County tapping into reserves to cover TAT

LIHU‘E — Since March 2020, the county has tapped into at least 40% of its reserve fund.

Since the onslaught of the pandemic until now, the state has withheld the county’s share of the Transient Accommodation Tax, which is usually about $14.9 million per year for Kaua‘i. And since last March, that’s amounted to a $17.4 million hole the county has had to plug.

As of June 30, 2020, the county had about $50 million in the reserve fund balance, according to officials.

During this current FY21, the county allocated funds from the reserve to fully cover the money it typically gets from the state in hotel tax funds.

Earlier this month, the Kaua‘i County Council passed the fiscal year 2022 budget, which runs from July 1 to June 30, 2022, which also tapped into the reserve for another $14.9 million in anticipation that the state will continue to withhold that money.

Combined, that’s $29.8 million.

One of the most contentious bills Gov. David Ige intends to veto is House Bill 862, which would eliminate the $103 million county cut of revenue from the TAT and allow county governments to up its own hotel tax charge of up to 3% over the next decade.

The bill would have also cut funding for the Hawai‘i Tourism Authority by about $19 million, and used funds from the American Rescue Plan Act.

Mayor Derek Kawakami said this bill put the county and HTA in an “awkward position to be competing against each other when in fact, we work closely together.”

“We are appreciative to Gov. Ige for his thoughtful consideration of this particular measure, which would have cut TAT appropriations to the counties and instead allow imposition of our own TAT on tourists,” Kawakami said. “I will always advocate for home rule and be in favor of the counties having control of their own destinies. However, I also understand there are other consequences tied to this bill unrelated to TAT.”

Should HB 862 move forward, the county would be in charge of administering the tax, which it currently does not have the infrastructure to implement. However, per every one percent increase, the county would see about $6 million, according to a previously reported projection.

“HTA and the counties should have never been included in the same bill because what it was asking from each of us forced us to be against each other. What we need right now is to bring people together,” Kawakami said. “Now more than ever we are seeing the need to better manage our tourism industry and we need our Tourism Authority to be a big part of that effort.”

The county’s reserve cannot sustain funding the shortfall in the future.

“Due to HB 862 and the possible loss of our county’s share of Transient Accommodations Tax, we were forced to utilize funds from our reserve to fill the potential void of approximately $14.9 million in this year’s budget,” County Council Chair Arryl Kaneshiro said. “Moving forward it will be imperative for the county to find an alternative way to cover this loss and prevent a catastrophic depletion of our reserve fund. The most likely solution would be in the form of a county-designated TAT tax in addition to the tax already collected by the state.”

Kaneshiro said that if the veto does go through and the share of TAT comes through, it will go into the county’s savings.

“I have all intention of making sure the budgeted money goes back into the reserve,” Kaneshiro said.

Meanwhile, the county continues to lobby for the unreleased TAT funds.

“As for TAT, we will continue to work with our state partners to have a more predictable source of collecting revenues from our visitors for their impacts to our island, so that we can maintain our roads, parks, and public spaces for our local residents,” Kawakami said.

  1. RGLadder37 June 24, 2021 7:38 am Reply

    HTA is cutting funds. We don’t really need tourist. We don’t really need Walmart to be open. Or the travel car rentals to be open. Or even Kentucky Fried chicken to be open.

    This takes a lot out of the economy.
    The rich get richer. Others are left out. Can the county recover?

    1. Reality Bites June 26, 2021 3:44 am Reply

      “We don’t really need tourist”

      That is the funniest thing I’ve heard this month. Really? This island produces nothing….Where do you think the 70K residents will work? Oh, yea,…..on the Government dole, kicking back on the beach, fishing, and surfing. Got it Millennial.

  2. Westside Resident June 24, 2021 8:55 am Reply

    If you keep voting for the same, you’ll get more of the same.

    The Democratic Party is centralizing control and dismantling the Republic.
    Don’t believe their lies about Republicanism and Nationalism.

    If you want the TAT money to stay nearby where it is generated, stop voting for Democrats who will take the money, centralize it, then redistribute the money. This is how they become powerful and rich.

    There is nothing wrong with wealth, but when the Democratic Party tries to paint a picture that the rich are the Republican Party members, think again. The redistribution of money, your TAT, is to enhance the Democratic Party’s grip, enhancing their power, and thereby enhancing their individual wealth.

  3. therealhawaiian June 24, 2021 9:45 am Reply

    Then quit allowing our “Tourism Authority” to spend millions of dollars in ads, and other schemes, to “sell” Kauai in an effort to increase tourism!! You’re caught in a conundrum of get more tourists to make more immediate money, then build more houses because they all want to live here, which will result in destroying the beauty that God gave Kauai and the efforts of our ancestors who left us Paradise, as a result! Tourism should be kept at a minimum and we need to find other ways for our ‘aina to work, grow, and thrive!

    1. Reality Bites June 26, 2021 3:32 am Reply

      Um, Ok, I’ll play……..Hawaii produces nothing. What industries do we transition to?? Do you think GM, IBM, Tesla is going to build a plant on the island? You would cry if they started leveling acres on the West Side for high paying jobs. “The Environment, the environment !!……Keep Kauai the way it was in the 1960s…..where will all the people live?……This will impact Marine life off of Kauai!”.

      “God gave Kauai”……maybe……just be honest, you want to live in the past, and live off the Government freebies, and just chill on the beach.

  4. randy kansas June 25, 2021 10:55 am Reply

    hahahaha, without federal bailouts and rich property owners paying all the land tax…we would even be more broke…vacation rental owners should also stop paying the higher “business property” tax rates, if not allowed to operate or if we do not need them…lets cut out of of the folks that pay all the tax and see where that gets us……

  5. kimo June 25, 2021 3:42 pm Reply

    amen realhawaiian, amen

  6. I saw a Vampire once June 26, 2021 4:03 pm Reply

    Actually there’s not going to be any tourist coming to Kaua’i. Pretty slow. No need to worry about any coronavirus. Just because tourist won’t be coming to Kaua’i. If they do, the airports will ruin there stay by checking to see if they got cancer also along with a coronavirus check. This is too unreal how they are handling everything at the airport in Lihue.

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