Bill would take some TAT funds to help pay for rail

LIHUE — Hawaii lawmakers are expected to make a decision today on a bill that seeks to reduce the counties’ cut of the Transient Accommodations Tax.

No matter what, the counties’ allocation of TAT was scheduled to be reduced from $103 million to $93 million this session, said Jimmy Tokioka, D-15.

Senate Bill 1183 proposes to reduce that number by an additional $13 million to fund Honolulu’s rail transit project, leaving the counties $80 million to share.

That would mean less money for Kauai.

“Obviously, any reduction of TAT revenues will impact our county,” said Mel Rapozo, council chair.

The difference will have to be made by increasing property taxes and user fees, Rapozo said.

“Also, reductions in services to the public will have to be looked at,” he said.

In 2014, the Legislature capped county appropriation of TAT funds to $103 million. Currently, Kauai gets $14.9 million in TAT revenue.

If passed, the measure will give the County of Kauai 14.5 percent in TAT revenues, or $11.6 million, according to the bill. Hawaii County will receive 18.6 percent, the city and county of Honolulu will receive 44.1 percent and Maui County will receive 22.8 percent, according to the bill.

The amendments were made Friday, which was the last day to introduce bills for the 2017 legislative session.

Jimmy Tokioka,, said he doesn’t approve of the way the changes were made.

“It wasn’t part of any discussion,” he said. “No one had time to weigh in on it. As a former councilmember, I don’t like it, and I am voting no.”

SB 1183 also seeks to increase hotel taxes from 9.25 percent to 12 percent over the next 1o years. Funds from the hike, which is expected to raise $1.3 billion by 2027, will help pay for the rail.

“This will result in a huge revenue increase for the state. Add to that the increase in GET taxes that the visitor industry pays. And even with this increase in state revenues, the Legislature is proposing to reduce the county’s share of the TAT from $103 million to $93 million,” Rapozo said. “Where is the fairness in that? Why is the Legislature punishing the counties this year?”

Kauai Councilman Ross Kagawa questions why money taxed on Kauai will be used to fund services on Oahu.

“Tourists visiting Kauai will be paying significantly higher TAT taxes that will be going to the City and County of Honolulu for rail,” he said. “Why are visitor taxes on Kauai going to Oahu needs when Kauai has needs as well is my big question.”

Tokioka doesn’t support SB 1183.

“It’s punishing the counties and it’s punishing the hotels,” he said. “I support the rail, and I always have, since my time on the County Council. When I got here (to the state Legislature), I supported the rail every time, but this particular version, I’m voting no.”

Tokioka said Mayor Bernard Carvalho, Jr., called him early in the morning to ask him what his position was.

“I said I didn’t support it,” he said.

Rapozo said this year has been the worst legislative year for the counties since he was elected to the Kauai County Council in 2002.

Along with the TAT reduction, he cited a proposal to add a surcharge to the county’s real property tax collections and a proposal to remove liability protections from county lifeguards.

“The Hawaii State Association of Counties had aggressively opposed each of these measures with no success,” Rapozo said. “Time will tell what the final outcome will be. We anxiously await their final decisions and then start the discussions as to how we will address any reductions in revenues.”

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