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--_ Attachment A COUNTY COUNCIL ° ' OFFICE OF THE COUNTY CLERIC � K Jay Furfaro,Chair Mason K.Chock Sr.,Vice Chair G "'- z, ',.;) Ricky Watanabe,County Clerk Tim Bynum t rM ;, Jade K.Fountain-Tanigawa,Deputy County Clerk Gary L.Hooser ;` Ross Kagawa i`YAr��t _ j��4 Telephone(808)241-4188 Mel Rapozo of Fax (808)241-6349 JoAnn A.Yukimura v Email cokcouncil@kauai.gov Council Services Division 4396 Rice Street,Suite 209 Lihu`e,Kauai,Hawaii 96766 MEMORANDUM October 22, 2013 Updated January 14, 2014 TO: Mel Rapozo, President and Members of the Hawai`i State Association of Counties FROM: JoAnn A. Yukimura, Councilmember, Kaua`i County Council RE: A PROPOSAL REGARDING TAXING POWERS AND REVENUE- SHARING FOR THE COUNTIES I. Legal Framework: "Article VIII, Section 3: The taxing power shall be reserved to the State, except so much thereof as may be delegated by the legislature to the political subdivisions, and except that all functions, powers and duties relating to the taxation of real property shall be exercised exclusively by the counties, with the exception of the county of Kalawao. The legislature shall have the power to apportion state revenues among the several political subdivisions." [Ren and am Const Con 1978 and election Nov 7, 1978] II. Background: Prior to 1978, revenue sources for the counties evolved from one percent (1%) of the General Excise Tax (GET) (distributed by percentages to counties) (1947) to a combination of GET and public service taxes (1965) to grants-in- aid of$18.2 million divided among counties by percentages (1973). In 1978, a constitutional amendment was proposed by the Constitutional Convention and approved by the voters transferring all real property tax powers to the counties. See "Legal Framework" above. In 1986, the Transient Accommodations Tax (TAT) on visitor accommodations was approved by the Legislature. In a separate bill, but presumably taking from the revenues generated by the TAT, counties were AN EQUAL OPPORTUNITY EMPLOYER