The powerful chairpersons of the state House and Senate money committees on Monday dashed the hopes of the four county mayors that the counties would easily get a bigger share of money collected from hotel rooms and other short-term rentals.
At issue is the transient accommodations tax, a 6 percent tax levied on accommodations of less than 180 days rented to people who have a permanent home elsewhere.
Increasing the counties’ share of the so-called TAT is the top priority of the Hawaii Council of Mayors this year, and all four mayors emphasized the need for a greater share to pay for the myriad costs additional tourists bring to their islands. The mayors don’t want to raise the tax; just the counties’ share of it.
“When a visitor calls for law enforcement help, a county police officer responds. When a visitor gets into trouble in the ocean, county lifeguards or firefighters respond,” Hawaii County Mayor Billy Kenoi said in testimony to the committees. “When a visitor uses sewer and water service, those are county services. Visitors travel on county roads, and use county parks.”
“In fairness to our residents who shoulder the majority of our operating expenses through property taxes, it is important that transient accommodations tax revenues to the counties increase as the visitor count increases,” Kenoi added.
More of the TAT is an annual request from the mayors, who so far haven’t gotten much satisfaction, just as they didn’t Monday when the lawmakers said a bigger chunk wasn’t likely this year either.
“I’m afraid we’ve gone through this exercise too many times, too many years and the results have always been the same,” said Bertrand Kobayashi, an Oahu Democrat.
Last year, the Legislature instead gave counties the option of adding a half-cent county surcharge to the general excise tax that could be used for transportation improvements. So far, only Honolulu and Kauai have acted on that alternative.
Kenoi estimates Hawaii County spent about $31 million on visitor-related expenses during the 2013-14 budget year.
The counties’ share was capped at $93 million during the recession. Last year, the counties split $103 million, with Hawaii County getting $19.2 million of that. It’s the second-highest source of county revenue, behind property taxes.
A working group created by the Legislature last year has recommended the cap be removed. It recommends the state get 55 percent of the total, with the counties splitting the remaining 45 percent. Of that remaining amount, the City and County of Honolulu would get 44.1 percent, Maui County would take 22.8 percent, Hawaii County would take 18.6 percent and Kauai County would get 14.5 percent.
Under that scenario, Hawaii County would get about $39 million of the roughly $475 million forecasters predict the tourist industry will bring in next year.
The working group was supposed to analyze how public services are divided between state and county governments and recommend an equitable breakdown of TAT funding. Instead, the group focused only on the impact of tourists to the counties, recommending the TAT be divided to give the counties a greater share.
That irked House Finance Committee Chairwoman Sylvia Luke, who said the Legislature appropriated $50,000 for the task force and report, and the task force didn’t deliver what was asked of them.
“They completely ignored the intent of the legislation,” said Luke, an Oahu Democrat. “We gave them $50,000, so someone owes us $50,000 back.”
Senate Ways and Means Committee Chairwoman Jill Tokuda, also an Oahu Democrat, said the state performs 81 percent of overall public services, compared to the counties’ 19 percent, according to the working group report. She said she doubted the counties would be unhappy with that breakdown, and suggested they go back and rephrase their request.
“We got a portion of what we asked for,” Tokuda said of the report.
Kauai Mayor Bernard Carvalho, speaking for the mayors’ council, said he needs to “regroup” after the legislators’ comments.
“We’re a little surprised,” Carvalho said. “We need to go back as mayors and talk about it.”
None of the mayors were on the working group.
Acting Auditor Jan Yamane, whose office prepared the 173-page report, retired Hawaii Supreme Court Associate Justice Simeon R. Acoba, who chaired the working group, and Hawaii County Finance Director Deanna Sako, who was on the working group, could not be reached for comment late Monday.
Email Nancy Cook Lauer at ncook-lauer@westhawaiitoday.com.
