When the legislature gave Honolulu county part of the excise tax for rail, it added a controversial piece.
The state receives 10 percent of the rail tax. The supreme court heard arguments Thursday over the legality that, and if it was constitutional.
State officials admit the state collects about $25 million to $30 million a year from the fee, but argued that the tax foundation didn't have the right to challenge the clearly written law.
The Tax Foundation of Hawaii says the so-called "Rail tax Skim" has been a huge and unnecessary burden on taxpayers.
"Through the life of the current surcharge, the state of Hawaii will have skimmed more than $300 million from amounts paid by Oahu taxpayers for the rail system," Paul Alston, attorney for the Tax Foundation of Hawaii said.
The supreme court's ruling could take months.
In the meantime, the legislature recently considered reducing the ten percent fee all the way down to just one percent.