2017-03-28 Letter to Sylvia Luke re SB 1290 SD2 HD1 relating to the Transient Accommodations Tax

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Ntr os� ' Wil Okabe �I��%�f ` Managing Director Harry Kim ,• r t'�'� • Mayor = Barbara J.Kossow re: +�'�` - Deputy Managing Director Countv of Pa x f l Offirt of file C uvrur 25 Aupuni Street,Suite 2603 • Hilo,Hawai`i 96720 • (808)961-8211 • Fax(808)961-6553 KONA: 74-5044 Ane Keohokalole Hwy.,Bldg.C • Kailua-Kona,Hawai`i 96740 (808)323-4444 • Fax(808)323-4440 March 28, 2017 Rep. Sylvia Luke, Chair Committee on Finance Hawai'i State Capitol Honolulu, HI 96813 Dear Chair Luke and Committee Members, RE: SB 1290, SD 2, HD 1 Relating to the Transient Accommodations Tax Thank you for this opportunity to testify against the latest draft of SB 1290, SD2, HD1 which deals with the Transient Accommodations Tax. We ask that the Committee substantially amend this version of the bill before going to conference. SB1290, SD2, HD1 would reduce the counties' share of TAT to $93M. An earlier draft (SB 1290, SD2) increased the share of TAT funds that go to the counties to $108M per year. We have hoped for a share even larger than $108M, and although we know that the State faces a financial dilemma not dissimilar from that faced by the counties, SB1290, SD2 recognized that without an increase in the counties' share of TAT, the counties would be forced to raise property taxes and/or reduce services to levels that most would find unacceptable. My understanding is that the TAT was originally established to assist the counties, but the Legislature has always had the prerogative to determine how it will be apportioned. Given Hawaii County's limited resources (and seemingly unlimited needs), we are fortunate that the Legislature has never wavered in allowing the counties to share in the TAT, and we thank you for that. History is important, and the TAT should really be thought of in two parts. When the TAT was originally established at 7 14%, the counties were the intended beneficiaries. Later on, when legislators took the politically unpopular step of increasing the TAT to 9 1/4 %, it was the legislators' necks that were on the line, so there is less County of Hawai`i is an Equal Opportunity Provider and Employer.