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Hotel room tax bills jockey for position as deadline looms

The House Finance Committee has scheduled a hearing Tuesday morning on House Bill 1586, which would phase out the counties’ share of transient accommodations over a three-year period and implement new income tax brackets and rates.

The measure will be heard at 11 a.m. in Conference Room 308, along with about 20 other bills.

Maui County members of the panel include Upcountry Rep. Kyle Yamashita, the bill’s main sponsor, and Molokai-East Maui-Lanai Rep. Lynn DeCoite, another sponsor. Fifteen other members of the House signed the measure as sponsors.

Under the measure, the visitor accommodations tax revenue received by the counties would drop from the current $103 million to $93 million in fiscal 2017-18, $62 million for fiscal 2018-19, $31 million for fiscal 2019-20 and zero thereafter.

The House Tourism Committee recommended passage of the bill with amendments on Feb. 17.

Written testimony may be sent via fax to (800) 535-3859 or by going to ww.capitol.hawaii.gov/submittestimony.aspx.

To check the legislative broadcast schedule, go to www.capitoltv.org.

The House bill has been strongly opposed by Maui County officials and other counties statewide. They argue that taking away the counties’ share of the transient accommodations tax, also known as the hotel room tax, would unfairly shift the cost of providing fire, police, roads and other services used by visitors to residents, either by raising property taxes or cutting county spending.

Maui County Council Chairman Mike White told lawmakers in written testimony earlier this month that, over an eight-year period, the counties have incurred $170 million more in costs for visitor-related services without a corresponding increase in revenue.

In an announcement of the bill’s recommended passage in the Tourism Committee, Yamashita said the measure was aimed at protecting residents, especially low- and middle-income taxpayers, who pay too much state income tax. Meanwhile, nonresidents buy homes in Hawaii, the state with the nation’s lowest property tax rates, but they don’t pay income taxes, he said.

Among two related bills, Senate Bill 1290 would adjust the hotel room tax allocation to the counties to equal 45 percent.

White supported the Senate measure in written testimony.

“A formula-based policy allows distributions to the counties to increase as visitor numbers grow, without a need to change state law,” he said. “Further, a capped-distribution policy gives the wrong impression that returning TAT revenue to the counties is a kind of charitable donation that must be sought by the counties year after year. TAT revenues are not charity to the counties, but money owed to cover county costs associated with hosting tourists.”

The Senate bill was recommended for passage by the Senate’s Economic Development, Tourism and Technology; and Public Safety, Intergovernmental and Military Affairs committees on Feb. 15. They referred it to the Ways and Means Committee, which set a public decision-making meeting for 1:35 p.m. today in Conference Room 211.

Meanwhile, House Bill 317 also would have originally increased the counties’ share of the hotel room tax to 45 percent. But an amended version of the bill passed out by the Tourism Committee removes that provision. Now, the measure proposes allocating $2 million of the revenue to the Hawai’i Tourism Authority for homelessness initiatives in tourist and resort areas.

The bill was referred to the Finance Committee, but there was no scheduled hearing as of late Sunday afternoon.

Lawmakers have a March 9 deadline for bills originating in one chamber — the House or Senate — to “cross-over,” or pass a final reading and move to the other, non-originating body in the bicameral Legislature. Bills that don’t pass the juncture die this session.

* Brian Perry can be reached at bperry@mauinews.com.