Forget about the nearly $1 billion shortfall, Honolulu’s rail project has a cash flow problem that could halt work as soon as this summer.
Construction costs are now outpacing the money trickling in from taxes and the federal government. That means the Honolulu City Council must issue debt to temporarily cover the difference while the revenues catch up.
But council members are still uneasy about the plan, especially given the growing shortfall and the fact that state lawmakers have yet to pass an extension of the general excise tax surcharge to pay for it.
On Wednesday, the City Council Budget Committee once again tabled an agreement with the Honolulu Authority for Rapid Transportation that would allow the city to float bonds for the project.
Council members also signed off on a resolution that would take $210 million in federal funds normally used for city bus service out of the rail budget, which effectively increases the shortfall and forces officials to find more money.
RelatedAt Least $1.25B Has Been Spent on Rail So Far, But Where Has All the Money Gone?Jan 30Off the Rails: Honolulu Transit Project Up to $700M Over BudgetDec 18Large Rail Contractors Dump $1.3 Million into Local Campaign CoffersFeb 02
HART Executive Director and CEO Dan Grabauskas said these decisions add even more uncertainty to the project. The most immediate concern is cash flow.
Without bond revenues coming in, he said construction
Editor’s Note: “Off Track,” our investigative series examining what’s happening to $6 billion in taxpayer money that is going into the biggest public works project in Hawaii history, continues today with a look at campaign contributions from contractors to local politicians. That may seem like an obvious political story but our larger question remains: Is the Honolulu rail project boosting the economy — as Oahu voters were promised — or just fattening the campaign treasuries of politicians in a position to hand out lucrative contracts? We need your help to figure out who’s really benefitting from the rail project. Check out the list of companies posted at the end of this story. Who are these companies and are they really locally owned and operated? Have you or anyone you know gotten a job with any of them? Do you own or work for a business that has benefitted from rail money? Increased sales? Better salaries? What are some of the economic indicators you’ve seen that would suggest rail is having an impact on our economy? Help us tell this important story through crowdsourcing. Post your thoughts in the comments section below or send a note to Nick Grube at email@example.com. Continue the conversation in our Facebook Group, Honolulu Rail Talk, or through Twitter or Instagram using the hashtag #railtalk.
Many of the companies snatching up contracts as part of Honolulu’s $6 billion rail project are also the same ones plumping up the campaign coffers of local politicians.
A handful of Hawaii-based businesses alone
Editor’s Note: Civil Beat has spent the past six months examining financial records relating to the Honolulu rail project. “Off Track” is an ongoing series that explores what’s happening to the taxpayer money that is going into the biggest public works project in Hawaii history. Our investigation raises serious questions about the lack of public accountability on the project, especially at a time when city officials are asking lawmakers and City Council members to give them hundreds of millions more as the project flounders financially. Continue the conversation in our Facebook Group, Honolulu Rail Talk, or through Twitter or Instagram using the hashtag #railtalk.
City Council members aren’t the only ones worried they’re getting the runaround when it comes to following how the money is being spent on Honolulu’s $6 billion and counting commuter rail project.
State lawmakers say they too want some answers on the spending habits of the Honolulu Authority for Rapid Transportation that last month raised the specter of huge cost overruns on construction of the 20-mile rail system stretching across the southern girth of Oahu.
On the line is a proposed tax increase. Both HART officials and Honolulu Mayor Kirk Caldwell want lawmakers to make permanent a half-percent surcharge on the state’s general excise tax to help pay for the project.
HART has already begun laying the groundwork for seeking a surcharge extension and the borrowing of millions of dollars secured by the
Honolulu Mayor Kirk Caldwell’s desire to protect $210 million in federal bus funding means the city’s $6 billion rail project needs even more money than officials had recently announced.
In December, Honolulu Authority for Rapid Transportation Executive Director and CEO Dan Grabauskas said the project was estimated to go over budget by $550 million to $700 million.
And while Grabauskas knew the city didn’t want to spend the $210 million on rail, he didn’t include it in the projected shortfall. If he had, the range would be $710 million to $910 million.
KITV reported the discrepancy Tuesday, including quotes from Honolulu City Council members who raised questions about whether HART and city officials were being truthful about just how much money was needed to complete the project.
“The council was never told that we have a nine-hundred and some odd million dollar shortfall for rail,” Honolulu City Councilman Ikaika Anderson told KITV4. “The council was told by HART that our shortfall is $700 million.”
Councilwoman Ann Kobayashi, who chairs the budget committee, called the project’s financial plan a “shell game.”
Caldwell and Grabauskas responded quickly, even though both were on the mainland meeting with federal officials about the project and its financing.
“I maybe think it could have been made more clearly by HART when they talked about it,” Caldwell told KITV from Washington, D.C. on Wednesday. “At
UPDATED 9 a.m., 9/17/2014
County officials agree on at least one thing as they prepare to lobby the Legislature next year: They want more funding for local government services ranging from roads to rescues.
But Kauai, Maui, Big Island and Honolulu council members and mayors have different ideas on how to go about boosting their revenues.
Council members plan to ask state lawmakers for a bigger share of hotel taxes. The mayors, although not opposed to more Transient Accommodations Tax money, may double down on new revenue proposals with a request for the authority to levy up to a 1 percent county surcharge on the General Excise Tax.
The counties’ success in getting either through the Legislature next session, which starts in January, could make a difference in the number of lifeguards at beaches or the amount of potholes that get filled. It could also determine whether the counties have to increase property taxes — the only tax they have direct control over — or raise other fees to maintain their current slate of services.
In the case of Honolulu, Mayor Kirk Caldwell wants to keep the county’s 0.5 percent GET surcharge that it’s using to fund the 20-mile-long rail project. The surcharge, which voters approved, is set to expire in 2022 but Caldwell says Honolulu would like to
UPDATED Notification for 30-day review comes just days before key funding deadline.
Grabauskas said FTA review would take 30 days; it’s been 80.
$2.8 million spending was ‘excessive’ and ‘unnecessary,’ Honolulu rail chief says
UPDATE Honolulu rail authority submits application to Federal Transit Administration.
With line of credit bill passed, will Honolulu get guarantee before election?
HART consultant’s work questioned by Honolulu Council member.