Posted By WLS

My sincerest apologies for taking so long to update this post with the promised factual context. 

The initiative language comes from the City Charter of the City & County of Honolulu (the political subdivisions were combined for efficiency many years ago).  Here it is again:

“For Initiative Special Elections. A special election for an ordinance by initiative power shall be called within ninety days of filing of the petition if signed by duly registered voters equal in number to at least fifteen percent of the votes cast for mayor in the last regular mayoral election, and if such petition specifies that a special election be called; provided that if the clerk certifies less than fifteen percent but at least ten percent, the proposed ordinance shall be submitted at the next general election or scheduled special election. No special initiative election shall be held if an election is scheduled within one hundred eighty days of submission of the proposal.”

For decades the Island of Oahu has argued over the need for light rail transit to address traffic congestion during peak travel times.  But there are many many facts about mass transit arguments in Honolulu that make it unlike any other location.   This subject has come up at least twice in the last couple decades, only to have political backstabbing among elected officials derail it each time.  

Honolulu’s current mayor, who is up for re-election this November, but who also has his eyes firmly affixed on the Governor’s seat three years from now, came into office four years ago as a battering ram for the rail transit project.  He has 6 semi-solid votes out of 9 on the City Council to back his project.  He’s got every engineering and architectural firm with him, as well as all the various construction trade unions.  Most of the light industrial developers support the project because of development opportunities they expect to arise around the various rail stations, and home builders support the project because increasing traffic congestion has made further development of available land on the western side of the Island of Oahu very difficult.  The project will run pretty much on a straight line for approximately 20 miles from an area called Kapolei in the west to downtown Honolulu in the east.  The remainder of the Island will not be served.

The project is being financed — so far — by an increase in the local excise tax.  For those of you unfamiliar with an excise tax, its like a sales tax but much more painful in a devious and deceitful way.  An excise tax is imposed on every business for any type of good or service provided.  But the law allows the excise tax to be passed on to the person who receives the good or service, including end use customers or consumers.  It applies to service providers like doctors and hospitals, as well as all food and medicine.  And it applies at every level of commerce — meaning it can be applied in multiple instances as a product makes its way from a manufacturer to the consumer.  For example, a tomato is taxed when its sold by the farmer to the wholesaler.  Its taxed again when it goes from the wholesaler to the grocery store. And its taxed a third time when it goes from the grocery store to your home.  

They also “tax the tax” just in case you’ve still got a little money left over.  What I mean by that is that the merchant is authorized by law to add the tax to your bill even though an excise tax is a tax on the merchant’s revenue stream.  But when the merchant figures out his revenue stream, he includes not only the amount of your purchase, but also the tax you paid.  So, if you purchased an item for $100, and paid $4 in excise tax, the merchant actually has to report and pay taxes on an income stream of $104, even though $4 is tax revenue!!!!!  Just to make sure the merchant can pay his electricity bill (that’s taxed too), the merchant is allowed to charge you slightly more than the established tax rate (about .15) to cover this “tax on the tax”.  So a 4.5% excise tax rate is collected by the merchant at 4.71%.  And you thought the language of the initiative provision was bad.

The tax rate is currently around 4.5% — but when you impose it 3 times before a product makes its way to the consumer, you can see how it adds up.  Various studies have shown that it would take a sales tax of about 16% to generate the same revenue for the state and local governments who divide the funds now.

When the rails project first began its latest incarnation three years ago, the proposal was to finance the estimated $3.8 million cost with an increase in the excise tax from 4% to 5%.  This had to be approved by the state legislature, and after much political battling, the legislature ultimately approved only a .5% increase.  The mayor took it because he knew that once the project was under way, the only way to pay for it all would be a further increase in the excise tax, or an increase in property taxes which could be passed by the City Council alone.  No one believes the current .5% increase will finance the construction costs, so the tax rate must rise, or property taxes must be increased.  How much is anyone’s guess.  

