League's Testimony on State-County Rail Transit Development Agreement
January 22, 1992
As citizens of both the State and the City and County of Honolulu, we are urging you not to approve the proposed Development Agreement and Rapid Transit Financial Plan, which we believe are in the interest of neither. Our reasons are as follows:
- The attempt to sugar-coat the extraction of $1.7 billion from Oahu's citizens by a State income tax credit is, in our opinion, a sham and an illusion . As the Legislature's 1990 Joint Conference Report No. 163 points out, "The County government establishing the surcharge will receive the revenue, while the State will pay out the credit from State revenues."
Whether these State revenues come out of the General Fund, are borrowed, could otherwise be used to reduce debt service, or diminish resources which would otherwise be available for education, housing, health, etc., the money comes one way or the other out of taxes paid by the same people paying the GET. In fact, if a formula could be found which could repay in tax credits exactly what the increased GET cost each individual tax-payer we would have the absurd situation of neatly transferring money from one pocket to another, with nothing gained except for a lot of jobs to process the papers.
- It will be argued that the point of all this is to collect from the tourists. We have analyzed this claim. Of the average $172 million a year the City plans to raise from the surcharge between 1993-2003, at best some 25% to 30% could represent increased taxes on tourist purchases or from pyramided taxes attributable to goods and services ultimately bought by tourists. This would amount to between $43 million and $52 million a year. The remaining $120 to $130 million a year would be paid by residents--an average of $400 to $450 per household per year.
- The basic point we want to make, however, is that for the State to pay $850 million, whether in cash or lost income tax revenues, toward the City's rail construction costs represents a gross distortion of priorities and a wasteful misdirection of resources. The competing demands on the State Budget--for education, health care, welfare, public safety, housing, infrastructure and the rest are known to al I.
- We argue that the State should not have to bear costs of this magnitude for so questionable a project. The City's Alternatives Analysis--Draft Environmental Impact Statement (AADEIS) shows only 25,000 more total transit rides a day in the year 2005-including both bus and rail--than if an augmented and improved bus system were built. This is less than 1% of the 3 million trips a day expected on Oahu by that time. Less than 7% of the population would ride on the rail component of the system on any given day--most of whom are now taking the bus or would do so even if there were no rail transit available. City figures show that traffic vehicle volumes would be reduced between 1 %and 2%. Even if all the new transit riders represented former auto commuters, peak hour traffic would be reduced by no more than 4%.
- There are many who stand to gain a lot from this project--contractors, land speculators, developers, and the like. A small minority of commuters will get a faster ride if they make direct connections--but most will gain little or nothing. There will be less accessible and fewer stops, more transfers, poorer bus service in outlying areas. The City has publicly mentioned a fare of $1.50. Attempts to give private developers zoning concessions were disapproved 69% to 11 % in a recent poll and levying the excise tax surcharge was opposed 63% to 26% in a later survey.
- We think it is not too late to stop this juggernaut. The costs--even with Waikiki and the Hotel Street subway eliminated -- are nearly double those the AA-DEIS would have shown for a comparable system. More than half the Council opposes the project or has expressed serious doubts and reservations. We urge you to reconsider and reverse your support while there is still time.