Folks who follow this blog know that one of my biggest peeves is the 10-percent cut the state is taking from the half-cent excise tax for O’ahu mass transit to pay for nonexistent state collection costs.
The state rakes in $15 million a year from its share of the transit tax, almost all of which is clear windfall profit for the state, with actual collection costs budgeted at only $700,000 next year.
It amounts to a back-door general tax increase that legislators can spent on non-transit projects anywhere in the state. The siphoning unnecessarily inflates the cost of rail transit, already the most expensive public works project in Hawai’i’s history at some $4 billion.
Given the obvious inequities, it’s good to see Mayor Mufi Hannemann finally make an aggressive move to try to get the money back for the city with his proposal to use the $300 million the state will divert over the 20-year life of the transit tax to pay for a 2.1 mile rail spur to the airport.
Hannemann will have to press the Legislature hard to pry the money away, and it’ll be interesting to see if Gov. Linda Lingle joins him. For somebody who ran for office as a tax-cutter, Lingle has been strangely quiet about how the state tacked its own sneaky tax increase onto the city’s transit tax.
Update: I received the following email from Rep. Rida Cabanilla. I felt I laid it at the Senate’s feet by naming two senators who have been most publicly visible in blocking the legislation (the whole Legislature approved the 10-percent kickback in the first place), but she makes fair points and offers interesting insights:
Dear Dave,
Your comments today are inaccurate. Instead of accusing all legislators you should limit it to senators. HB 724 which will do just what you are asking for passed unanimously in the House. It was the Senate who refuse to hear it. You might find it interesting that when I was walking the floors of the Senate to force them to schedule the bill for a hearing, the comment to me was, “Why are you the one asking us, it should be the Mayor?” So, I repeatedly called the Mayor’s office and notified the City Council members to help me lobby Senator Fukunaga to schedule the bill for a hearing, finally on the third day his Managing Director whose name I cannot remember this very moment called and said “the Mayor does not want that matter opened at this time.”
HB 724 HD1 specifically asked that the State withhold only the amount necessary to process the tax and nothing more. Unlike what you said, not every one in this building consider it their birthright to cockroach money. Please review the attachments and make the proper corrections.
I’ve heard some readers grumbling that the typeface on this blog is too small for their bleary morning eyes, so I decided to try a podcast version to help them out.
To give it some sex appeal, I enlisted the robo-lady who lives in my computer to do the voicing for me. You can listen to her sultry audio here.
On to the news that amused and confused in Hawai’i’s week that was:
Sen. Daniel inouye is miffed that Gov. Linda Lingle sought federal funding for her proposed purchase of Turtle Bay without consulting him. He’s got a point. You wouldn’t plan a luau without making arrangements with the guy at the piggery, would you?
After a seven-hour meeting, the City Council still couldn’t decide if the O’ahu transit system should run on steel, rubber or levitation. A frustrated Mayor Mufi Hannemann threatened to have futless council members levitated to a rubber room with steel doors.
The Police Commission scolded Chief Boisse Correa for not communicating with them about the back pain that kept him away from the job for half the year. The chief promised that next time he’ll say “owie” immediately.
Thieves have broken into seven ATMs around O’ahu this month. The robbers busted open the machines with crowbars after the devices failed to respond to their orders to “stick ‘em up.”
Six passengers were unharmed when the pilot of a tour airplane made a slick emergency landing on a highway near the Kilauea lava flow. I’ll bet they were relieved to hot-foot it out of there.
US Airways will charge passengers $5 extra for aisle or window seats starting next month. For another five bucks, the flight attendant will have the pest in the middle seat who’s talking too much arrested as a terrorist.
Kaua’i officials set up neighborhood computer kiosks to make access to services easier for residents. They’ll take good advantage of that. The Superferry offers its best fares online.
Legislators want to cut $25 million from programs to help people who are already poor and save it just in case other people become poor in the future. That kind of logic certainly justifies the 54-percent raises they’re paying themselves over the next five years.
Sen. Rosalyn Baker insisted “we’re not stupid” when critics said the Legislature would endanger public safety with its bill to limit the governor’s emergency powers. I wonder where the smart money is on that one.
Required by the Constitution to refund money to taxpayers after two straight years of budget surpluses, state senators voted to give us all a $1 tax rebate. Yippee! In five years, I’ll have enough to get a window seat on US Airways.
