Mayor withdraws support for rail funding plan, citing legal concerns

Mayor withdraws support for rail funding plan, citing legal concerns 10pm update
Published: May. 1, 2017 at 9:17 PM HST|Updated: May. 1, 2017 at 10:45 PM HST
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HONOLULU (HawaiiNewsNow) - The mayor has withdrawn his support for a deal that would increase hotel room taxes to help pay for rail.

The reversal came on the eve of a planned vote on the legislative proposal, and could put the plan in jeopardy.

In a memo to state Senate President Ronald Kouchi on Monday afternoon, Caldwell said the city had identified "some serious constitutional concerns" with the measure -- ones that, if not rectified, mean the legislature "could run the risk" of having the bill vetoed by Gov. David Ige.

Specifically, Caldwell objected to portions of the measure pertaining to the renovation of Blaisdell Center, the use of county funds to fund an alternative mass transit project, and the distribution of monies for the New Start Education Special Fund, which Caldwell says would increase the project's budget shortfall from $980 million to $2 billion.

Caldwell wasn't the only city leader to come out Monday in strong opposition to the plan, which relies on boosting hotel room taxes to raise new funds for the beleaguered project.

City Council Chairman Ron Menor is demanding lawmakers do something rare -- use floor amendments to change the bill completely again.

Menor's proposed floor amendment would change the bill -- from paying for rail by increasing hotel room taxes to instead extending the rail tax surcharge another 10 years, which Honolulu Mayor Kirk Caldwell wanted.

On Monday afternoon, representatives from the visitor industry, construction, and affordable housing groups joined Menor and city budget Chairman Joey Manahan to oppose the deal being considered at the state Legislature, which increases the state's hotel room tax from 9.25 percent to 12 percent.

While lawmakers have said doing it this way will make visitors pay for the project, opponents say the bill would still hurt residents and the visitor industry.

"What we're asking them to do is ... eliminate some of the other provisions we find to be objectionable, and basically to go forward with a more straightforward mechanism for funding rail," Menor said.

A spokesman for the American Hotel & Lodging Association in Hawaii, prior to Caldwell's statement, criticized the bill by claiming that higher hotel room taxes would drive more tourists to illegal vacation rentals.

"Our tourists are already seeking alternative lodging outside the hotels that we represent," said Kekoa McClellan, "That's not good for Hawaii, and an increase to the TAT will encourage this illegal and illicit activity."

House leaders, meanwhile, say the bill is good policy and legal -- and they have a solid majority in support.

The Senate has been meeting for most of the day, and leaders are unsure if they have the votes to pass the measure.

But even if the proposal passes as is Tuesday, there are still challenges ahead.

Visitor industry leaders say they plan to urge the governor to veto the bill. If he doesn't, they could take the issue to court.

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