Bill to extend rail tax surcharge would boost infrastructure spending

As costs rise, lawmakers to consider indefinite extension of rail tax surcharge
Updated: Dec. 22, 2016 at 7:02 PM HST
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HONOLULU (HawaiiNewsNow) - Opening day for the state Legislature is still weeks away, but there's already a proposal to extend the .5 percent rail tax surcharge.

The bill calls for the tax to go on indefinitely, and the new wrinkle is that the state would keep a third of the money.

"This would be a way to finish what is the most important transportation infrastructure project," said state Sen. Will Espero. "That would allow rail to be built to UH-Manoa and Kalaeloa Airport."

Espero's bill is now in draft form, and it's likely the first of several proposals that would extend the general excise tax to pay for the completion of the 20-mile rail project.

Under the plan, one-third of the tax revenues --- up to $100 million a year --- would go toward state transportation projects, such as highway expansion and new roads, which are partly paid for by gas taxes and registration fees.

"This is a key point, we would never have to raise the gas tax, the vehicle registration and the vehicle weight tax again," Espero said.

The governor has indicated he's willing to discuss concepts like this one.

City Councilman Ikaika Anderson, who will be Transportation Committee chair, is OK with the state taking more of the money in return for the tax being made permanent.

"The general excise tax surcharge is the best way to pay for rail and extending that further so that we can collect the money to pay for rail is the best of the bad options we have in front of us," Anderson said.

The measure comes nearly two years after lawmakers extended the rail surcharge for five years. Since then, the projected costs have skyrocketed by nearly $2 billion.

Some expect lawmakers to be more skeptical this time around.

"The House needs to do some due diligence before it takes up a request to extend the rail tax. One of the things we need to do is to meet with the (Federal Transit Administration) to determine what the FTA's position is on the rail project," said state Rep. Scott Saiki.

The discussion is urgent because the federal government want to see a financing plan by April -- before the legislative session is even over.

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