Changes to bills
let state take Honolulu’s
share of hotel tax

The city and county could levy
a tax to recoup the loss

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By Pat Omandam
pomandam@starbulletin.com

The City and County of Honolulu could impose up to a 1 percent sales tax if the state can use its $31 million share of the hotel room tax to cope with a projected shortfall in the state budget.

Legislature Directory Legislature Bills & Hawaii Revised Statutes

The measure initially gave Hawaii counties with a population of more than 200,000 the authority to levy an unspecified general excise and use tax surcharge in lieu of their share of the state transient accommodations or hotel room tax.

The other counties would then get a larger share of the hotel room tax by dividing up what Honolulu gives up. All four counties supported the measure.

But Senate Ways and Means Chairman Brian Taniguchi (D, Manoa) said yesterday that Senate leadership needs "a good portion" of that money to offset the estimated $67 million shortfall in the proposed 2004-2005 state budget.

The counties, he said, would get a little more but not most of it.

"We're probably looking to take some of the $31 million, a good portion of it, and put it back in the general fund," Taniguchi said. "That's how I would look at it."

The Senate Tourism and Transportation, Military Affairs and Government Operations committees recommended the amendments to House Bill 1554 HD1, SD1, yesterday after testimony from the counties and others on the excise and use-tax idea.

The bill, as it stands now, allows the city to impose up to a 1 percent sales tax, with 5 percent of that revenue dedicated toward administration of the tax.

The bill goes to the Senate Ways and Means Committee for consideration.

Gary Okino, City Council chairman, said in his written testimony that all counties are struggling to find the revenue needed to maintain basic services.

Passage of the bill gives the city "an additional tool" to deal with this problem, he said.

Danny Agsalog, Maui budget director, added while Maui is one of the strongest counties financially, many programs cannot be funded because of a lack of revenue.

Agsalog said the bill would not completely solve this problem, but it allows the county to mitigate the situation.

But Bill Ramsey, a member of the legislative committee for the Hawaii Association of Realtors, said the group opposed the bill because it would basically result in a tax increase to the public.

The city would have to at least make up its loss of $31 million in hotel room tax revenue, he said.

"This is a tax increase," Ramsey said.

The Chamber of Commerce of Hawaii also opposed the measure, saying the time has come for government expansion to be curtailed to a level that its citizens can reasonably be expected to support.

"The chamber opposes any increase in existing tax rates, imposition of new taxes or repeal of an income tax rollback," said Jim Tollefson, chamber president.