County mulls new tax ability

LIHU‘E — The county administration is still analyzing its position on a bill sitting on Gov. David Ige’s desk that includes a provision that would allow county governments to enact their own sort of transient accommodations tax.

Due to the pandemic, the state has withheld county shares of the TAT, and since spring 2020 the county has not gotten over $14 million it originally accounted to have.

The state Legislature’s answer to this was House Bill 862, which states that in lieu of the TAT, counties may establish ordinances seeking up to 3% of gross transient rental proceeds, fair-market-rental-value taxable. Ige’s deadline for a decision is early June.

For Kaua‘i, 1% is projected to equate to $6 million, county Managing Director Michael Dahilig reported to the County Council on Friday.

Dahilig indicated that the county is continuing discussions with the governor’s office, but said Mayor Derek Kawakami believes tourist dollars are needed to keep the county going.

“Mayor’s position is that we cannot have a sustainable budget picture without the ability to recapture revenues from tourism activities,” Dahilig said. “What that looks like and how that needs to be structured is what we’re going to be first conveying to the governor.”

For fiscal year 2021, which the county is in until June 30, the administration is continuing to lobby for the release of the withheld TAT, too.

Other parts of HB862 reduce the budget for the Hawai‘i Tourism Authority by $19 million.

Dahilig said the county would also need to assess how it would go about administering the tax, which he noted as different than a regular surcharge.

“It does seem a bit of a challenge in terms of being able to start from scratch on something that would be pretty foreign to us, since we do not at this point in time have a database or track transit-accommodation activities at the hotel and resort,” Dahilig said. “

Kawakami’s fiscal year 2022 supplemental budget submittal features a $243.3 million operating budget and $24.8 million capital improvement project budget. The mayor’s first budget was transmitted in March, and a supplemental budget with slight changes came the first week of May.

Friday, the council met for a brief decision-making session to discuss the budget at hand and make slight changes.

“We know that there will remain economic uncertainty regarding the use of the American Rescue Plan Act and any future state and federal funding that may be coming down the pipeline,” Council Chair Arryl Kaneshiro said. “But we do have the supplemental-money-bill process to assist in adjusting our budget throughout the fiscal year as may be needed.”

Kawakami’s budget submittals prioritize past deferred maintenance, affordable housing and pandemic response, which Kaneshiro noted.

“The challenges that we have faced in the past have also not disappeared,” Kaneshiro said. “This includes our deteriorating roads, bridges and other deferred-maintenance needs. We continuously see the need for more affordable housing and improvements to our parks. Our collective-bargaining costs will continue, including the contributions for health, retirement and other post-employment benefits.”

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Sabrina Bodon, public safety and government reporter, can be reached at 245-0441 or sbodon@thegardenisland.com.

3 Comments
  1. randy kansas May 17, 2021 3:34 am Reply

    Code for: our county is broke and we need to tax you more to pay for our mis-management……


  2. Des May 17, 2021 8:56 am Reply

    We need new infrastructure too. You can’t keep allowing new building in Koloa and allow increasing tourists to the island without expanding two-lane Kaumuali’i all the way to the tree tunnel, and you need to do more work in Kapaa than that mile or so of construction.

    You need to charge tourists every dime you can, to reduce numbers, but still have enough money to build up our infrastructure so our next generation isn’t blocked up in traffic and run off the beaches their whole life.


  3. RGLadder37 May 18, 2021 1:56 pm Reply

    You cannot charge TAT to tourism. Tourism on Kauai is limited. Increasing taxes for tourist will likely result in no returns and no rentals for transient accommodations. Which in itself is already less. This limited income that the county has will not be enough. Since Hawai’i is dependent on tourist, tourist return must be at its peak. More returns means more money. The county is a sitting duck. It has no money to spend. This goes far into the pocket books. The pay is the most important thing. Where is the pay coming from? This complicated issue stems from employment. Of which the county officials too are unemployed. This is due to the pandemic.


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