Originally, the county’s new 3 percent transient accommodations tax was set to go into effect on Friday, when the council was set to take its second and final vote to establish the law.

Visitor industry leaders earlier this year urged against the county imposing a 3 percent surcharge, saying that properties are trying to recover from the pandemic. Most of the arguments Friday, especially from small accommodations, asked to push back the implementation date.

“When thinking of the TAT we often think of large resorts, but this tax would apply to all tourism visitor accommodations, including the many vacation rentals and bed and breakfasts we have heard from, as well as small hotels like in Hana and on Molokai,” said Chairwoman Keani Rawlins-Fernandez, whose budget committee vetted the bill.

“While I have no doubt that the larger resorts with membership to the Maui Hotel and Lodging Association have been following this issue from its inception at the Legislature, I’m not confident that all accommodations, especially smaller ones, have had sufficient notice.”

She added she put herself in “the shoes” of those impacted by the tax and that she would be pretty upset if she were a hotel guest and had been asked to pay the new tax that had just been imposed on Friday.

If the tax is not collected from the guests, then the accommodation would have to absorb the costs, she added.

Council Member Yuki Lei Sugimura also supported pushing back the date to Nov. 1, “which would give people time to plan.” She said that members have heard from many small businesses who needed more time to implement the new law, and, unlike larger accommodations, don’t have as much staff or accounting departments to assist.

“You heard the voices of the people,” Sugimura told Rawlins-Fernandez. “I think it allows businesses to react more in line of a business and not like, ‘crazy, Oct. 1, we are going to start, we are going to do this.'”

With the bill passed, a 3 percent transient accommodations tax is established on all gross rental, gross rental proceeds and fair market rental value considered taxable under a section of Hawaii law.

The council voted 7-0 to approve the measure with Council Members Tasha Kama and Kelly King absent and excused.

Mayor Michael Victorino said at his news conference on Friday that he expects to sign the bill possibly on Tuesday. He said the county did not want to have to enact the tax but was forced to do so to help pay for visitor services.

Historically, TAT was collected from hotels and other lodgings that host guests for fewer than 180 days and then distributed among the counties and the state to fund things such as state parks and train maintenance and marketing for the Hawaii Tourism Authority, with the remainder going to the state general fund.

However, in its latest session, the state Legislature took away the counties’ share of visitor lodging taxes. In the past, Maui County’s annual share of the transient accommodations tax was around $23.5 million of the $103 million in TAT distributed to the counties.

As the Legislature took the TAT away, it also authorized the counties to establish their own surcharge of up to 3 percent in addition to the existing 10.25 percent rate the state charges for visitor lodgings.

The Legislature this year also changed the way the Hawaii Tourism Authority is funded.

Maui County’s revenue from its new tax for this year will go toward affordable housing, open space, cultural programs, and tourism management and enforcement, Rawlins-Fernandez said.

At the county news conference Friday afternoon, she added that the county expects to generate around $15 million from the new tax in the current fiscal year.

In anticipation of the new tax, Rawlins-Fernandez said the council also passed on first reading a bill to increase anticipated revenue for the Open Space, Natural Resources, Cultural Resources and Scenic View Preservation Fund; the Affordable Housing Fund; and the Economic Development and Cultural Programs Revolving Fund.

Kauai County recently passed a bill to add its own 3 percent surcharge to make up for the lost TAT.

The majority of people testifying on the TAT bill Friday asked that the collection period be pushed back even as far off as January.

Angela Vento, general manger at Wailea Beach Resort, asked that the tax take effect beginning in December to allow for implementation and a chance to notify future visitors.

She added that the resort of 550 employees was just getting back on track in welcoming back its staff. While Wailea Beach Resort and other properties “had a tremendous summer,” occupancy among 81 hotels in Maui County is still lagging from 2019, said Vento, who is also the new chairperson of the Maui Hotel and Lodging Association.

She said occupancy for 2019 was 77.8 percent, and 2021’s occupancy currently is running at 58 percent.

She estimated her property was $15 million to $20 million off from 2019.

Emergency rules, along with Gov. David Ige’s announcement in August asking residents and visitors to delay all nonessential travel to and from the islands, have also impacted business, Vento added.

Lisa Bryant, who works at Rentals Maui Inc., a vacation rental company, also asked that the start date for the tax be moved to November or December to allow companies time to adjust.

She was also concerned about how the law would affect those who have already booked ahead as well as any discrepancies that could arise between state and county tax reporting as the new law is put into place.

Citing the state provisions, Rawlins-Fernandez said during the meeting that if bookings have already been paid in full and if the accommodation does not have a disclaimer or a legal way to add the new 3 percent tax, then the new tax does not need to be applied.

But if a booking is not paid and full and the accommodation has a way to add the 3 percent tax, then it must do so.

In a statement to The Maui News Friday afternoon, Mufi Hannemann, president and CEO of the Hawai’i Lodging & Tourism Association, maintained that while they oppose any new tax or fee that will increase the overall cost of travel to Hawaii while businesses are still struggling to bring associates back to work and trying to recoup losses, they recognize that Maui County is determined to enact the surcharge.

“Therefore, we strongly urge that the funds generated by the surcharge be spent on addressing specific tourism-related issues and challenges through a transparent and open process,” Hannemann said. “The last thing that we want to see is monies placed into the general fund to balance the budget.”

Maui County Finance Director Scott Teruya said after the meeting that the state will continue to take in the financial reporting from the visitor accommodations and collect its existing 10.25 percent, with the businesses separately remitting monies owed to the county under the 3 percent tax.

He said no elaborate systems need to be in place and the county has an account to accept the funds.

More information about the tax will also be posted on the county website soon, he added.

* Melissa Tanji can be reached at mtanji@mauinews.com.