Neighbor-island residents should not be forced to shoulder the costs of the Oahu rail system. This project initiated and managed (term used loosely) by the City and County of Honolulu needs to remain the responsibility of that County. Raiding neighbor-island Transient Accommodations Tax (TAT) revenue, or expanding the General Excise Tax (GET) surcharge statewide in order to bail out a poorly run project in Honolulu, is simply not acceptable.
I assume, perhaps naively so that neighbor-island legislators in both the House and Senate would be united in their opposition to any attempt to go down this path. A vote in support would be a very blunt and effective instrument that political opponents would gleefully use to effectively bludgeon neighbor-island incumbent legislators running for reelection in 2018.
Public Transportation 101 teaches that for trains and bus systems to work properly they must be reliable, regular and convenient AND that driving a car must be less desirable and more expensive.
The number one source of new revenue to support the completion and expansion of the Honolulu rail system should come from rental cars. In 2011 the legislature increased the Rental Motor Vehicle Surcharge (RMVS) by $4.50 per day, going from $3 to $7.50 and generating approximately $60 million per year. For various budget reasons, this additional charge was only in place for one year.
Anyone into policy and politics would be well served to review the Department of Taxations annual report. – http://files.hawaii.gov/tax/stats/stats/annual/16annrpt.pdf
Raising car rental fees and dedicating that money to public transportation makes sense. There is a direct correlation between the number of tourist rental cars on the roads at any particular point in time, and the amount of traffic on the highway that local residents have to deal with.
Week after week we read headlines about how well the visitor industry is doing. The flip-side to that success is our highways and our beaches are choked with both the extra people and the extra cars. Increasing this daily fee by $4.50 or even $10 per day would have minimal impact on visitors choosing to travel to Hawaii and could easily generate $100 million a year in support of the rail and other public transportation options.
The impact of a large increase in the daily car rental fee means either the visitor will not rent a car and instead stay within Waikiki or other visitor destination areas, or they will use public transportation (rail and bus), or they will rent a car and pay the increased fee. All choices represent a win for local residents.
According to TripAdvisor the current cost of renting a car in Waikiki ranges between $29 and $83 per day. Will an additional $4.50 have any negative impact at all? I don’t think so. Certainly when the fee was raised by $4.50 for one year in 2011 the sky did not fall and there was no discernible negative impacts on tourism.
The vast majority of funds generated by this fee would come from the visitor industry. Yes, local residents travel between islands and rent cars as well, but the lions share of the impact would be shifted to the tourism industry.
And there is legal precedent for increasing the daily car rental fee and utilizing those funds for purposes other than those directly related to the car rental industry. The Department of Transportation in 2011 stated, “The additional $4.50 of each surcharge, which was formerly collected to fund car rental facility upgrades at state airports, will now be deposited directly into the state general fund to assist with the…state budget and the local economy.”
On August 28th, the Hawaii State Legislature will convene a “special session” to deal with the question of how to bail out the City and County for their mismanagement of the rail system.
Hopefully they will consider and pass a measure granting to the Counties legal authority to increase the daily car rental fee and dedicate those funds to supporting public transportation at the County level. At the minimum they should pass a statewide increase and allocate the funds County by County for public transportation. In no case should neighbor-island residents have to subsidize the bad decisions made by the City and County of Honolulu.
Note: The above is a slightly edited version of a “Policy & Politics” column that was first published in The Garden Island Newspaper on August 16th, 2017