A bill that calls for generating education funding through a new surcharge on hotels and vacation properties has cleared the state House and is slated for conference.
Senate Bill 683 would ask voters to approve a constitutional amendment to create an “education surcharge” on residential investment properties and visitor accommodations.
The tax, as originally proposed, would apply to timeshares, hotel rooms and other vacation units. People who own one home would not see an increase nor would those with a second home who rent out properties for less than $1,500 per month.
Low-income households, seniors on fixed incomes, people with disabilities, wounded veterans, Hawaiian homesteaders, charities and schools also would be exempt, under the original proposal.
The Hawaii State Teachers Association, which is advocating for the bill, touted it as an ideal way to generate money for public schools because it taxes properties often owned by out-of-staters. The teachers union says up to 30 percent of homes in the state are owned by nonresidents and the surcharge could bring in about $500 million per year.
The idea, though, garnered backlash from people in Hawaii Island’s visitor industry. Many previously said they worry it could hamper tourism and would tack on more fees to an industry that already is heavily taxed.
Jasper Moore, owner of Lotus Garden in downtown Hilo, a cluster of short-term apartments, rooms and vacation cottages for rent, said his business took a hit several years ago when the state last upped taxes on visitors.
“It might appear to be an easy way to grab money from people traveling to the state with little impact to the population, but that’s not really the case,” Moore said Wednesday. “Already, I have guests who come and think they’ve paid their entire bill and I say ‘No, we need to collect more tax,’ and their eyebrows go up. For a lot of people on a budget, it’s a big hit.”
The measure also garnered concern from Hawaii County Mayor Harry Kim, who said in written testimony a surcharge would “limit county options and make it even more difficult to balance our budgets.”
“Therefore, we have to jealously guard this taxing authority and ask that you not breach this line of authority,” Kim said. “… Please do not deprive the counties of this needed source of revenue, by dividing the pie even further.”
The bill is among several education-related measures still alive after today’s second crossover deadline.
Others include:
• House Bill 1594, which would establish the Hawaii Promise scholarship program. The program would provide state aid to eligible low-income students at any University of Hawaii campus and help them pay for tuition, fees, books, supplies and transportation costs not already covered by federal grants, state aid and private scholarships.
• House Bill 480, which would allocate state funding to hire a farm coordinator and purchase new equipment for Hawaii Community College’s agriculture program.
• House Bill 930, which would create a task force to look at ways of creating a sexual abuse prevention program for the state’s public school students.
• House Bill 501, which would establish a teacher stipend program to address the statewide teacher shortage.
• Senate Bill 423, which would prohibit public schools from denying a student a meal solely for being unable to pay.
A bill that would have funded a higher-education distance learning center in Puna died. The measure was sponsored by state Sen. Russell Ruderman, D-Puna, who previously said he hoped it would expand college opportunities to residents of the district — the “fastest growing” and yet “poorest district in the state.”
Email Kirsten Johnson at kjohnson@hawaiitribune-herald.com.
