Breaking: House passes TAT hike for rail

HILO — There was no stopping the train Friday, when a House majority overpowered 15 opponents to pass a bill hiking the hotel tax on all islands to pay for an over-budget Honolulu rail project.

Big Island Reps. Richard Creagan, Cindy Evans, Nicole Lowen and Chris Todd, all Democrats, voted no.

Reps. Mark Nakashima, Richard Onishi and Joy San Buenaventura, also Democrats, voted yes.

Senate Bill 4 increases the transient accommodations tax statewide by 1 percent, with the proceeds going to the rail project.

Proponents said it’s financially essential that transient rentals and hotels from all islands bear the tax hike to help rescue the troubled rail project. Opponents warned that setting a precedent of levying taxes on all islands for a local project on one island is fundamentally unfair and could lead to legal trouble.

The $2.4 billion bailout bill caps the counties’ share of TAT revenues at $103 million.

SB4 also gives neighbor islands the option of raising their general excise tax by one-half percent to be used for roads, while extending Honolulu’s current half-percent general excise tax for three years. And, it reduces how much the state takes as administrative fees and requires an audit and more oversight for the rail project.

The rail project, estimated to be 40 percent built, has seen costs almost double from $5.26 billion in late 2014 to nearly $10 billion, including financing costs. The city has a Sept. 15 deadline to present a financing plan to the Federal Transit Administration, which could require the city to return more than $800 million already spent of a total $1.5 billion in promised federal dollars.

See tomorrow’s newspaper for more.