Honolulu Mayor Kirk Caldwell is asking the Legislature to lift a cap on the amount of hotel room tax money that goes to counties and return at least some of the money collected by the state for administrative costs stemming from the general excise tax surcharge intended for rail.
The four county mayors outlined their budget requests to the Legislature’s money committees last week.
Key lawmakers say it is too early in the legislative session to say whether either is a possibility.
"We’re going to take a look at all the mayors’ proposals, along with any other different type of tax and revenue issues, and we’re going to give serious consideration to all of them," said Rep. Sylvia Luke (D, Punchbowl-Pauoa-Nuuanu), the new chairwoman of the House Finance Committee, which will get first crack at the state budget.
Her Senate counterpart, Ways and Means Chairman David Ige (D, Pearl Harbor-Pearl City-Aiea), echoed those comments.
"The budget’s very tight," Ige said. "On anything that diverts money out of the general fund, we’re really going to look long and hard before we really take action on it."
Lawmakers instituted a cap on hotel room tax revenues two years ago as they looked to fill a sizable budget deficit, while the 10 percent taken by the state from the half-percent GET surcharge has been questioned by city officials as overly generous since its inception in 2007.
Caldwell framed his requests in the context of his two main priorities: building rail better and keeping the city safe, beautiful and accessible.
"Obviously I’m biased on this, but I really would like to see the 10 percent come back to the city," Caldwell said earlier this year.
In his testimony to state lawmakers, Caldwell noted that for 2012 alone, the amount of money collected by the state for administrative costs — $21.2 million — was almost as much as the entire budget to operate the state Tax Department.
He asked lawmakers to review the "necessary and proper" administrative costs and said he planned to offer legislation to rescind the 10 percent fee and present a reasonable reimbursement to the Tax Department.
"The GET surcharge was enacted to build the rail system," Caldwell said in his written testimony to the money committees. "The taxpayers have the right to know that its taxes are being spent on the purpose intended — to build a rail system."
As part of the plan to deal with the budget shortfall in 2011, lawmakers raised the hotel room tax, known as the Transient Accommodations Tax, by 2 percentage points to 9.25 percent through 2015 and capped the amount that goes to the counties at $93 million.
A proposal in the package of bills being submitted by the Hawaii State Association of Counties requests a nonbinding resolution calling on the Legislature to preserve the counties’ share of the TAT.
Caldwell went a step further, asking that the cap be removed and for the tax rate to remain at 9.25 percent.