The opponents of the rail project have argued for years that it’ll cost much more than the estimated $3.8 billion – which remains the price tossed around by supporters even though its in 2003 dollars and doesn’t include land acquisition costs — a significant amount of which will come via imminent domain — nor operating expenses which even the advocates acknowledge cannot be met with revenue from the fare box. Some estimates have the actual cost as high as $8 billion.  The easiest way to gauge the impact on tax payers is to simply divide the number of residents (800,000) of Oahu by a number in the middle — say $6 billion.  That’s $7500 per every man, woman, and child just to build the thing — it doesn’t include operating expenses and maintenance, which will be paid out of general tax revenue on an annual basis, putting it in competition with police, fire, sewer services, etc.  Now consider that every not every man, woman, and child on Oahu are taxpayers — the future starts to look pretty grim.

Opponents of the rail project have looked for various ways to get the project on a ballot for a vote of the people, rather than have it continued to be driven only by 6 members of the City Council and the Mayor — all of whom are Democrats in this one-party Banana Republic, and all of whom owe their elected positions to the Democrat machine and the public and private employee unions who turn out election volunteers and voters.  

The only citizen initiative process available under the law is the one I set out above.  But it has always been supposed that the signature collection effort was too steep for most proposed initiatives to ever reach the ballot.  But a grassroots effort was undertaken to put an “anti-rail” initiative on the ballot for the coming general election.  It literally began as a two man operation who used a little free attention during a sympathetic local radio talk show to call attention to a petition they put on their website which people could download and sign.  Before you know it the petition was being downloaded and taken around neighborhoods, into public parks, and into the work place.  The rail opponents have long thought they needed 45,000 signatures which is the 10% number, and that they would have to submit their signatures in early August to qualify for the November ballot.  The signature collection project really caught fire in June, and now it appears that they will have far more signatures than needed.

Even though they had consulted with the City Clerk many times over the last few months, and the Clerk had seen the petition that was being used, and it was clear that the intention of the petition gathers was to submit the initiative under the 90 day clock for the November ballot, the Clerk never mentioned to them that the language of the Petition being used — because it referred to a “special election” — would not allow it to go on the November ballot unless it was submitted more than 180 days ahead of the November election.  The City Clerk dropped that bombshell on the petition proponents last week.

The first line of the petition states as follows:

The following question is being submitted to the People of the City and County of Honolulu to be voted upon at a special election: 

SHALL AN ORDINANCE BE ADOPTED TO PROHIBIT TRAINS AND RAIL TRANSIT IN THE CITY AND COUNTY OF HONOLULU?

 WE, THE UNDERSIGNED, AS DULY REGISTERED VOTERS IN THE CITY AND COUNTY OF HONOLULU, WITH FULL KNOWLEDGE OF THE CONTENT OF THIS PETITION, PROPOSE AN ORDINANCE SUBSTANTIALLY IN THE MANNER SET FORTH: 1. TO PROHIBIT THE USE OF TRAINS OR RAIL TRANSIT IN ANY MASS TRANSIT SYSTEM WITHIN THE CITY AND COUNTY OF HONOLULU; AND 2. TO BE EFFECTIVE IMMEDIATELY UPON APPROVAL.

The only explanation that can be offered for why the highlighted language was included was that drafter worked from a form used in an earlier petition drive, and when the drafter put it together he/she had no understanding of how the reference to a “special election” would effect the manner in which it was acted upon if sufficient signatures were gathered.  

The City Clerk has now told the rail opponents that under the terms of the Charter provision dealing with initiative elections, because there is a general election within 180 days of the date of submission of the signatures, the “special election” called for in the petition cannot be held until after the general election, and that this initiative cannot go on the general election ballot because it specifically calls for a “special election” in its language.  

If you deconstruct the language of the statute, it states as follows:

1)  If you gather 15% of the voters in the last mayoral election, and the petition expressly calls for a “special election”, you get one within 90 days.

2)  If you gather between 10% and 15% of the voters in the last mayoral election, the matter shall be on the next general election ballot or scheduled “special election”  — meaning no “special election” just for your ballot initiative.

3) If there is a general election scheduled within 180 days, then no “special initiative election” shall be held.

The Clerk is focusing on that last provision to say that because the language of the petition calls for a special election, and because there is a general election within 180 days, the petition cannot be voted upon in November, but must await its own “special initiative election” sometime thereafter, at an estimated cost of $1 to $2 million to hold just such an election.

I’ll update this later with some additional facts if there is enough interest in the comments to warrant.