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HomeMy WebLinkAbout2017-03-20 Letter to R. Kouchi, J. Souki, J. Tokuda, S. Luke RE: TAT JNsulOs ham; Wil Okabe Managing Director Harry Kim - +' "s,,/. i• Mayor -- Barbara J.Kossow +f•:;w:-w;:•r``.• Deputy Managing Director ounf r of A.tt x f`l ( ffIIrr of fir 4L or 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,Hawai`i 96740 (808)323-4444 • Fax(808)323-4440 March 20, 2017 Honorable Ronald D. Kouchi Honorable Jill Tokuda Senate District 8 Senate District 24 Hawai'i State Capitol, Room 408 Hawai'i State Capitol, Room 207 senkouchi@a.Capitol.hawaii.gov sentokuda(a�capitol.hawaii.gov Honolulu, HI 96813 Honolulu, HI 96813 Honorable Joseph M. Souki Honorable Sylvia Luke House District 8 House District 25 Hawai'i State Capitol, Room 431 Hawai'i State Capitol, Room 306 repsouki©Capitol.hawaii.gov replukea,Capitol.hawaii.gov Honolulu, HI 96813 Honolulu, HI 96813 Dear President Kouchi, Speaker Souki Senator Tokuda and Representative Luke: This is another plea to increase the counties' share of the TAT. When my Finance Director, Collins Tomei, and my aide, Andy Levin, visited the Capitol, Senator Kouchi went into the history of the TAT. He is the "last survivor" of early TAT negotiations, so his perspective was extremely interesting and valuable. We know that when the TAT was originally established at 71 %, the counties were intended beneficiaries. However, one of the things that the Senate President made clear is that, when the legislators took the politically unpopular step of increasing the TAT to 9 %%, it was their necks that were on the line, and there is no reason why the counties should feel they have any claim on that extra 2%. The Ways and Means Committee has proposed to increase the counties' share of the TAT from $103M to $108M. While we recognize that the State has its own financial problems, and therefore any increase in the counties' share of TAT is appreciated, we cannot help but express our belief that the counties' portion of TAT should be much higher than $108M, and that belief has been reinforced by the Senate President's history lesson. Based on past commitments, and the tough vote that the state legislators took, we understand why the counties cannot expect to receive 45% of County of Hawaii is an Equal Opportunity Provider and Employer. 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.