September 1992 Home   Newsletters

October 1992

November-December 1992

President's Message (Arlene Ellis)
Testimony before the Planning Commission 9/2/92 (Arlene Ellis)
League Recommendations on Proposed Charter Amendments
Statement on Policy and the Environment - 1 (Astrid Monson)
Statement on Policy and the Environment - 2 (Jean Aoki)
Statement on Policy and the Environment - 3 (Arlene Ellis)
Testimony on Bill 122, Excise Tax Surcharge (Arlene Ellis)
Testimony on Bill 122, Excise Tax Surcharge - 2 (Astrid Monson)
Rail Opponents Challenged to Find Alternatives (Astrid Monson)
Letters to the Editor - 1 (Arlene Ellis)
Letters to the Editor - 2 (Muriel R. Roberts)
Letters to the Editor - 3 (Katherine Kocel (P.K.A. Loew) & Susan MacKinnon)
Letters to the Editor - 4 (Barbara Farwell)

Statement before City Council on Policy and the Environment on Bill 122, ½% General Excise Tax Surcharge - 3

September 22, 1992

Today things have narrowed down to whether and how this island can pay for the proposed rail transit system. The City administration proposes to raise about $1.6 billion by means of an admittedly regressive tax, which they allege is made less so by a State tax credit which gives poor families $25 a year and richer ones up to $210 -hardly progressive. Our existing State food excise tax credit, by the way, pays a poor family of four $220, while over-$30,000 income families get nothing -- a truly progressive approach.

Moreover, the State can only pay the $43 million annual credit by first collecting it from the tax-payers, or by borrowing it (to be paid back by the tax-payers, with interest), or by letting them take the credit out of their income taxes (thus reducing State revenues) or by eliminating other programs. In view of the drop in tourism, of the flat economy, of what Iniki did, how long will the State be able and willing to keep this up?

And that's not all. It's like saying, "If we just had some ham, we could have ham and eggs if we just had some eggs." The City is saying that if our GET just goes up high enough, we can pay for rail transit if its costs just don't go up.

But the financial plan in the FEIS guarantees neither ham nor eggs:

  1. It assumes that annual GET revenues will double by 2003, going up at an average rate of nearly 7% a year.

  2. Costs, however, are assumed to go up only 3% a year.

  3. Some 40% of the estimated costs are not included in the basic systems contract and will undoubtedly be higher.

  4. Inflation higher than 3% a year would escalate all costs, even that contract.

  5. Change orders, add-ons, and other unanticipated costs could be much higher than the contingency reserve included in the financial plan.

  6. A modest 20% increase in these costs, over-all, would add $420 million to the revenues needed.

  7. A lower rate of growth in GET revenues -- say 4% a year rather than 7% would subtract $180 million, leaving a total gap of some $600 million so far.

  8. To finance this amount with, say, 20-year bonds at 6% would add another $450 million in interest.

  9. According to the FEIS, transit's annual locally funded operating deficit caused by O & M costs would rise 49% in constant dollars starting in 1998 -- another $250 million by 2003.

  10. So far we have identified a potential total short-fall of $1.3 billion. This does not include bus capital costs of $259 million, nor HOV and other highway improvements needed to make rail accessible by feeder buses.

Would children be grateful to a father who in his old age buys them a Cadillac and other expensive goodies and leaves them to pay the bills?

Once again we plead with you -- don't start down this slippery slope. Once this project is started, the fiscal pit at the lower end is bottomless. Stop now, while you still can. File Bill 122 once for all, so we can start finding realistic and financially feasible traffic solutions.

Arlene Kim Ellis

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