes the Senate, the $2.4 billion bailout bill will be taken up at 1:30 p.m. today during a House committee hearing.
Legislative leaders are pushing for a quick resolution to a looming financial crisis for the rail, which faces a Sept. 15 deadline to present a funding plan to the Federal Transit Administration. The city risks having to return more than $800 million already spent from a total $1.5 billion in promised federal dollars.
The measure comes after the cost of the rail project ballooned from $5.26 billion in late 2014 to $9.5 billion.
The short time frame created a pressure-cooker environment at the Capitol, with two House members who were opposed to the bill removed from the powerful Finance Committee late Sunday, and senators cautioned about proclaiming too much opposition on social media.
The bill was created by legislative leaders for a special session after House-Senate negotiations broke down during the regular legislative session. At that time, the House speaker was ousted along with the chairwoman of the Senate Ways and Means Committee.
Amid a tumult of opposition from the hotel industry, mayors, county councils and neighbor island residents, legislators were told no amendments will be allowed or the process will fall apart.
“It’s being railroaded, pardon the pun,” said Sen. Russell Ruderman, a Puna Democrat. “This bill was crafted behind closed doors and handed to us, with a ‘take it or leave it, and by the way, you’ll take it,’” sentiment.
Ruderman doesn’t think there’s such an emergency to find more money, especially at the risk of creating a precedent that could lead to more statewide funding of local projects.
Sen. Josh Green, D-Kona, said he voted against the bill because it’s “fundamentally unfair to the neighbor islands” and it will leech money away from needed projects throughout the state, such as affordable housing, health care and homelessness.
“As good as it is to build infrastructure, so many other things fall by the wayside when we pay $10 billion for one project,” Green said.
Sen. Kai Kahele, D-Hilo, said he’s surprised at the level of opposition he’s hearing to the funding mechanism.
“I don’t feel like the elected leadership is listening to the people,” Kahele said. “There’s a resounding opposition to this bill.”
Sen. Lorraine Inouye, a north Hawaii Democrat, echoed Kahele’s statement.
“I have heard from many constituents and even conducted an informal survey,” Inouye said. “The overwhelming sentiment is that neighbor islanders do not want, nor do they feel they need, to support the Oahu rail, a City and County of Honolulu project, not a state project.”
Senate Bill 4 levies a statewide 1 percent increase on the transient accommodations tax dedicated to Honolulu rail while setting the share of the TAT to be divided by the counties at $103 million permanently. It also gives counties the option of raising their general excise tax by one-half percent to be used for roads.
The bill also extends Honolulu’s current half-percent general excise tax for three years, and reduces how much the state takes as administrative fees. And it requires an audit and more oversight for the rail project.
Legislators supporting the measure say Honolulu is the economic driver for the entire state and residents’ tax dollars often help fund neighbor island projects. Legislators opposed to the measure say they’re in favor of mass transit — they’re just skeptical about the current project that’s so much over budget.
Sen. Laura Thielen, an Oahu Democrat who voted against advancing the bill, said there is traditionally more debate when bills are up for final reading.
Before the Tuesday vote, she mentioned on the Senate floor a 2006 news article that estimated a $3 billion total price tag for a proposed rail line that would have gone as far as the University of Hawaii at Manoa — farther than the current proposed route.
“When people say that the rail cost has gone up — you know, it’s doubled — it’s actually more than doubled because we’re not doing the last 2 miles from Ala Moana to Manoa, and that would be a really expensive portion of rail,” Thielen told the Associated Press. “So the price is going up and we’re getting a shorter rail, and really it’s that last segment that would have given you the most traffic relief because traffic is way worse when UH is in session.”
The Associated Press contributed to this report.
Email Nancy Cook Lauer at ncook-lauer@westhawaiitoday.com.