Thursday, August 27, 2009

Revenues Panel Sees 5 Years of Tax Growth

We admit to a jerky restart of Yes2Rail after several months of dormancy. The site’s patina of rust needed more spit and polish than we had anticipated, so we used some of it to polish up a new look to this blog. Now we’re back – and with some pretty good news for Honolulu’s rail transit project:

After a couple years of dismal forecasts for Hawaii’s economy, the state Council of Revenues has issued a five-year tax forecast that anticipates positive long-term growth.

According to today's Council report, Hawaii’s economic recovery will begin in Fiscal Year 2011, which is forecast to see 6.5-percent growth. The report says tax revenues will increase through Fiscal Year 2015, which is the last year in the Council’s five-year forecast window.

The new forecast is good news for rail because general excise tax revenues will provide the local share of the project’s funding over a 16-year period. The GE tax was increased by 0.005 percent in January 2007 on Oahu for transactions by residents and visitors alike. The tax is scheduled to run through 2022.

The City’s financial model for rail anticipates GET revenues of just over $4 billion by that time. When combined with the anticipated Federal Transit Administration (FTA) New Starts funds of $1.365 billion, the total will be enough to build the 20-mile elevated rail system between Kapolei and Ala Moana Center.

The City’s draft financial plan submitted to the FTA on May 1 stirred up a journalist or two, but as Department of Transportation Services Wayne Yoshioka said last week, that’s exactly what the May 1 plan was – a draft. A newer version went to the FTA this month, and the complete project financing plan will be released in the Final Environmental Impact Statement in a month or so.

Some headlines already are highlighting the economy’s forecasted 1.5-percent contraction next year, and that undoubtedly is significant elsewhere in the state. But building the rail project is a 16-year process and requires a long-term view to get the complete picture.

The Council’s report today offered reason for optimism that the picture is going to look good.

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