Council chairs from all four Hawaii counties jointly announced their support for legislation that would repeal the cap on distribution of hotel room tax revenue to the county governments.
Council Chairs Gladys Baisa of Maui County, Jay Furfaro of Kauai County, Ernie Martin of the City and County of Honolulu and J Yoshimoto of Hawaii County said they testified in support of House Bill 1671 (2014), which was before the House Committee on Tourism on Monday, Feb. 3, at 9:30 a.m.
Revenue from the state’s hotel room tax, known as the transient accommodations tax or TAT, is partially remitted to the counties. Citing the state government budget shortfalls, the legislature imposed an artificial cap on the counties’ annual remittance three years ago, resulting in millions of dollars in lost revenue to each county.
The council chairs said county residents and county governments earn TAT revenue by supporting the visitor industry in countless ways, including by funding tourism promotion, providing police, fire and lifeguard services and maintaining roadways, beach parks and other public infrastructure. They say the revenue should be proportionally returned to the counties, under an established formula.
According to Mike McCartney, CEO of the Hawaii Tourism Authority, more than 8.2 million visitors traveled to Hawaii in 2013, a 2.6 percent increase from 2012, generating a total of $1.5 billion in state tax revenues.
Of the TAT revenue that’s returned to the counties, Kauai County receives 14.5 percent, Hawaii County 18.6 percent, Maui County 22.8 percent and the City and County of Honolulu 44.1 percent. Eliminating the artificial cap on distribution would mean the counties would realize additional annual revenue of more than $10 million each.
“We stand united and humbly ask the state legislators to lift the cap they imposed upon our counties three years ago. Since then, the economy has improved.” Hawaii County Council Chair Yoshimoto said. “We ask that the State legislators allow the counties to receive our fair share of the TAT revenues so that we can provide the necessary services and meet our obligations to residents and visitors alike.
Hawaii County’s capped TAT revenue is $17.2 million. The TAT revenue distribution for Hawaii County would rise to more than $30 million (based on a projected increase of $13.4 million) if the cap is eliminated.
“In any given day, 21 percent of the population on Kauai is visitors,” Kauai County Council Chair Furfaro said. “It is one of our primary economic engines. If we want them to return to our island, we have to meet their high demands and expectations.”
Kauai County’s annual TAT revenue distribution is currently capped at $13.4 million. With the cap eliminated, Kauai County would expect to get $10.4 million in additional TAT revenue, based on Fiscal Year 2013 projections.
“Over the past few years, Honolulu contributed millions of dollars to upgrade and renovate several areas of Waikiki to enhance the visitor experience,” Honolulu City Council Chair Martin said. “The additional TAT revenues the counties receive would go a long way in maintaining our beaches and parks, to continue to promote our state as a premium visitor destination and, specifically for Honolulu, to avoid enacting poorly conceived revenue-enhancing measures that would negatively infringe upon our well-deserved and longstanding image as one of the most desired tourist destinations in the world.”
The City and County of Honolulu’s projected TAT revenue would be about $72.8 million ($31.8 million more than the current capped amount of $41 million) if the legislature removes the distribution cap.
Maui County’s TAT revenue distribution is projected go up by $16.4 million if HB 1671 is enacted. TAT revenue is currently capped at $21.2 million for Maui County.
“As promised, county officials will have a stronger and united lobbying effort this year to ensure that our constituents and visitors get what they deserve,” said Maui County Council Chair Baisa, noting the Hawaii Council of Mayors and Hawaii State Association of Counties also support repealing the cap. “We encourage the public to join us in supporting this measure by submitting testimony.”
Cumulatively, the counties would receive an estimated $72 million in annual revenue under HB 1671, which was co-introduced by all six members of the House of Representatives from Maui County, including Speaker Joseph M. Souki. During the Jan. 15 opening of the legislature, Speaker Souki expressed support for lifting the TAT cap during his remarks, saying, “It’s time.”
Rep. Tom Brower chairs the House Committee on Tourism. Testimony for HB 1671 is accepted at the legislature’s website at www.capitol.hawaii.gov.