HONOLULU, Hawaii (HawaiiNewsNow) - Honolulu’s mayor says the city is in good financial shape despite the rail project, which is billions of dollars over budget and far from completion.
Mayor Kirk Caldwell held a news conference Monday to dispel any concerns, reassuring residents that the rail will not drain the city’s funds and break the budget.
“There’s a perception that’s repeated around the island and the state of Hawaii that says somehow, our city’s finances are in dire straits. They’re in jeopardy because of rail, the cost of rail, the cost of operating rail — and that’s just simply not correct,” Caldwell said.
He said rail construction is mostly funded by excise and hotel taxes, not city and county funds.
Eventually, the city will pay for rail operations. Those costs could be up to $100 million a year.
But to prepare for that, the city increased hotel and investment property taxes and has grown the rainy day fund to $120 million.
“Whoever the next mayor is and whoever is the new council members are, they stand on solid footings to move forward and meet the challenges of the next fiscal year,” Caldwell said.
The mayor added that city has an AA+ bond rating, and just completed a bond sale showing that investors have confidence in the city’s credit.
But critics of the rail project point to soaring costs and the severe delays in getting the project finished.
The revised total project cost is now expected to hit $9.2 billion with an estimated completion date of Sept. 2026.
Caldwell also tabled a redevelopment of the Blaisdell Center citing unknown costs of the remaining miles of the rail project.
HART says the general excise and use tax surcharge for rail — which is a half percent on goods and services purchased on Oahu — began in 2007 and will continue through 2027.
According to their website, it is expected to bring in $4.8 billion for the project.