This commentary is in response to the West Hawaii Today’s Feb. 16 front page headline article concerning House Bill 1586 “Lower taxes for lower income – Legislators looking to shake up tax structures; opponents say it would hurt counties,” which would completely eliminate the county’s allocation of the Transient Accommodation Tax (TAT) revenues. The TAT revenue is the counties’ second highest source of income after property taxes and is collected from visitors on rental car use, hotel stays and other short-term rentals.
I am shocked that two of our Hawaii County State House legislators – Richard Onishi and Nicole Lowen — are among the introducers and supporters of this legislation. Hawaii County currently receives about $19 million in TAT revenue and spends about $31 million on visitor impacts. Their pitch in support of eliminating the county’s share of the TAT is that the county should raise its property taxes to cover the costly impact of the visitors on county facilities and services – from police and fire department services to lifeguards to solid waste and county water services.
How can these legislators justify turning their backs on the real property owners of this county? Every Hawaii County property owner should contact their state legislators in opposition to HB 1586. The bill is now headed to the House Finance Committee, of which Nicole Lowen is a member. Likewise our House Floor Leader, Big Island Rep. Cindy Evans, should be contacted to do her part to stop HB1586. And further, we need to contact Sen. Lorraine Inouye and Kai Kahele’s to stop this bill – because they are on the Senate Ways and Means Committee, and this legislation needs to be passed by that committee in order to become law.
As reporter Max Dible pointed out, the sponsors of Bill 1586 cleverly tied eliminating the counties’ allocation of the TAT with an attractive smokescreen provision that would lower some lower income tax rates. If that maneuver was supposed to blind real property taxpayers from the outrageous TAT related provisions in the bill, the maneuver failed. And, if a legitimate intent of these legislators is to reduce the portion of income taxes paid by those in the lower brackets, there are other bills now pending that aim to raise taxes on those in the upper income brackets, to which a proposal for lower taxes for lower incomes could be attached.
Be mindful that it was the State Revenue Commission that originally recommended the TAT revenues should go to the counties (with 95 percent of the revenues originally distributed to the counties), and that General Excise Tax revenues should go to the state – as GET taxes are largely borne by residents and resident-related services are largely borne by the state.
In 2008, state legislators significantly increased the state’s proportionate allocation of the TAT revenues, combined with a promise to the counties that when the economy rebounded, the counties’ full share would be reinstated. It did not happen, and last I checked the state already increased its allocation by 2,000 percent while the counties’ portion only increased by 2 percent.
Then last session, state legislators set up a State-County Working Group (paid for out of the counties’ portion of the revenues) to assess the reasonable allocation of TAT revenues between the state and counties. The Working Group recommended the counties receive 45 percent of the TAT revenues. You guessed it! That recommendation was ignored. State legislators simply want the counties’ real property owners to pay for the cost of visitor impacts, while the state collects and retains all of the tax paid by visitors to cover these costs.
It is time our state legislators – starting with Richard Onishi and Nicole Lowen, be held accountable for their actions and not treat us real property owner constituents with such disregard.
Margaret Wille is a Waimea resident and former member of Hawaii County Council