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Ige plans to veto TAT bill

Lawmakers don’t want to see county lose its share of lodging tax

Gov. David Ige appears at a news conference Monday to discuss his intent to veto 28 of 268 bills passed during the recent legislative session. The Maui News / COLLEEN UECHI photo

Gov. David Ige on Monday announced his plans to veto a bill that would take away the counties’ share of the visitor lodging tax and create more oversight for Hawaii Tourism Authority funding.

House Bill 862 would eliminate the $79 million special fund that the Hawaii Tourism Authority receives every year and instead allocate the agency $60 million under the federal government’s American Rescue Plan Act.

The measure would also repeal the transient accommodations tax allocation to the counties while allowing them to levy an additional surcharge, which Mayor Michael Victorino had said he was considering to make up for the lost funding.

Maui County receives $23.5 million of the $103 million doled out to the counties from transient accommodations taxes.

Ige said the bill would make “significant changes to funding and functional operations of the Hawaii Tourism Authority and the disposition of the transient accommodations tax.”

“I’m very concerned that the changes in this bill will severely damage HTA’s shift to destination management,” Ige said during a news conference on Monday afternoon. “We have heard loud and clear that our community is concerned, and it’s not about attracting more visitors; it’s about managing those who we invite to come.”

Because HB 862 is the only funding bill for the Hawaii Tourism Authority, Ige said the state would look to fill the gap in some way but didn’t plan to take from the counties.

“I would not be looking to take funds from the counties at this point in time in order to make up for the funding for HTA,” Ige said. “If the veto on House Bill 862 is sustained, then the current law that exists would remain in place, which means that the counties would get about $103 million from TAT. And so I have been working with all the mayors as we’ve been defining the state’s financial plan, and we have been in communication with the counties throughout this process.”

Victorino, who disagreed with lawmakers after they passed the bill in April and said he was mulling an additional surcharge of up to 3 percent on the existing 10.25 percent tax, said Monday that he understood Ige’s reasons for wanting to veto it.

“My main concern has always been for Maui County’s taxpayers,” Victorino said. “They should not be burdened by the costs of providing infrastructure and services used by visitors without appropriate and sufficient compensation.”

Maui’s state lawmakers, meanwhile, had mixed feelings, saying that they didn’t want to see the county lose its TAT funding but liked the increased oversight that the bill would provide.

“I am glad that the governor is considering veto of that bill,” said Rep. Tina Wildberger, whose district covers South Maui. “Really don’t like the fact that sister counties’ TAT revenue was completely removed when especially Maui County, Lahaina and the south side generate 30 percent of the TAT revenue in the state for 2019 numbers. And we are currently bearing a disproportional burden of travelers here.”

Wildberger called the measure a “Franken-bill” and said she had initially supported it when it focused on relocating aerospace programs but was “very surprised to see its final iteration.”

“I have mixed feelings about it,” said Wildberger, who ultimately voted against it. “Hate to see the county lose its TAT funding but OK to see HTA given some tightening of its leash and oversight.”

Rep. Angus McKelvey, whose district includes West Maui and part of South Maui, also said he supported more oversight for the tourism authority, pointing out that if the agency received $60 million under the American Rescue Plan, it would have to be accountable to both the state and the federal government.

“You have two layers of oversight — us and the federal government, and it’s only for one year,” he explained. “They will have to come back to the Legislature next year to justify all of their programs, otherwise they will get a big fat goose egg — zero, nothing.”

However, he voted against the bill, as he didn’t want to see Maui County lose its TAT share.

“My whole thing is, why can’t we get the allocation of the monies coming in from the TAT rather than having to add another surcharge to get the monies from all that activity?” he said.

McKelvey pointed out that nothing is set in stone; the governor still has until July 6 to make his final decisions.

Ige is looking to veto 28 out of the 268 bills that were passed during the legislative session, including House Bill 613, which sought to appropriate federal funds from the Coronavirus Response and Relief Supplemental Appropriation and the American Rescue Plan Act for education-related services. It also would have included $2,000 bonuses for teachers, Ige said. The governor explained that the bill did not comply with the U.S. Department of Education’s guidance on how the funds need to be used. He added that the state concluded negotiations with the teachers’ union and will not be providing bonuses at this time.

The potential bonus had been celebrated by the Hawaii State Teachers Association that said it would help address a shortage of educators but criticized by the Hawaii Government Employees Association who felt it wouldn’t be fair to other state workers.

Some of the bills Ige wants to veto are budget related, given that “the state’s economic position has significantly brightened” amid a surge in visitors and an infusion of federal aid. The Council on Revenues also recently increased its general fund revenue projections for fiscal years 2021 through 2027 by a total of $6.1 billion.

“This is a significant difference from when the Legislature made the tough decisions to manage the state budget and arrive at a spending plan,” Ige said. “Because of this, we definitely no longer need some of the extraordinary measures that have been proposed.”

Ige also reasoned that federal guidance that came out after the session ended also prohibits some of the budget items and bills that lawmakers passed, including provisions that use rescue funds for the debt service and to replenish the state’s rainy day fund. He acknowledged that this could create some gaps in the budget that would need to be filled.

Sen. Gil Keith-Agaran, who represents Central Maui and is the vice chairman of the Senate Ways and Means Committee, said that lawmakers are reviewing the 28 bills and Ige’s rationale. July 6 is the deadline for the Legislature to decide whether it disagrees with the governor.

“For any of the bills, he does have the option to present an amended bill that we can consider on July 6th to approve by majority vote,” Keith-Agaran said. “That might be the best option for the budget gaps created by his state budget line item vetoes of the debt service funding. Otherwise, his objections would need to be addressed in a special session or next January in a new session.”

* Colleen Uechi can be reached at cuechi@mauinews.com.

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