The state House is proposing to increase the three neighbor island counties’ share of hotel tax revenues by $36 million a year
through 2030.
That would amount to
a 63 percent jump in the
existing total annual allocations to Kauai, Maui and
Hawaii counties.
The temporary revenue boost would run concurrently with the increase
in the transient accommodations tax approved by
lawmakers in a special session last year to help bail out Oahu’s rail project. Neighbor island officials
had complained it was
unfair to raise a statewide tax to benefit a Honolulu project.
The counties, including Honolulu, currently split $103 million in TAT annual revenues, with Kauai getting 14.5 percent ($14.9 million); Hawaii island receiving
18.6 percent ($19.1 million); Maui County receiving
22.8 percent ($23.4 million) and Honolulu getting
44.1 percent ($45.4 million).
The state collected
$508.4 million in transient
accommodations taxes in fiscal 2017.
Senate Bill 648 HD1 Opens in a new tab would provide additional TAT
revenues for Kauai, Maui
and Hawaii island as follows: An extra $9.43 million a year for Kauai; $14.82 million for Maui; and $12.09 million
for Hawaii island. Honolulu’s annual TAT allocation would be unchanged.
The House replaced the contents of SB 648, which originally dealt with an
income tax credit, with its TAT proposal.
“After the rail special
session, we felt that we should provide some financial support to the neighbor island counties, because we know that at this time they are struggling with their budgets,” said House Speaker Scott Saiki (D, Downtown-Kakaako-McCully).
The Legislature previously gave the neighbor island counties an opportunity to increase the general excise tax charged locally. But only Kauai did so, with the extra revenue restricted to funding transportation projects.
The mayors
of Kauai, Maui and Hawaii
island testified in strong support of SB 648 before the House Finance Committee.
Hawaii Mayor Harry Kim said the increased TAT allocation would be a big help for his county, which had to raise taxes last year.
“Financially, the county government of Hawaii is
not in its best year so we did have to raise taxes last year, right across the board,” Kim said.
Maui Mayor Alan Arakawa added, “Sometimes we feel like a stepchild, and this is one time that we feel like you’re
going out of your way to
try and help us. We can most certainly use the
extra help.”
The House Finance
Committee on Thursday advanced the measure, which next heads for a floor vote.
