Gov. David Ige has included on his list of 28 legislative measures for possible veto a bill taking away the counties’ share of the tax on hotel rooms and short-term rentals.
House Bill 862 would eliminate the current $103 million that’s divvied up among the four counties and replace it with an option for each county to add its own surcharge of up to 3%. The current tax, which also has earmarks for the Hawaii Tourism Authority, Honolulu rail project, Hawaii Convention Center and other state and local projects, is set at 10.25% of the room charge on hotels and short-term rentals of less than 180 days.
Hawaii County’s share, which was suspended this year, is $19.2 million.
Ige’s main concern with HB 862 is that it would take away what he believes is the only funding for HTA. The tourism authority is in the process of a “destination management” program that identifies areas of heavy tourist use on each island and takes measures to mitigate them.
“I’m very concerned the changes in this bill will severely damage HTA’s shift to destination management,” Ige said during a press conference announcing bills he may veto. “(It) identifies hot spots in each and every county and takes measures to relieve the stress of residents and visitors alike so we can coexist in these islands.”
Ige said he’d work with the Legislature so new legislation could be passed, probably in a special session, to ensure HTA is funded. The counties won’t have to worry that HTA funding could come at their expense, he said.
“I would not be looking to take funds from the counties at this time to make up HTA. … Current law would remain in place,” Ige said. “I have been working with all the mayors as we’ve been defining the states financial plans.”
Mayor Mitch Roth said he’s pleased the governor is considering a veto.
“I’ve been very vocal asking that he does veto that bill,” Roth said. “If you raise that tax you’re preventing our local families from having a vacation as well, preventing people on the other islands from coming here, we’re pricing ourselves out of the staycation and it makes it very difficult for our local families to have a vacation.”
Puna Councilman Matt Kanealii-Kleinfelder, chairman of the County Council Finance Committee, said a local-option transient accommodations tax might not be a bad thing. If HB 862 ultimately passes, the County Council would be the ones creating such a tax.
“Given the impact of the tourism industry on our island’s finite resources, a county TAT if passed would greatly alleviate some of the tax burden on Hawaii County residents,” Kanealii-Kleinfelder said.
Council Chairwoman Maile David, of South Kona/Ka‘u, said there’s no simple answer, if the bill were to become law.
“If passed, HB 862 would place counties between a rock and a hard place,” David said. “This increase would greatly impact our hotel and accommodation providers, not to mention unintended consequences. If Hawaii County wishes to consider this proposal, great care must be exercised in figuring out whether or not to move forward at all, how to move forward, and the impacts upon Hawaii County under both scenarios.”
Announcing the list Monday, Ige said 28 potential vetoes out of 268 bills passed by the 2021 Legislature might seem like a lot, but the state’s budget situation changed because the tourism economy recovered faster than projected and federal guidance on the allowable uses of recovery funds came after the Legislature adjourned its regular session April 29.
Other bills include those using federal stimulus money to replenish the state’s rainy day fund, pay for debt service and for teacher bonuses. A bill raiding the tobacco trust fund is also on the list, as is one that would require schools to report the number of positive coronavirus cases on their campus.
All measures on the list are subject to veto, but inclusion on the list does not indicate the governor will veto a bill. The public can make comments on legislation at: https://governor.hawaii.gov/contact-us/comments-on-legislation/. Ige has until July 6 to make his final decisions. Any measures passed by the Legislature this session that are not on this list will become law with or without Ige’s signature.