2017-02-27 Letter to Sylvia Luke re HB 1586 HD 1 Relating to Taxation

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-.'iOi• Hey•.. �o.• • Wit Okabe ^ � Managing Director Harry Kim •:i!'`',1►',W • Mayor -= Barbara J.Kossow :40'.•+f•.;�—wo.• : Deputy Managing Director C1Iraxnfg of�. . r ai`i ®ffirr of fI r 4 a r 25 Aupuni Street,Suite 2603 • Hilo,Hawaii 96720 • (808)961-8211 • Fax(808)961-6553 KONA: 74-5044 Ane Keohokalole Hwy.,Bldg.C • Kailua-Kona,Hawaii 96740 (808)323-4444 • Fax(808)323-4440 February 27, 2017 Representative Sylvia Luke Finance Committee Hawai'i State Capitol Honolulu, HI 96813 Dear Chair Luke and members: RE: HB 1586 HD1 Relating to Taxation Thank you for this opportunity to testify in strong opposition to the provisions in HB 1586, HD 1 that would reduce and then eliminate the counties' share of TAT. The stated purpose of HB 1586, HD1 is to address Hawaii's high cost of living by reducing the tax burden on low- and middle-income earners. While I fully support that purpose, I cannot agree that HB 1586, HD1 offers a reasonable solution to the problem. The "low- and middle- income earners" that HB 1586, HD1 refers to are citizens of both the State and a county. You and I represent and serve the same people. Decimating the budgets of the counties in order to reduce the State tax burden would not be beneficial; it would simply force the counties to drastically reduce services or increase other taxes for our shared constituents. TAT is a very important source of revenue to the County of Hawaii (and the other counties), and we rely on it to balance our budget and maintain services for our citizens and visitors. The TAT is, in fact, our second largest source of revenue, behind only the property tax. HB1586, HD1 would deal a punishing blow to us, and therefore to our taxpayers. Please remember that TAT was established in part to help the counties, but the State of Hawaii already gets the major portion of the TAT revenues. Without the limited share that we currently receive, we would be pressed to raise property taxes about $19M (5.1% of our total budget), and that would worsen the pressures on our population, many of whom are currently managing a paycheck-to-paycheck financial existence. It would hurt a major portion of our residents, affecting renters and County of Hawai`i is an Equal Opportunity Provider and Employer.