HomeMy WebLinkAbout2017-08-28 Mayor Harry Kim's Testimony re SB 4 - TAT & Honolulu Rail
WilOkabe
Managing Director
Harry Kim
Mayor
Barbara J. Kossow
Deputy Managing Director
County of Hawai‘i
Office of the Mayor
25 Aupuni Street, Suite 2603 Hilo, Hawai‘i 96720 (808) 961-8211 Fax (808) 961-6553
KONA: 74-5044lole Hwy., Bldg C Kailua-Kona, Hawai‘i 96740
(808) 323-4444Fax (808) 323-4440
August 28, 2017
TESTIMONY BEFORE THE SENATE COMMITTEE ON WAYS AND MEANS
REGARDING SB 4, RELATING TO GOVERNMENT
Testimony by: Harry Kim, Mayor, County of Hawai'i
The County of Hawai'i opposesthe permanent cap on the counties’ share of the TAT. This cap is unnecessary
to achieve all other aspects of the bill to finance Honolulu’s rail. The bill proposes to finance rail by extending
the GET surcharge period to 12/31/2030, increasing the share of the surcharge that goes to rail by decreasing the
administrative charge retained by the State, and increasing the TAT rate by 1% and dedicating all of that
increase to rail. There is no reason related to rail financing to cap the share of the TAT to the counties.
Acap on the counties’ TAT share is contrary to the Legislature’s own working group report and the original
intent of the TAT tax summarized as follows:
Working Group Recommendation. The working group recommendedthe Tourism Special Fund receive
$82 million in FY 2016 and increase in subsequent years in line with the Consumer Price Index for
Honolulu, $31 million constantfor the Convention Center-Turtle Bay-Special Land Develop Fund, and
the remainder split between the State and counties at 55% for the State and45% for the counties.
Based on total TAT revenues in 2016 of $444 million, the $103,000,000 cap represents 31%of the
remainder of the TAT after allocations to the Tourism Special Fund ($82 million) and the Convention
Center-Turtle Bay-Special Land Development Fund ($33 million). As a result of the cap, the counties’
share will only get worse as tourism grows.
Nexus to Tourism Services. The incidence of the TAT is primarily on visitors, so the TAT tax revenues
should fund public services which benefit visitors. The UH Economic Research Organization
(UHERO) estimated that the counties pay for 53%of the services for which visitors directly benefit
(UHERO Working Paper No. 2016-4).These services include police and fire protection, rescue, parks,
beaches, water, roads, and sewer systems.
Act 185 (1990). Recognizing that “many of the burdens imposed by tourism falls on the counties,” the
legislature created the TAT as a “more equitable method of sharing state revenues with the counties”
(Conference Committee Report 207 on HB No. 1148). The legislature deemed at that time that the fair
allocation was 95% of the total TAT revenues to the counties.
The State has multiple sources of revenues. The counties only have property tax, motor vehicle weight tax, and
public utility franchise tax. Our out-of-control homeless problems area symptom of the soaring cost to rent or
own a home in Hawai'i. And you want to offer us the power to increase the GET tax, the most regressive form
of taxation that impacts the lower income the greatest. We already had to increase our property tax to make
ends meet. With the collective bargaining decisions dominated by the State, we again will face possible
increases. We ask only for our fair share as recommended by the Working Group, to maintain quality services
that uphold the tourism industry and affordability for our people.
County of Hawai‘i is an Equal Opportunity Provider and Employer.