Conference Committee Agree on Funding Honolulu’s Rail Project – Tourists Will Pay More

The House and Senate conference committee came to an agreement this afternoon on the future of Honolulu’s rail project. Earlier today, the House proposed removing the 2-year extension using GET surcharge from SB 1183 SD2 HD2 and replacing it by increasing the Transient Accommodations Tax (TAT) by 2.75%.

“The City and HART have been telling us over and over again that the cost of rail should be put on tourists and the visitor industry,” said Representative Sylvia Luke (Makiki, Punchbowl, Nuuanu, Dowsett Highlands, Pacific Heights, Pauoa). “We have taken them to heart and we have done that today without imposing a further tax burden on the citizens of the state.”

The amended bill calls for the City & County of Honolulu to contribute $13 million of their share of the hotel room tax to fund the rail project.

The bill allows for a massive infusion of money now for the rail project without putting the cost of it on the backs of our most vulnerable citizens, the poor, elderly and low-income working families. The money generated by the increase in the hotel tax in today’s dollars is equivalent to receiving $2.4 billion in future GET revenues. This would provide more funding for rail than any package currently being proposed.

“The end goal has always been to get rail to Ala Moana so that the City fulfills its agreement with the Federal Transit Authority,” said Representative Henry Aquino (Waipahu). “This bill gives the city more tools to use in managing and funding its project.”

The bill also calls for a moratorium on redeveloping the Neil S. Blaisdell Center, which is estimated to cost nearly $500 million, so the City does not fiscally over extend itself and can focus on its number one priority – rail.

The provisions of the amended bill include:

  • Removal of House’s proposed 2 year GET extension for 2027 – 2029;
  • Increase of the Transient Accommodations Tax (TAT) by 2.75% from its current 9.25% to 12% for 10 years from January 1, 2018 to December 31, 2027;
  • Revenue generated from the TAT increases will be distributed as follows:
  1. $50 million will be set aside annually for education in a newly created education special fund;
  2. The City and County of Honolulu will receive $130 million annually over 10 years concurrently with the GET surcharge revenue that they are already receiving now;
  • $13 million of Oahu’s share of the TAT go to funding the rail project;
  • Maintaining the House position to lower the state’s share of the administrative service fee to 1%;
  • Giving all counties the option to extend the GET surcharge;
  • Requiring Honolulu to repeal any ordinance prohibiting use of county funds for rail;
  • Prohibiting the use of the GET surcharge revenue to fund HART administrative, operating, and personnel expenses.

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