County of Kaua’i Mayor Bernard P. Carvalho, Jr. commented today on the latest draft of Senate Bill 1186, which would reduce the amount of transient accommodations tax (TAT) revenues that would be distributed to the counties:
“Although we understand the need for a temporary cap, the counties are very concerned about the Senate’s proposal to lower the cap on TAT distributions to $85 million. Such a drastic cut would have significant impacts for us, as the TAT is our second largest source of revenue behind real property taxes. At this point I endorse the House position, which would cap TAT distribution to the counties at the 2010 level, or roughly $102 million,” stated Mayor Carvalho, adding that any cap on the TAT should be temporary until the state’s fiscal position improves.
The TAT was established in 1986 under Act 304, Session Laws of Hawai’i and imposes a tax on the gross revenues derived from the furnishing of transient accommodations. In 1990, in recognition of the profound impact tourism has on county services, the state began to distribute a significant portion of the TAT to the counties on an annual basis.