- Maui Now - https://mauinow.com -

TAT Bill Gains Senate Backing, Governor Weighs In

By Wendy Osher

The Hawaiʻi State Senate advanced a list of more than 170 bills ahead of the legislative second crossover deadline, including a measure that would remove the cap on the transient accommodations tax revenues to be distributed to the counties.

Maui Mayor Alan Arakawa and Council leaders on Maui have been advocating for a restoration in the TAT revenues [1], with the council passing a resolution last week urging support of House Bill 1671.

According to council members, House Bill 1671 would return 44.8% of TAT revenues to the counties, which translates to approximately $165 million in annual TAT revenue to the counties.

Governor Neil Abercrombie, photo by Wendy Osher. [2]

Governor Neil Abercrombie, photo by Wendy Osher.

The measure proposes to remove the current cap on the counties’ share of the TAT, which is a tax that is collected when a guest stays in a hotel or other accommodation in the state for less than 180 days.

During a recent interview with Mayor Arakawa, he said the county budget hinges on [3] whether or not the state is going to remove the Transient Accommodations Tax.

The TAT cap was established in 2011 as a temporary measure to assist the state government in its recovery from the economic downturn. Now, three years later, county officials say it’s time to restore those funds [4].

“If they don’t remove the cap, then we’re going to have to ask the community for a property tax increase of 6.7%. If they remove the cap, we can actually ask the council to not raise any of the property taxes and actually possibly reduce some,” Mayor Arakawa said during the interview.

Governor Neil Abercrombie has also been monitoring the progress of the bill and weighed in from the state administration’s perspective saying in an exclusive interview on Friday, “I make it a point to try and not make to not make predictions about what the legislature will do; but the question of the division of the revenue coming from travel and tourism taxes is something that’s a perennial discussion in the legislature, so we’ll see how that works out.”

He said the object is to increase the amount of money coming to the counties, and to the same degree, the state has to make enough revenues another way.

“For residents and taxpayers throughout the state, no matter what county you’re in, the state responsibilities and county responsibilities all have to be met, and all have to be paid for.  So, be careful what you wish for,” he said.

“You may find an advantage on one hand, and a disadvantage on the other; but for purposes of meeting community needs, service needs, the division of the revenues from travel and tourism really should be discussed,” said Abercrombie.

“Now whether it ends up at the county or the state level is problematic, and political considerations naturally come into the picture; but the fact that the county provides services and the state provides services is an ongoing reality of hospitality and tourism, so how that works itself out I wait for the end of the legislative session to see what conclusions were reached,” he said.

Other bills advanced by the senate include measures aimed at kūpuna support, environmental protection, community investment, fiscal responsibility, education, homelessness, public safety and tourism.

A list of bills highlighted by Senate leaders include the following:

Education

Environmental Protection

Transient Accommodations Tax

Community Investment

Other Notable Legislation

Members of the Senate and House will convene conference committees next week to work out any differences in the measures.