Tax collections to pay for Honolulu's planned elevated commuter rail topped the $200 million mark in April.

The state began collecting the half-percentage-point general excise tax surcharge in January 2007 and $211 million was raised in the first 16 months, according to the state tax department records.

That equates to about $233 per O'ahu resident, or $634 per household, based on population statistics from the U.S. Census Bureau. However, those figures include money spent by visitors, who account for about 30 percent of the state's economic activity.

The surcharge is being collected as Honolulu consumers pay more for goods and services as a result of spiraling crude oil prices.

"The surcharge added to the general excise tax is driving (costs) higher," said Lowell Kalapa, president of the nonprofit Tax Foundation of Hawai'i. "I just don't think that can be ignored because that ripples through everything."

Mayor Mufi Hannemann hopes to break ground on the rail project in 2009, with the first segment starting service between East Kapolei and Waipahu in 2012. The entire 20-mile route to Ala Moana would open for service in 2018. The transit system is aimed at giving commuters another option and accommodating growth in the H-1 corridor, although it is not expected to improve traffic conditions.

The state and the city of Honolulu are raising money in the form of a 15-year increase in the state's general excise tax on O'ahu from a maximum of 4.166 percent to 4.712 percent. That 12.5 percent tax hike is expected to generate $3 billion out of the $3.7 billion needed to pay for the project.

While Hawai'i's excise tax seems relatively low, the tax is applied to a broad range of goods and services and is assessed on all levels of transactions.

FEE EXCLUDED

The $211 million figure excludes a 10 percent fee the state withholds from the city to cover surcharge-related administrative costs. That leaves the city with about $190 million in transit tax revenues through April, based on tax department figures. That appears to be less than expected, partly because transit tax collections were low in the initial months after the surcharge took effect.

According to a financial feasibility report prepared by project consultant Parsons Brinckerhoff in November 2006 the surcharge is expected to generate $170 million this year, which equates to an average of $14.2 million a month. That monthly figure is in line with current surcharge collection rates, said city spokesman Bill Brennan.

"We didn't go with the most conservative nor did we go with the most rosy outlook for projections and went with that middle ground," he said. "Think that's paying off."

At this point the city does not have a plan to deal with any potential surcharge shortfall.

"If that situation should arise where we're starting to see the need, we would make some sort of adjustment," Brennan said.

City officials estimate the surcharge adds about $365 to household bills annually, or $1 a day. The Tax Foundation of Hawai'i estimates the average household cost at about $450 annually.

LITTLE IMPACT

Increased costs caused by the transit tax likely has little impact on Honolulu's overall economy, said University of Hawai'i economist Carl Bonham.

"Those kinds of things that are nickel-and-diming us, they matter. But they're going to be swamped by things like the shutdown of Aloha (Airlines) or the cruise ships (exiting Hawai'i) or the slowdown in contracting," Bonham said.

So far the city has spent about $20 million of the surcharge for project planning and preparation. Significant spending on the transit system isn't expected to occur until next year. The city expects to spend an average of about $400 million a year on the project over a nine-year span — spending that is expected to generate thousands of local jobs.

That could have a stabilizing influence on the economy in the long-run, UH's Bonham said.

"My expectation is that you're still going to have a fairly significant, positive impact of the building" of the commuter rail line, Bonham said.