STAND. COM. REP. NO. 1096

Honolulu, Hawaii

, 2005

RE: H.B. No. 1309

H.D. 2

S.D. 1

 

 

Honorable Robert Bunda

President of the Senate

Twenty-Third State Legislature

Regular Session of 2005

State of Hawaii

Sir:

Your Committees on Transportation and Government Operations and Intergovernmental Affairs, to which was referred H.B. No. 1309, H.D. 2, entitled:

"A BILL FOR AN ACT RELATING TO TAXATION,"

beg leave to report as follows:

The purpose of this measure is to allow the counties to establish a county surcharge on the state excise and use taxes to fund public transportation in the counties.

Your Committees received testimony in support of this measure from Congressman Neil Abercrombie, Department of Transportation, Honolulu Department of Transportation Services, Honolulu Transportation Commission, two Honolulu City Council members, Catrala-Hawaii, Hawaii Automobile Dealers Association, Committee For Balanced Transportation, Hawaii Building and Construction Trades Council (AFL-CIO), Leeward Oahu Transportation Management Association, WESLIN Consulting Services, The Hawaii Business League, and twelve individuals. Testimony in opposition was received from the Department of Taxation (to the collection of the tax), Hawaii Association of Realtors, SuperStar Hawaii Transit Service, National Federation of Independent Business, Retail Merchants of Hawaii, Grassroots Institute of Hawaii, The Chamber of Commerce of Hawaii, Paradise Cruise, Ltd., Royal Princess Cruises, Inc., Charley's Taxi, Institute of Real Estate Management, and twelve individuals. Comments were received from the Tax Foundation of Hawaii.

The Honorable Neil Abercrombie, United States Representative for urban Honolulu, urged your Committees to pass a "local funding initiative" to have a "funding mechanism in place" to demonstrate to the Federal Transit Administration that Hawaii is serious about constructing a rail mass transit system. Hawaii is competing with the other states to secure federal monies to subsidize the costs of construction of a mass transit system.

The capital costs for a fixed rail system with an initial trunk line extending from Kapolei in West Oahu to Iwilei in the central business district was estimated in 2004 to be in excess of $2 billion by the Department of Transportation. A portion of the costs is anticipated to be paid with federal funds. Your Committees find that a fixed rail mass transit system is not possible without additional dedicated funding from a county mass transit surcharge.

Your Committees further find that the apparent haphazard development of mass transit development and financing plans over the years is due to the fact that a solution to transportation problems on all islands has eluded the State for many years. Every attempt has fallen short, despite the best efforts of many informed and knowledgeable people, including a multitude of experts. Bigger highways, more buses, and ferries are inadequate over the long term to serve transportation needs, and are unsuitable for many areas of the largest county. In contrast, a fixed light rail system has possibilities but the costs are prohibitive without a heavy investment of revenues. Nevertheless, light rail is not suitable for every county.

Your Committees are reluctant to, in effect, provide for a raise in taxes. However, your Committees believe that there is no alternative if mass transit is to become a reality. The costs are simply prohibitive. The time is now, following fifteen years in the making, to decide to implement light rail or not.

The intent of your Committees is to provide the counties with assistance in mass transit design and planning, and with construction financing ability. The Department of Transportation as well as the Honolulu Department of Transportation Services have assured your Committees that in fact they are working collaboratively to that end.

Your Committees have amended this measure by:

(1) Adding a purpose section to provide a historic record of the legislative efforts in enacting a county mass transit tax, so that future generations will have information and a perspective of what transpired in passing this landmark legislation;

(2) Clarifying that the surcharge proceeds may be expended upon fixed rail rapid transit;

(3) Allowing rental car dealers to pass on the surcharge to lessees; and

(4) Changing the effective date to July 1, 2020.

As affirmed by the records of votes of the members of your Committees on Transportation and Government Operations and Intergovernmental Affairs that are attached to this report, your Committees are in accord with the intent and purpose of H.B. No. 1309, H.D. 2, as amended herein, and recommend that it pass Second Reading in the form attached hereto as H.B. No. 1309, H.D. 2, S.D. 1, and be referred to the Committee on Ways and Means.

Respectfully submitted on behalf of the members of the Committees on Transportation and Government Operations and Intergovernmental Affairs,

____________________________

DAVID Y. IGE, Chair

____________________________

LORRAINE R. INOUYE, Chair