Honorable Robert Bunda

President of the Senate

Twenty-Second State Legislature

Regular Session of 2004

State of Hawaii

Sir:

Your Committee on Transportation, Military Affairs, and Government Operations, to which was referred H.B. No. 2956, H.D. 1, entitled:

begs leave to report as follows:

The purpose of this measure is to establish a mass transit planning account as a special account within the general fund.

This measure requires tax revenues from the fuel license tax to be deposited into the account, not to exceed a total amount of $3,600,000. The Director of Finance is required, by January 1, 2007, to transfer $600,000 from the account to a separate account of the highway fund for each county having a population greater than 500,000. The transferred moneys are to be used by the county to develop and finalize a mass transit work plan, including a fixed guideway mass transit system. Upon specified county approval procedures, the Director of Finance is required to transfer the remaining $3,000,000 into the separate account for the county to prepare an environmental impact statement and a financial plan within two years of the receipt of the moneys by the county. Provisions are made for the moneys in case the county fails to accomplish these matters.

This measure further requires that of the sixteen cents state sales tax per gallon of liquid fuel and of the fifteen cents state sales tax per gallon of diesel fuel, an unspecified amount is required to be paid into the mass transit planning account, to be used for the same purposes.

Testimony in support of this measure was received from the Honolulu Department of Transportation Services, one Honolulu City Council Member, Chamber of Commerce of Hawaii, Land Use Research Foundation of Hawaii, and Leeward Oahu Mass Transportation Management Association. Testimony in opposition was received from the Department of Transportation and Department of Taxation. Comments were received from the Tax Foundation of Hawaii.

Your Committee finds that the federal government is requiring the State to demonstrate a commitment to fund a mass transit system from state or local funds as a precondition to providing federal funding. U.S. Representative Earl Blumenauer (Oregon), a leading advocate of mass transit financing in Congress, on a January 7, 2004 visit told transportation and business leaders in Honolulu that the State needs to have its local fundraising plan in place before Congress acts on a new long-term transportation measure. U.S. Representative Neil Abercrombie has urged the Legislature to expedite a measure to provide a funding mechanism and for the Governor to sign it as soon as possible.

Your Committee further finds that mass transit is a critical element to the alleviation of traffic congestion and is necessary to the full development of West Oahu. Your Committee is cognizant of past failed attempts to fund a mass transit system, and believes that the impetus to get a mass transit system in place has never been stronger than it is right now. However, the opportunity to develop a mass transit system with federal funds is fleeting.

This measure is an alternative to another proposed measure to increase the excise tax to pay for mass transit. This measure imposes no new taxes, but instead reallocates existing tax revenues derived from fuel license taxes collected from distributors.

Your Committee has amended this measure by:

As affirmed by the record of votes of the members of your Committee on Transportation, Military Affairs, and Government Operations that is attached to this report, your Committee is in accord with the intent and purpose of H.B. No. 2956, H.D. 1, as amended herein, and recommends that it pass Second Reading in the form attached hereto as H.B. No. 2956, H.D. 1, S.D. 1, and be referred to the Committee on Ways and Means.