StarBulletin.com

Counties need share of hotel room tax


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POSTED: Sunday, January 18, 2009

County mayors don't expect that state lawmakers will grant all of their funding requests when they go through the annual ritual of presenting their wish lists before the start of the legislative session.

This year shouldn't be any different. In fact, with the state's anticipated revenue shortfalls, legislators will be sorely tempted to dip into a pot usually distributed to municipal governments.

They should resist. The counties also have been hit hard by the economic downturn. Property taxes, their chief source of revenue, are decreasing as valuations drop, and raising tax rates will further burden residents and businesses.

The mayors presented no-frills requests, seeking small amounts mainly for transportation improvements and bills to aid agriculture and conservation. Their primary goal is to retain their shares of the hotel room tax. About 45 percent of the tax that totaled $229 million in the last fiscal year is distributed to counties. While the state controls tax authority, counties bear considerable responsibilities for sewer systems, roads, landfills and other basic public services that support resorts and hotels.

Counties also fund law enforcement and have routinely sought revenue from traffic tickets that don't involve the courts. However, the state lays claim to the money, arguing that it runs the court system.

It is also for that reason that the state has withheld about $28 million of a sales tax surcharge to pay for Oahu's rail transit system. The state collects the taxes, but its 10 percent administrative fee is more than the cost for the collection. Legislators should at least trim the fee to match the work.