Mayor Kenoi Urges Committee to Reject Bill to Take Counties Share of Hotel Taxes

Media Release:

The following is the text of Mayor Billy Kenoi’s testimony to the House Finance Committee today in opposition to House Bill 2598, which would suspend distribution of the transient accomodations tax to the counties for three years. The County of Hawai’i will lose nearly $18 million a year in revenue if the bill passes.

Aloha, Chair Oshiro and Members of the Committee:

The County of Hawai‘i strongly opposes H.B. 2598, which would suspend for three years the distribution of transient accommodations tax (TAT) revenues to the counties.

Today you will be presented with testimony from the Mayors of all four counties, who together represent every one of your constituents. That is important because it lays bare a simple, important fact: If this committee votes to take away the counties’ share of the hotel room tax, you are taking that money from your own constituents. You are taking away money that today pays for critical programs such as police and fire protection.

Our constituents elected all of us to solve problems, but this bill solves nothing. I understand the state is confronted by budget challenges, but so are the counties. It makes no sense to make your budget situation better while making our budget situation worse. We represent exactly the same people.

When a visitor’s plane touches down in Hawai‘i, the state collects a landing fee. When the visitor rents a car, the state collects a car rental fee. When the visitor buys a drink, the state collects the liquor tax. When the visitor buys food, the state collects the excise tax. And when the visitor rents a hotel room, the state collects a transient accommodations tax.

Of all of those taxes, only the hotel room tax is shared with the counties, and House Bill 2598 proposes to cut off even that source of funding.

Yet when a visitor calls for law enforcement help, a county police officer responds. When the visitor gets into trouble in the ocean, county lifeguards or firefighters respond. When the visitor uses sewer and water service, those are county services. The visitors drive on county roads, and use county parks. The counties haul away the visitors’ rubbish.

The Legislature from the very beginning in 1986 planned to make the Counties beneficiaries of the hotel room tax because lawmakers recognized the importance of county facilities and services to support and enhance the visitor experience. It was always understood that much of the burden of mass tourism is carried by the counties.

We now have more than one million tourists a year visiting the County of Hawai‘i. Honolulu, Maui, Kaua‘i and Hawai‘i counties have relied on the TAT as a source of revenue for over 20 years and it is the second largest single source of revenue in Hawai‘i County’s budget – nearly $18 million.

As you know, the Counties have their own budget challenges, and we are doing our part by slashing department budgets, eliminating positions and carefully reviewing every new hire and major expenditure. I have furloughed my own staff, and will impose additional furloughs and painful budget cuts in the coming budget year.

Stripping away the TAT from the Counties would aggravate this situation, and would impose additional cuts in essential services for your constituents. I urge the committee to reject this bill.

Mahalo for your consideration.

Aloha,

William P. Kenoi

MAYOR

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