Upcoming leadership changes in the state Legislature could be good news for counties seeking to increase their share of hotel taxes, Hawaii County Council learned Tuesday at a meeting with several state legislators.
Only three lawmakers showed up after being invited by the council Committee on Governmental Relations and Economic Development. Committee Chairman Dennis Onishi of Hilo called the rare joint session with the island’s 11 state lawmakers to get an early start on budget issues before the Legislature convenes in January.
The council was disappointed this year when its priority of a return to a larger county share of the transient accommodations tax didn’t pass the Legislature. The tax, known as the TAT, is collected as a surcharge on hotels and lodging rentals of less than 180 days. It comes primarily from island visitors.
The county isn’t seeking to increase the tax, just the counties’ share of it.
When the recession hit, state lawmakers capped the counties’ share, supposedly temporarily until the economy improved. But attempts during the past few years to remove the cap have been unsuccessful.
Although championed by House Speaker Joe Souki, a Maui Democrat, removing the cap was strongly opposed by Senate President Donna Mercado Kim, a Honolulu Democrat. Kim was Senate Ways and Means chairwoman when the cap was imposed.
“I think President Kim is very determined once she makes up her mind,” said Rep. Mark Nakashima, a Democrat representing Hamakua and parts of Hilo.
A turnover of Senate leadership is expected. Kim and Senate Majority Floor Leader Will Espero are running for the 1st Congressional District seat, Ways and Means Chairman David Ige is running for governor and Judiciary Chairman Clayton Hee is running for lieutenant governor.
Elected officials in Hawaii have to resign to run for state or county office, if the term for the new office begins prior to the end of the term for the old office. But state candidates for federal office do not. Kim and Espero lose the Senate seat only if elected to Congress.
Removing the TAT cap would make a big difference in the county’s $412.6 million budget.
In the 2012-13 fiscal year, Hawaii County generated $40.1 million in TAT and received $17.3 million back. Without the cap, the county would have received $30.7 million.
“This coming year may be a good one to initiate this discussion and move it forward,” Nakashima said. “I do see leadership changes in the Legislature … there’s going to be a lot of shuffling.”
Onishi thinks the county should push its legislative delegation to work harder on entering leadership positions.
“If we could get more committee chairs, that means we’d get more coming back to this island,” Onishi said.
The Legislature didn’t remove the cap this year, but it did increase the amount, giving the counties some relief. Hawaii County received an extra $1.86 million, which it used to bolster the county’s GASB 45 account for future health benefits for retirees.
Sen. Russell Ruderman, a Puna Democrat, said the counties, not the state, bear the brunt of the stress tourists add to infrastructure, so they should get more benefit from the TAT.
“All the impacts of the visitors go to the county,” Ruderman said. “The TAT, the majority, ought to go to county. You shouldn’t have to beg for it.”
Rep. Richard Creagan, a Naalehu Democrat, told the council to keep in close contact with the Big Island legislative delegation. The delegation meets every Thursday morning when the Legislature is in session, and council members might be able to get on the agenda to push their priorities, he said.
“The representatives should be in close contact with the people in their district,” Creagan said.
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