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Counties disappointed in plan to remove their TAT share

By Hawaii State Association of Counties Executive Committee

If tourists pay a local visitor tax, shouldn’t the counties, which handle services they use like public safety, maintenance of beach parks and roads, water and wastewater, get its fair share of that revenue?

That is again the question the Hawaii State Association of Counties, which represents the four county governments of Honolulu City and County, Maui County, Hawaii County and Kauai County, hopes to get a favorable answer to at this year’s state Legislature.

Over the past years, HSAC has sought for a more equitable state-county distribution of the hotel tax, called the transient accommodations tax, or TAT. From the taxes that Hawaii visitors pay for their hotel rooms, 83 percent of that amount goes to the state and only 17 percent goes to the four counties.

But some legislators are proposing NOT to give any share of that tax to the counties at all. This is absurd, unacceptable and quite a disappointing effort as partners in Hawaii’s governance.

That’s what House Bill 1586 would do — phase out the counties’ share of the TAT and slowly place the burden on our taxpayers. The state would keep all the TAT money and would force the counties to raise property taxes, pull out lifeguards from beaches and reduce service programs.

And with all bargaining units up for negotiations this year, counties are faced with even more fiscal challenges. Where will the money come from to pay for mandates we don’t have control over?

The costs for fire, police and parks services alone have increased dramatically, by $170.3 million since fiscal year 2015.

With a meager amount of TAT received, do you know who’s paying for our visitors’ use of our facilities? You — our local taxpayers. Is that fair?

We urge legislators to kill HB 1586 and instead consider HB 317 in HSAC’s legislative package, which calls for a 55-45 percent-based distribution instead of a cap. This formula would allocate the corresponding amount of money based on the revenue received. If more visitors come to our islands and require more county services, then more money should be reimbursed.

HSAC’s request mirrors a state-county working group recommendation to state lawmakers to provide a justified 55-45 percent split of the TAT between the state and counties. Unfortunately, the Legislature this past session decided not to use the working group’s recommendation and instead settled for an arbitrary cap of $103 million for all the counties.

We feel our argument for a greater funding share for the counties is justified: During the last economic downturn, the state took the counties’ share of TAT revenue to balance its budget. But the state failed to make significant adjustments when its revenues rebounded — visitor numbers are at an all-time high, comparing a 2,363 percent increase in TAT versus the counties’ measly 2.2 percent since 2007.

State legislators sometimes ask why county leaders are hesitant to push for an increase in the state general excise tax, or GET. The simple answer is that raising the regressive GET would unfairly burden our Hawaii taxpayers. Why should our local residents be burdened again to pay for services our visitors use and are already paying for?

HSAC is hopeful a fair agreement can be reached on the TAT matter. The four county governments believe that providing the counties a more equitable share of the TAT would benefit all — residents and visitors both the state and counties serve.


The Hawaii State Association of Counties Executive Committee includes Councilmember Stacy Crivello, Maui County; Councilmember Dru Kanuha, Hawaii County; Councilmember Mel Rapozo, Kauai County; and Councilmember Ikaika Anderson, Honolulu City and County.

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