2017-03-20 Letter to R. Kouchi, J. Souki, J. Tokuda, S. Luke RE: TAT

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March 20, 2017 Page 2 the total revenue generated from the TAT. However, we do believe that we should receive 45% of what would be collected if the TAT were still 7 '/ %. Please note: We are not claiming that this was the Senate President's position— it was not. But we think the history creates a strong case for why it is a position we all should endorse. It is our understanding that the TAT is expected to generate about $472M this year; if the tax were 71 %, only $369.9M would be raised. But 45% of $369M would be $166M, not $108M. The State then could receive 55% of the moneys collected at 71,%, and all of the revenue from the enhanced TAT (the extra 2%). The State should then pay for the various carve-outs from its total share. Although $166M would seem to be the fair share for the counties, we are not blind to the State's needs, and if the Legislature feels that it cannot take such a large financial hit this year, we would propose that the restoration to 45% be phased in over two or three years. The statutory language could provide for fixed sums of, say, $125M in FY18 and $150M in FY19, with 45% to be effective in FY20 and beyond. If the Legislature locked in those numbers now, it would not have to waste so much time dealing with complaining counties, year after year. We appreciate your consideration as we all attempt to best serve our joint constituents, the people of Hawaii. If our largest industry, tourism, is to flourish, both the State and the counties must be financially healthy, and able to deal fairly with the demands tourism places on our infrastructure and communities. Respectfully, l Harry Kim Mayor County of Hawai'i is an Equal Opportunity Provider and Employer.