Chances are good that state lawmakers will OK a bill allowing counties to collect a larger share of Hawaii’s hotel room tax, although uncertainty remains.
The mayors and Councils of all four counties are pushing hard for House Bill 1671, which eliminates a cap of $93 million on Transient Accommodations Tax revenues that counties divide among themselves. The ceiling has been in place since 2011.
Exactly how much more the counties would get remains in question and is likely to be hashed out when House and Senate leaders meet in conference committee in the coming weeks. The House version of the bill calls for returning to a pre-2011 formula that would give counties a 44.8 percent share of all TAT collected.
Maui County Council Chairwoman Gladys Baisa estimated that would give counties about $72 million more, or about 77 percent more than they are currently receiving with the cap.
State Budget Director Kalbert Young estimated that distributing 44.8 percent to the counties would cost the state $81 million in revenues in 2015, and more in subsequent years.
The Senate is poised to approve the version of the bill that moved out of its Ways and Means Committee, leaving the percentages blank, which assures there will be further discussion on the matter.
State House Speaker Joe Souki said last week he expects counties to receive more in hotel revenues next year, but they might not get what they had originally sought, at least not initially.
"It could be phased in," Souki told the Maui News.
Honolulu City Councilwoman Carol Fukunaga said she’s not surprised by hesitation among senators to check off on the House plan after the state Council on Revenues, on March 11, revised its overall revenue forecast for the state to zero growth for the current fiscal year and 5.5 percent growth next year. That’s down from the 3.3 percent growth and 7.4 percent growth, respectively, it predicted in January.
The lower projection leaves the state with $478 million less to spend in fiscal year 2015.
But Fukunaga, who heads the Council’s Public Safety and Economic Development Committee, said state lawmakers need to remember the intent of the TAT is to help reimburse the different government agencies that contribute to the experience of visitors.
Besides police, fire and emergency medical services, the city operates some of Oahu’s top tourist attractions, including the Honolulu Zoo, Hanauma Bay Nature Preserve and Blaisdell Center and is tasked with keeping restrooms and other facilities at city parks clean, Fukunaga said.
On Oahu the city is also "on the front line" in combating homelessness and making sure sidewalks are clean, passable and free of panhandlers who harass visitors, she said.
"It really is a team effort," Fukunaga said, noting that she’s much more appreciative of the counties’ role now that she is a Council member after years as a state legislator.
Maui Mayor Alan Arakawa said residents in his county will likely see a 6.7 percent increase in property tax rates if the old TAT formula is not restored.
Honolulu Mayor Kirk Caldwell said a city study estimated up to $160 million, or 9 percent of its operating budget, goes to services "key to keeping Honolulu globally competitive as a safe and desirable destination."
Kauai County officials estimated that more than 20 percent of their population, on any given day, is made up of visitors, while Hawaii County officials said 14 percent of Hawaii island’s daily population consists of visitors.
Visitors pay a 9.25 percent TAT for hotel and resort rooms, a percentage that’s been in place since 2010. It was increased to 8.25 percent from 7.25 percent in 2009.
The Tax Foundation of Hawaii did not directly oppose the bill, but noted that all four counties impose significantly higher tax rates on hotel and resort properties than for residential properties.
"The search for more and higher taxes has to stop somewhere," the foundation said in written testimony. "Both levels of government need to resize their operations and set priorities for what limited resources taxpayers can share with government."
MORE MONEY FOR EVERYONE
The House version of House Bill 1671 would eliminate the dollar cap of $93 million in Transient Accommodations Tax revenues counties can share and instead allow them to collect a total share of 44.8 percent of the revenues. The Senate version of the bill, expected to be approved this week, leaves the percentage blank, so the matter will likely be hashed out in joint conference committee meetings in the coming weeks.
County |
Current |
House Plan |
Honolulu |
$41 million |
$72.8 million |
Maui |
$21.2 million |
$37.6 million |
Hawaii |
$17.2 million |
$30.7 million |
Kauai |
$13.4 million |
$23.9 million |
|
TOTAL |
$92.8 million |
$165 million |
Source: Maui County