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Hawaii House Approves $1.2 Billion Package to Fund City Rail Project

The House of Representatives today agreed to provide an additional $1.2 billion funding package for the City’s financially troubled rail project estimated to cost a total of about $8.1 billion.

In passing SB1183 SD2 HD2, the House extended Oahu’s 0.5 percent general excise tax surcharge for the City’s rail project for an additional two years through 2029 which will generate an estimated $792 million.

The House also agreed to reduce the funds it collects as a GET administrative fee by 90 percent which will generate an estimated $397 million for the City project.

When adding this new funding of $1.2 billion to the $6.8 billion already committed to the project, the State is providing $8 billion for the City rail project.

Rep. Sylvia Luke (D, Makiki, Punchbowl, Nuuanu, Dowsett Highlands, Pacific Heights, Pauoa), Chair of the Finance Committee, said the additional rail funding provided in the bill brings the City very close to its total estimated cost for the entire project.

“This bill is an honest attempt to once again provide sufficient funds for the city’s over-priced, over-budget rail project,” Luke said. “There are many more questions about the rising cost estimates that remain unanswered.”

(For the full text of Rep. Luke’s speech today, click here.)

“This was a reasoned approach and I would hope that reason would prevail at the city. It is incumbent upon the Mayor, the city, and HART to use this opportunity to take control of the cost and its budgets, and look at all viable options. Threatening the public with a property tax increase is doing a disservice to our citizens. The city must first do whatever they can to instill confidence and trust in this project. I am certain given the opportunity they will do that.”

As part of the bill, the Honolulu City Council must vote to allow city funds to be used for rail and approve the GET extension by Dec. 31, 2017 or void the additional State support.

In an impassioned speech, Speaker Joseph Souki (D, Kahakuloa, Waihee, Waiehu, Puuohala, Wailuku, Waikapu), said building rail is the largest public works project in Hawaii’s history and will provide jobs and a new mode of transportation for commuters.

“This is for the future. The burden now goes to the City. They need to have ‘skin in the game.’ Hopefully, the (City) Council will get the courage to pass it.  I’m asking all of you to support this bill,” Souki said.

Luke said the State must be very mindful of how it spends taxpayer money, and that  lawmakers and the public have lost faith in the credibility of cost estimates by the City and Honolulu Authority for Rapid Transportation administrators.

After providing almost all the funds needed for the project, the State cannot write a “blank check” for more taxes going into the future just in case rail goes over budget again, she said.

Luke said the City should look at cost savings either through r public private partnerships, finding creative ways of securing bond financing, or aggressively looking at their contracts and making cuts to cover the final $100 million of the total cost.

Luke said this $1.2 billion package provides the City with funds to complete the rail project through Ala Moana and will not jeopardize the $1.55 billion in Federal Transit Administration funding.

SB1183 SD2 HD2’s provisions include:

  • Extending the general excise tax surcharge for two additional years, from December 31, 2027 through December 31, 2029, which will generate an estimated $792 million;
  • Redistributing 90 percent of the State Department of Taxation administrative fee to the City, which will generate an estimated $397 million;
  • Requiring the City to approve the extension on or before December 31, 2017;
  • Mandating that the City not prohibit the use of city funds for rail expenses;
  • Prohibiting the use of the GET surcharge revenue to fund HART administrative, operating and personnel expenses;
  • Stating that GET funds can only be used for construction;
  • Giving all counties the option to extend the surcharge.

In addition, the House also moved the following bills on Second Crossover:

Veterans

SB 602 HD1 repeals the requirement that a disabled veteran be in receipt of disability retirement pay from the armed forces to be exempt from the payment of annual vehicle registration fees.

Climate Change

SB 559 SD1 HD2 requires the State to expand strategies and mechanisms to reduce greenhouse gas emissions statewide in alignment with the principles and goals adopted in the Paris Agreement.

Affordable Housing

SB 1244 SD2 HD2 authorizes qualified nonprofit housing trusts to repurchase affordable units developed with government assistance when a government entity waives its first right of refusal to repurchase the unit.

Internet Privacy

SB 429 SD2 HD2 adopts uniform laws on protecting the online accounts of employees, unpaid interns, applicants, students, and prospective students from employers and educational institutions, respectively.

Condominium Law

SB 369 SD1 HD1 prohibits apartment and condominium associations, boards of directors, managing agents, resident managers, and apartment and condominium owners from retaliating or discriminating against an owner, board member, or association employee who takes lawful action to address, prevent, or stop a violation of Hawaii’s condominium laws or a condominium’s governing documents, or exercises any rights as an owner.

Prison

SB 603 SD1 HD2 requires report to Legislature on solitary confinement in Hawaii and Arizona correctional facilities that house Hawaii inmates. It also requires the Department of Public Safety to expand the environmental impact statement process for potential sites for the Oahu Community Correctional Center relocation and submit a report to Legislature.

Taxation

SB 620 SD2 HD2 requires retailers or vendors that are not located in the State and not required to pay or collect general excise or use tax for sales to send certain information to purchasers in the State.

SB 686 SD2 HD1 establishes education surcharges on residential investment properties and visitor accommodations for funding public education.

SB 704 SD2 HD2 allows transient accommodations brokers to register as tax collection agents to collect and remit general excise and transient accommodations taxes on behalf of operators and plan managers using their services for vacation rentals.

Homelessness

SB 717 SD2 HD2 makes appropriations and establishes a temporary program to clean up state real property after the departure of persons who have illegally camped or lodged on state real property.

SB 1290 SD2 HD2 allocates funds from transient accommodations tax revenues to the Hawaii Tourism Authority in conjunction with the Hawaii Lodging and Tourism Association for the implementation of initiatives to address homelessness in tourist and resort areas.

Pregnancy Centers

SB 501 SD1 HD2 requires all limited service pregnancy centers to disclose the availability of and enrollment information for reproductive health services and establishes privacy and disclosure requirements for individual records and information.

In Vitro Fertilization

SB 502 SD1 HD1 removes discriminatory requirements for mandatory insurance coverage of in vitro fertilization procedures to create parity of coverage for same-sex couples, unmarried women, and male-female couples for whom male infertility is the relevant factor.

Retirement

SB 249 SD2 HD1 reduces the percentage of average final compensation used to calculate the retirement allowance for a member who first earned credited service as a judge after June 30, 2050, to 2 per cent.

Maui Hospitals

SB 207 SD2 HD1 appropriates funds to the Department of Budget and Finance for collective bargaining cost items related to the transition of affected Maui region hospital employees to employment with Maui Health System, a Kaiser Foundation Hospitals LLC.

Lifeguard Protection

SB 562 SD1 HD1 requires the Attorney General to defend any civil action against the county based on negligence, wrongful act, or omission of a county lifeguard for services at a designated state beach park under an agreement between the State and a county.

A complete list of Senate bills passed by the House to date is available on the Capitol website at http://capitol.hawaii.gov/advreports/advreport.aspx?year=2017&report=deadline&rpt_type=secondCross_ammend&measuretype=SB&title=Second Crossover.

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