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HomeMy WebLinkAbout2018-02-15 Letter to Sylvia Luke re HB 1665, HD 1 Relating to Transient Accommodations Tax (TAT)Harry Kim Atayor ettuttfu Offirrtif Wi Okabe Alanaging Director Barbara J. Kossow Deputy Managing Director 25 Aupuni Street, Suite 2603 • Hilo, Hawaii 96720 • (808) 961-8211 • Fax (808) 9616553 KONA: 74-5044 Ane Keohokalole Hwy., Bldg C • Kailua-Kona, Hawaii 96740 (808) 323-4444 • Fax (808) 323-4440 February 15, 2018 Representative Sylvia Luke, Chair Committee on Finance Hawaii State Capitol, Room 308 Honolulu, HI 9681:3 Dear Chair Luke and Committee Members: Re: HB 65, HD 1 Relating to the Transient Accommodations Tax (TAT) Flea lig Date: 02/16/18 — 4:00 pm; House Conference Room 308 HB 1665, started as a part of the Hawail Council of Mayors package, and would have restored the countiesallocation of the TAT to 45%. B 1665, HD 1, on the other hand, would require that the counties request reimbursement for various expenses, and justify each request in order to receive ANY TAT. While it is not clear what expenses would qualify for reimbursement (e.g., what percentage of overhead, salaries, maintenance products used at a park that serves locals and visitors, etc.) nor how much revenue the counties would ultimately receive, it is clear that the process would be a bureaucratic nightmare. Even if the counties wound up getting more TAT money than at present, it woul not be worth it. This bill would cripple the partnership that has been created over the y _ars in an imperfect but meaningful attempt to best serve the 1.4 million people of Hawaii. Therefore, you will not be surprised that we cannot support 1665, HD 1, and ask that it be held, or that the original intent of HB 1665 be restored. My understanding s 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. Give Hawal'i 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. The 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 current allocation has dealt a punishing blow to us, and therefore to our taxpayers. You and 1 represent and serve the same people. Decimating the budgets of the counties is not beneficial; it simply forces the counties to drastically reduce services or increase other taxes for our shared constituents. f Ha Ai`i is an Equal Opportunity Provider and Nmploycr. 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. February 15, 2018 Page 3 The chart below reflects ow small a portion of the TAT comes to Hawail County, and how the percentage has shrunk over the years. Please help us help our fellow citizens by restoring this vital component of the County budget to its original percentage. 5 ' 5 t2,5 vs. H Harry Kim Mayor, County of Hawaii 11' County Portion Cc C aoa