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The Rail Surcharge

The Rail Surcharge

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In what can only be described as a victory for the people, the Hawaii State Legislature is perilously close to an act of common sense when it comes to the rail surcharge.

Call it an attack of self-awareness — or perhaps self-preservation — but a number of our state senators and representatives have realized that the continual efforts to increase the rail surcharge are somewhat unpopular. (Perhaps it was all the people testifying against the surcharge that tipped them off.)

At the start of the session, there were two bills that seemed poised to increase the general excise tax in order to pay for the rail project. HB1442 didn’t even make it out of the House Transportation Committee. Meanwhile, SB1183 has been amended twice and lost some of its less attractive features in the process.

The most recent version of the bill repeals the 10% “reimbursement” for administrative costs that amounted to little more than state-sanctioned skimming for the Department of Taxation. The Grassroot Institute recently filed an amicus brief in support of the Tax Foundation of Hawaii’s lawsuit against the 10% fee. The fact that the legislature is prepared to repeal the measure demonstrates that nothing helps them focus on ethics and legality quite like a well-timed lawsuit.

It’s interesting to note that SB1183 has undergone some strange changes in its short life. One draft even included a series of low income tax credits and an extensive list of parcels of land to be transferred to the city and county of Honolulu from the HCDA. That same version also increased the GET from 4% to 4.5%.

The newest version, however, includes an element of fiscal responsibility. The current draft of the bill states: “The legislature finds that, if the county controls the construction cost of the rail transportation project, the additional surcharge revenues from this Act will be sufficient to complete the project.” It also requires Honolulu to repeal an ordinance that prohibits county funds to be used to pay for capital costs of the rail project. Moreover, the county will have to submit plans of how to cover capital costs as well as operations and maintenance of the rail project.

It even says that the public deserves to be kept informed of the future cost and funding plan for the rail and integrated bus system.

It’s true that the session is far from over. And this bill could certainly end up morphing yet again. But for now, it appears that accountability is trending at the legislature.

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