Councilmembers seek to use rail tax for operating costs, affordable housing

Councilmembers seek to use rail tax for operating costs, affordable housing

HONOLULU (HawaiiNewsNow) - The Oahu rail tax might be used to pay for operating costs and support affordable housing under a new proposal from key councilmembers.

The city wants an indefinite extension of Oahu's half-percent excise tax and councilmembers in charge of rail say they want to work with lawmakers, and are also hoping for a deal that allows the city to use the money to cover operating deficits and infrastructure for affordable housing along the route.

Councilmen Joey Manahan and Ikaika Anderson are likely to take the lead on rail issues for the council in their roles as budget and transportation chairs.  They jointly introduced Bill 3 on Wednesday in order to get the conversation going with state lawmakers, and the rest of city government, over what is possible and what is off limits if the rail tax is extended beyond its current expiration in 2027.

The bill proposes that, if extended, rail surcharge revenue could be used not only to build the rail, but also to cover the expected operating deficits and provide infrastructure to support affordable housing projects along the rail line.  Current law limits the use of rail tax collections to construction of rail and a ten percent state administrative collection fee.

There is increasing discussion about the state extending the tax, but also dividing the money with the county. The most talked-about concept would have the city collect two-thirds while the state keeps a third for its own transportation projects.

The councilmen say they are open to that idea, and hoping the legislature will loosen its constraints on how the money can be used.

"If the legislature decides that they want us to use it for other things then absolutely; but i think the priority for us in this city is really building out the 20 miles 21 stations," said Manahan.

Anderson said it's also important that the county lift a $4.8 billion cap placed on rail tax revenue imposed two years ago after the legislature extended the tax to 2027. That number is now obsolete with the price of the project estimated at $8.2  billion.  Bill 3 also repeals that cap, which Anderson said led to distrust between city leaders and state lawmakers.  He says it's important to work openly with lawmakers to restore a good relationship.

"I think the council needs to entertain all options that the legislature puts in front of us and not be closed-minded to anything," Anderson said.

All sides will be under the gun to work quickly toward a deal on rail financing early in the legislative session in order to get an approved plan to the federal government, which is providing $1.55 billion for the project, by an April deadline.

Bill 3 is expected to get its first hearing next week.

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