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Guest Commentary – Audit the Honolulu Rail Project

What does it say about the state of governance in Hawaii that endorsing basic standards of fiscal responsibility is a revolutionary act?

Ever since the Grassroot Institute of Hawaii launched its campaign to “audit the rail,” we’ve heard lots of excuses and evasions as to why an independent, thorough audit of Honolulu’s over-budget and behind-schedule rail project isn’t necessary.

But we’ve also seen that the public wants answers about the system and isn’t happy with the political foot-dragging.

Now, we’re finally seeing some results.

Trevor Ozawa, Honolulu City Councilmember for District 4 (Ala Moana to Hawaii Kai), has introduced a resolution calling for an, “economy and efficiency audit” of the Honolulu Authority for Rapid Transportation (HART), in order to discover the causes of the project’s significant and troubling cost overruns.

Click to read the full resolution

Noting in his resolution that the estimated cost for the rail is now more than $10 billion — up from $5.1 million in 2012 — Ozawa points out that HART has not updated its financial plan “to reflect the rail project’s current financial condition”; that the semi-autonomous city agency has not been maintaining accurate and complete financial records; that its management, operations and maintenance plans are “outdated and unreliable”; that it lacks the proper tools to administer contract payments; and that the actual costs of the rail project are not being properly managed against budgeted costs.

Most of these failings aren’t news to anyone who has followed the rail controversy, but it is encouraging to see a key Hawaii policymaker finally demanding answers.

The resolution even states that the audit should both identify the causes of inefficient and uneconomical practices and investigate whether the “entity audited has complied with laws and regulations on matters of economy and efficiency.”

The resolution notes that in June, “certain HART board members indicated that the HART board would not fund a special audit that would examine the cost overruns for the rail project.” But, the resolution adds, “there must be a higher level of transparency concerning the reasons for the cost overruns.”

We agree.

It may have taken some time, but our message is getting through.

So let’s keep up the pressure. Ask your friends and family to join the campaign to audit the rail. If they haven’t already, they can add their names to our online petition at AuditTheRail.com.

E Hana Kakou (Let’s work together!),

Keli’i Akina, Ph.D.
President/CEO Grassroot Institute of Hawaii

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.