Faced with a May 5 deadline to present his final budget proposal to the Hawaii County Council, Mayor Billy Kenoi said Thursday he’s crafting a spending plan that doesn’t take any increases in the county’s share of the hotel tax into account.
The state Legislature is taking negotiations on the tax issue right to the wire, with a 10 a.m. conference committee planned today that may or may not come up with an agreement. The legislative conference committees hope to have a budget resolved by the end of the day, with next week’s end of the 60-day legislative session looming.
“We’re working within our budget without factoring in any increases,” Kenoi said. “We’re working with what we know.”
Still, Kenoi said, he’s remaining “hopeful and optimistic” the Legislature will see fit to return some of the county’s share of the tax that it capped in 2010.
Kenoi was in Honolulu on Wednesday meeting with state legislators and fellow mayors, trying to work out an agreement that sends more of the money to the counties. He may have to return today, he said.
The transient accommodations tax, known as the TAT, is collected as a surcharge on hotels and lodging rentals of less than 180 days. It comes primarily from island visitors.
Removing the cap would make a big difference in the county’s $412.6 million budget.
In the 2012-13 fiscal year, Hawaii County generated $40.1 million in TAT and received $17.3 million back. Without the cap, the county would have received $30.7 million.
House Bill 1671, championed by House Speaker Joseph Souki, a Maui Democrat, would have removed the cap, allowing the four counties to share 44.8 percent of the revenues collected, with Honolulu receiving 44.1 percent, Maui receiving 22.8 percent, Hawaii County receiving 18.6 percent and Kauai receiving 14.5 percent.
But the bill faced opposition in the Senate, which is concerned about recent downgrades in the state’s revenue forecast. The state may need that money in its own budget, the Senate said.
A compromise was offered Wednesday by House negotiators that would phase in a lifting of the cap, giving the counties 33 percent starting July 1, 37 percent in 2015, 41 percent in 2016 and 44.8 percent in 2017. Sen. Gilbert Kahele, D-Hilo, Puna, Ka‘u, has said he would consider that compromise, according to Honolulu Civil Beat. Kahele did not return a telephone call by press time Thursday.
The county budget currently under consideration by the County Council is an $18.3 million increase over last year. But $18.4 million is slated for employee wages.
Kenoi said no specific programs or services have been cut to make up the difference. Still, having an additional $13 million or so in TAT would help keep those programs intact.
Kenoi said belt-tightening in the county’s recent lean years has put the government in a solid fiscal position. Rising property values, coupled with tax hikes in the 10 percent range last year, already added about $13 million to property tax revenues, a 5.9 percent increase.
“We don’t believe our programs and services will suffer,” Kenoi said. “But certainly, if there was an increase, we could improve programs and services.”