2018-02-15 Letter to Sylvia Luke re HB 1665, HD 1 Relating to Transient Accommodations Tax (TAT)

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February 15, 2018 Page 2 The State of Flawail has always received the major portion of the TAT revenues, but !think it is correct to say that when the TAT was first established, it was envisioned as a way to help the counties deal with the effects of tourism, including such costs as police, fire, parks, and other infr.structure impacted by tourists. When the Great Recession hit, the share of TAT for the counties was capped, but that was only su posed to be temporal'', until the economy recovered. We are well past the recession now. Without the share that the counties would have received prior to the cap, we have been forced to raise property taxes, vehicle weight taxes, and fuel taxes, an are now considering adding to the GET, all of which worsen the pressures on our population, much of which is barely managing a paycheck -to -paycheck financial existence. Property tax increases hurt a major portion of our residents, affecting renters and homeowners aike. Property taxes, after all, are not simply absorbed by a landlord or business; they • re passed on, in whole or in part, to the tenant or customer. The GET, a regressive tax, is paid by all. The original HB 1665 would have amended the amount of transient acco modations tax revenues allocated to the counties from a specified sum to a percentage of the revenues collected. If the counties' share of the TAT were restored, Hawaii County would not need to impose those property tax, vehicle weight tax, fuel tax, or GET increases. There admittedly is other history that could come in to play, and the TAT mi ht be thought of in two parts. When it was originally established, it was at a rate of 7 Y4%. Later on, when legislators took the politically unpopular step of increasing the TAT to 9 1/4 %, and then 10 1/4%, it was the legislators' necks that were on the line, so perhaps there is less reason why the counties should feel they have a claim on that second part of the TAT, the extra 3% Although we believe that the counties' share of the TAT should be restored to 45% of the total TAT, at the very least we should receive 45% of what would be collected if the TAT were still 7 1,4 %. If that position were taken by this Committee, the State then could receive 55% of the moneys collected at 7 14%, plus all of the revenue from the second, enhanced, part of the TAT (the extra 3%). If the Legislature locked in those numbers now, there also would be the added benefit that you would not have to spend so much time dealing with comslaining counties, year after year. We all could plan our future budgets with greater certainty. My priority is to seek an increase in the TAT for the counties, and that goal is shared by the Council of Mayors and the Hawaii State Association of Counties (i.e., the County Councils). Since the State and the counties serve the same constituents, it is important that we continue to work as partners in meeting the needs of our communities. As demand for services is ever increasing (and so is the cost of those services), it is equally important that revenue be appropriately shared so that the demands can be met to the best of our combined abilities. Conly of HaNvai 1 is an Fqual Opportunity Provider and Employer.