Rail gets its bailout: Governor signs hotly-debated funding bill into law

Published: Sep. 5, 2017 at 5:51 PM HST|Updated: Sep. 6, 2017 at 10:32 AM HST
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HONOLULU (HawaiiNewsNow) - The governor has signed the rail bailout bill into law Tuesday.

"There are no fatal flaws," said Gov. David Ige, in a news conference. "This makes a strategic investment in the community."

The hotly-debated measure was the product of a special session last week -- and the culmination of months of negotiation between the House and Senate.

The measure will generate nearly $2.4 billion to save the beleaguered project, the biggest public works project in the state's history.

Mayor Kirk Caldwell has continued tp have concerns about whether the bill would provide enough money to fund the shortfall. (The mayor previously said the measure was about $600 million short.)

After the bill signing Tuesday, Caldwell said in a statement, "The signing of the rail funding bill into law shows Gov. Ige's commitment and leadership in completing the rail project as promised to the people of Oahu, and is proof of the hard work done by members of the state Senate and House during the special legislative session."

The partially built rail line is years behind schedule and way over budget -- with the estimated price tag ballooning from $5.26 billion in 2014 to nearly $10 billion, including financing costs.

The city has until Sept. 15 to show the Federal Transit Administration a plan to raise the money to cover the project's budget shortfall – or risk losing $1.55 billion in federal grant funding it has already received.

The Legislature's agreement extends the existing .5 percent general excise tax surcharge on Oahu for three additional years through 2030, which will generate about $1 billion.

The bill also raises the statewide hotel room tax 1 percent for the next 13 years -- which equates to about $1.3 billion for upfront construction costs. To help please the neighbor islands, the counties' share of the hotel tax goes up from $93 to $103 million.

The law will also reduce the state's administrative fee, or skim, on collecting Oahu's rail tax from 10 percent (around $30 million) to just 1 percent (about $3 million).

And the measure requires a state audit and annual reviews of the Honolulu Authority for Rapid Transportation. Additionally, the Senate president and House speaker will have the power to appoint two non-voting members to HART's board of directors.

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