And the quote of the week …
… from attorney Don Wilkerson to reporters after a jury convicted his client Kirk Lankford of murdering Masumi Watanabe:
“Shame on you! Every one of you has participated in the most dishonest reporting I have ever seen in this state.”
The state Intermediate Court of Appeals achieved an important bit of tax reform with its ruling that the state can’t collect more than it needs from insurance companies to fund a special compliance fund, and then transfer the excess millions to the general fund to pay for unrelated state programs.
The court ruled that such abuses of special funds amount to illegal back-door general tax increases that violate both the Hawai’i and U.S. constitutions.
The Legislature has created hundreds of special funds for various specific purposes that currently hold more than $1 billion, and officials are worried it could wreak havoc on the state budget if the concerns raised by the court in the insurance case are extended to other special funds.
Attorney General Mark Bennett is considering an appeal to the state Supreme Court.
The problem is that lawmakers routinely assess more taxes and fees than are needed to pay for the purposes of special funds, then use the excess as slush money in the general fund to finance pet projects that have nothing to do with what the special fund was created for.
This is a sneaky way to pass general tax increases under the radar of public scrutiny, and the court was absolutely right to blow the whistle on a practice that reflects poorly on the integrity of the state’s tax policy.
If legislators want to raise taxes, let them state the reason, invite full public discussion and accept accountability for raising no more than they need for the intended purpose.
What can you do but moan about today’s story by Andrew Gomes about Ko Olina developer Jeff Stone reneging on a promise not to collect on a $75 milion tax credit for a nonexistent aquarium at the resort.
Prompted mainly by now-Senate President Colleen Hanabusa, who represents the West O’ahu district, the Senate twice since 2002 approved the huge tax credit as though Hawai’i’s very economic future depended on building a “world class” fish tank at the Leeward resort.
When it became apparent last year that the aquarium was never going to be built, Hanabusa, who aspires to higher office, persuaded Stone to say so and promise not to collect on the tax credit.
But when the Legislature failed to agree on bills to either rescind the tax credit or reallocate the money to some other boondoggle, Stone said “what the heck” and filed for a $3.45 million credit on previous expenses for the not-to-be aquarium and plans to file for $322,952 more.
Hanabusa, who lives in Ko Olina, felt so strongly about the aquarium tax credit that she sued former Gov. Ben Cayetano when he vetoed the original version.
I can’t wait to hear her explanation of how the money Stone collected benefited Hawai’i taxpayers.
I hope he at least sent her a nice goldfish bowl for her office.
Sean Hao had a good story yesterday about one of my biggest peeves — the Legislature’s pilfering of hundreds of million dollars from O’ahu residents paying the half-cent excise tax for rail transit.
When lawmakers authorized the city to collect the tax, they took a 10-percent share for the state off the top to pay for collection costs that aren’t nearly that much.
The result was a $40 million windfall in the first three years that could grow to some $300 million over the 20-year life of the tax, money that goes into the state general fund for legislators to spend on whatever they want — including projects in other counties that didn’t pay the tax.
The Legislature has refused repeated requests to return the windfall to the city for its intended purpose or give it back to taxpayers.
Their excuse now is that state revenues are down and they can’t afford to give up the money, but the state had a $700 million surplus when legislators first voted to pointlessly run up the cost of Hawai’i’s most expensive public works project ever by 10 percent from the outset.
The state’s greedy rake isn’t the chump change some have depicted; $300 million could go a long way toward paying for one of the rail lines to the airport, Waikiki or the University of Hawai’i that were cut to reduce the cost of the $3.7 transit project from Kapolei to Honolulu.
In non-rail terms, $300 million would mostly cover the massive cost of upgrading O’ahu’s dilapidated sewage collection system or pay one-third the cost of Sand Island and Honouliuli sewage treatment upgrades being demanded by the EPA that Mayor Mufi Hannemann claims would bankrupt the city.
At least Hao got an e-mail advocating returning the surplus to the city out of Hannemann, who has been mostly silent on the matter. He needed the support of legislators to enact the transit tax and no doubt will need their good will again before this this project is done.
Also quiet is Gov. Linda Lingle, who opposed having the state collect the city’s transit tax, but now is benefiting from having the extra money for the state to budget as much as the Legislature.
There’s little chance these funds will ever be returned unless Hannemann and Lingle make a bigger issue of it by standing up to fight for cheated O’ahu taxpayers and demanding that lawmakers publicly explain their shameless vigorish.
