Thursday, March 28, 2024
Hawai'i Free Press

Current Articles | Archives

Wednesday, September 3, 2014
GE Tax: Will Cost Overruns Lead to New Rail Showdown?
By Selected News Articles @ 2:29 PM :: 5900 Views :: Rail, Taxes

GE Tax: Will Cost Overruns Lead to New Rail Showdown?

by Gaetano Venezia

The city and county of Honolulu approved construction of a rail transit system in 2005 under the direction of the Honolulu Authority for Rapid Transportation (HART). Stretching 20 miles from East Kapolei to Ala Moana, this $5.26 billion rail line is projected to partially open in 2017 and be completed in 2019. But cost overruns created by an artificially compressed construction schedule are eating away at the financing. If HART does not act to rein in contract spending, moves to extend the GE Tax surcharge could lead to another rail showdown.

Passed by legislators in 2005, the 0.5% General Excise Tax surcharge was to aid only in construction costs, but recently some politicians have been intimating at an extension to the GET surcharge. Mayor Caldwell suggests continuing the GE tax “in perpetuity” to support operating costs.

The present rail surcharge will expire on December 31, 2022—two gubernatorial terms from today.

Public approval of the rail project is waning. In one poll performed by Civil Beat in October 2013, only 35% of residents supported the Honolulu Rail project, down from 43% in 2012 and 50.6% in the 2008 general election.

At the recent Grassroot Institute candidates’ forum, Republican gubernatorial candidate Duke Aiona said that “if they're going to present any proposals as far as extending that financing, they will meet opposition from the 5th floor when I'm governor.”

Randal O’Toole in a recent Cato Institute analysis, explained: “Honolulu is building a 20-mile elevated rail line that costs well over twice as much as the average light rail. Yet those lines will be limited to little (or no) more than light-rail capacities.”

In addition, the increase in local jobs has been paltry compared to the grandiose initial estimate of 17,000 jobs. Based on numbers from a recent HART news release, only about 743 local jobs have been created by the rail project thus far. One could reasonably expect the new peak estimate of 4,000 jobs to be lowered again as the project continues.

With budget problems mounting and public doubt growing, the rail project could face a fiscal showdown before it ever goes into commission.

A practical evaluation of the rail project’s schedule with an eye to reducing contract costs by extending artificially short construction deadlines seems wise at this junction. By their own admission, HART executives underestimated the effect of litigation on construction costs and schedules. Will they now underestimate their ability to push through an unpopular tax hike?

It would be better to commence partial operation in 2018 than to make permanent the temporary 0.5% GE Tax surcharge.

---30---

Gaetano Venezia is a policy analyst at the Grassroot Institute of Hawai‘i and is currently pursuing a degree in philosophy at the University of New Orleans.

Links

TEXT "follow HawaiiFreePress" to 40404

Register to Vote

2aHawaii

808 Silent Majority

Aloha Pregnancy Care Center

AntiPlanner

Antonio Gramsci Reading List

A Place for Women in Waipio

Ballotpedia Hawaii

Broken Trust

Build More Hawaiian Homes Working Group

Christian Homeschoolers of Hawaii

Cliff Slater's Second Opinion

DVids Hawaii

FIRE

Fix Oahu!

Frontline: The Fixers

Genetic Literacy Project

Grassroot Institute

Habele.org

Hawaii Aquarium Fish Report

Hawaii Aviation Preservation Society

Hawaii Catholic TV

Hawaii Christian Coalition

Hawaii Cigar Association

Hawaii ConCon Info

Hawaii Debt Clock

Hawaii Defense Foundation

Hawaii Family Forum

Hawaii Farmers and Ranchers United

Hawaii Farmer's Daughter

Hawaii Federalist Society

Hawaii Federation of Republican Women

Hawaii History Blog

Hawaii Homeschool Association

Hawaii Jihadi Trial

Hawaii Legal News

Hawaii Legal Short-Term Rental Alliance

Hawaii Matters

Hawaii's Partnership for Appropriate & Compassionate Care

Hawaii Public Charter School Network

Hawaii Rifle Association

Hawaii Shippers Council

Hawaii Smokers Alliance

Hawaii State Data Lab

Hawaii Together

HIEC.Coop

HiFiCo

Hiram Fong Papers

Homeschool Legal Defense Hawaii

Honolulu Moms for Liberty

Honolulu Navy League

Honolulu Traffic

House Minority Blog

Imua TMT

Inouye-Kwock, NYT 1992

Inside the Nature Conservancy

Inverse Condemnation

Investigative Project on Terrorism

July 4 in Hawaii

Kakaako Cares

Keep Hawaii's Heroes

Land and Power in Hawaii

Legislative Committee Analysis Tool

Lessons in Firearm Education

Lingle Years

Managed Care Matters -- Hawaii

Malama Pregnancy Center of Maui

MentalIllnessPolicy.org

Military Home Educators' Network Oahu

Missile Defense Advocacy

MIS Veterans Hawaii

NAMI Hawaii

Natatorium.org

National Christian Foundation Hawaii

National Parents Org Hawaii

NFIB Hawaii News

No GMO Means No Aloha

Not Dead Yet, Hawaii

NRA-ILA Hawaii

Oahu Alternative Transport

Obookiah

OHA Lies

Opt Out Today

OurFutureHawaii.com

Patients Rights Council Hawaii

PEACE Hawaii

People vs Machine

Practical Policy Institute of Hawaii

Pritchett Cartoons

Pro-GMO Hawaii

P.U.E.O.

RailRipoff.com

Rental by Owner Awareness Assn

ReRoute the Rail

Research Institute for Hawaii USA

Rick Hamada Show

RJ Rummel

Robotics Organizing Committee

School Choice in Hawaii

SenatorFong.com

Sink the Jones Act

Statehood for Guam

Talking Tax

Tax Foundation of Hawaii

The Real Hanabusa

Time Out Honolulu

Trustee Akina KWO Columns

UCC Truths

US Tax Foundation Hawaii Info

VAREP Honolulu

Waagey.org

West Maui Taxpayers Association

What Natalie Thinks

Whole Life Hawaii

Yes2TMT