It doesn’t appear that Hawaii’s mayors are going to get their chance to raise the general excise tax this year. But counties could still get more revenue from a bigger share of the transient accommodations tax.
It doesn’t appear that Hawaii’s mayors are going to get their chance to raise the general excise tax this year. But counties could still get more revenue from a bigger share of the transient accommodations tax.
Bills to raise the GET promoted by the Hawaii Council of Mayors have been summarily ignored by the state Legislature, despite a unified plea from both the mayors’ council and the Hawaii State Association of Counties, the group representing county councils.
Bills SB 2115 and HB 1606 would have allowed the counties an extra penny on the dollar, a 25 percent increase in the tax. Neither bill was heard by a single committee, thus missing the deadline to be sent to the other chamber.
The prospects are brighter for the transient accommodations tax, known as the TAT. That money, collected as a surcharge on hotels and lodging rentals of less than 180 days, primarily comes from island visitors.
The Legislature capped it at $93 million about four years ago, costing counties millions in revenues. Mayor Billy Kenoi said the counties agreed to the cap because of the recession, but now that the economy is stronger, it’s time to give it back.
“We’d be glad to give up the request for the GET if the cap could be lifted,” Kenoi said. “We believe it’s a reasonable and fair request.”
House Speaker Joseph Souki, a Maui Democrat, in his opening day speech in January asked House members to consider removing the TAT cap. HB 1671, which removes the cap, passed the House and is now awaiting Senate action. But a recent lowering of the state’s projected revenue by the state Council on Revenues could still put a damper on those plans.
The bill would remove the cap, allowing the four counties to share 44.8 percent of the revenues collected, with Honolulu receiving 44.1 percent, Maui receiving 22.8 percent, Hawaii County receiving 18.6 percent and Kauai receiving 14.5 percent.
The state Department of Budget and Finance was one of the few opponents to the measure during a Feb. 25 legislative hearing. According to Director Kalbert Young, the state would lose $81 million in the 2014-15 fiscal year that starts July 1, and more as the years progress. Under Young’s calculations, Hawaii County’s share would increase by $15 million, for the next budget year.
“Removing the cap and establishing the distribution of the TAT revenues to the counties at 44.8 percent of the TAT collected, would result in … significant general fund tax losses on the State’s financial plan,” Young said. “The administration has developed the six-year financial plan with an eye and objective towards sustainability across economic cycles without the need for state tax increases.”
Maui County Budget and Finance Committee Chairman Mike White, in testimony, said his calculations showed that during the 2012-13 fiscal year, Maui County generated $115.4 million in TAT revenue and received $21.2 million back from the state. Without the cap, Maui would have received $37.6 million.
Hawaii County, during that same year, generated $40.1 million and received $17.3 million back. Without the cap, the county would have received $30.7 million, according to White.
“The State is urged to view the removal of the TAT cap not as a loss, but rather the return of revenues the counties were promised, have relied on, and have responsibly budgeted for more than 20 years,” White said. “The bottom line is the state made use of the TAT revenues when it needed them and has not responded to the counties’ financial needs as the state’s fortunes improved.”
Email Nancy Cook Lauer at ncook-lauer@westhawaiitoday.com.