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HomeMy WebLinkAbout2017-03-20 Letter to Richard Onishi re SB 1290 SD 2 Relating to the Transient Accommodations Tax • ,` Wit Okabe ,Managing Director Harry Kim • +:A�� „,.'��:• lfavor - -0,Tw -_-=_ Barbara J.Kossow r44..of N'��`. Deputy Managing Director CI luntg of Ra ai'i Office of file . .laror 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 March 20, 2017 Rep. Richard H.K. Onishi, Chair Committee on Tourism Hawai'i State Capitol Honolulu, HI 96813 Dear Chair Onishi and Members, RE: SB 1290, SD 2 Relating to the Transient Accommodations Tax Thank you for this opportunity to testify in support of SB 1290, SD2, which deals with the Transient Accommodations Tax, but requesting additional funding. Our 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. 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. SB 1290, SD2, increases the share of TAT funds that goes to the counties from $103M to $108M per year. While we recognize that the State faces a financial dilemma not dissimilar from that faced by the counties, we also must inform you that $108M will leave us far short of what we need to balance our budget and keep our services at a level our residents deserve. An earlier draft of this bill, SB 1290, SD1, provided a reasonable division of revenue among the various parties that are looking for a piece of the TAT pie. That draft County of Hawaii is an Equal Opportunity Provider and Employer. Richard Onishi March 20, 2017 Page 2 removed the cap on the share of TAT going to the counties, giving us collectively 45% after several deductions. It recognized that without TAT, the counties would be forced to raise property taxes and/or reduce services to levels that most would find unacceptable. Many may not realize how important the TAT is to the County of Hawaii (and to the other counties). It is, in fact, Hawaii County's second largest source of revenue, behind only the property tax. Unless we continue to receive a reasonable share of the TAT, we will be pressed to raise property taxes about $19M (5.1% of our total budget), and that would worsen the pressures on the portion of the population that is currently managing a paycheck-to-paycheck financial existence. It would hurt a major part of our population, affecting renters and homeowners alike. Property taxes, after all, are not simply absorbed by a landlord; they are passed on, in whole or in part, to a tenant. The chart below reflects how small a portion of the TAT comes to Hawaii County, and how the percentage has shrunk over the years. While SB 1290, SD2 is preferable to no action, please help us help our fellow constituents by deleting the current language and substituting SB 1290, SD1. TAT — Total vs. Hawaii County Portion 5:0,003,0 O0 25.00% 400,000,000 20.00% 300,000,000 15 00% 200,000,000 A I • I 10.00% 100,000,000 5.00% .. .�» «. .. �, .. 0 ~' f. .. 0.00°0 �A(o A� ,` 4i 5:p No otiti Nt� a~`' �tiv ti� 4 min TOTAL TAT NM Have ai'iCounty HI County%of total Re pectfully submitted, Harry Kim Mayor County of Hawaii is an Equal Opportunity Provider and Employer.