Hawaii's mayors are beginning to feel the pressure to balance their county budgets by protecting their hotel room tax from a state raid while avoiding increases in sales tax, property taxes or various fees. Transfer of revenue from the hotel tax is the state's shell game to avoid direct tax hikes, leaving belt-tightening as its primary alternative while subjecting county mayors and councils to public ire.

Some state legislators tried in last year's session to strip away the nearly $100 million revenue from the room tax—the transient accommodations tax, or TAT—that goes to the counties. Gov. Linda Lingle, a former Maui mayor, opposed the transfer in last year's session but now supports it as a way to increase state revenue without leaving her fingerprints on tax increases.

Honolulu Mayor Mufi Hannemann has joined his three neighbor island colleagues in pleading with state legislators not to touch their hotel tax revenue.

“;This TAT is not a grant-in-aid to the counties—it's our fair share,”; Big Island Mayor Billy Kenoi said emphatically to legislative money leaders, and he is right; the counties have relied upon the revenue.

Hannemann initiated numerous fee increases a year ago and now says he is content with those. He told the legislators he would rather use existing revenue sources rather than ask for more taxing power, such as an additional general excise tax surcharge suggested by the lawmakers.

Sen. Donna Mercado Kim and Russell Kokubun have suggested that counties could impose a half-percent excise surcharge to make up for the loss of hotel tax revenues. Kenoi and Maui Mayor Charmaine Tavares seem to be entertaining the idea. However, Honolulu taxpayers already are paying a tax surcharge for the important rail transit construction and are in no mood for an additional increase.

“;I've managed my budget that way,”; Hannemann told the legislators. “;I will make up this shortfall that way as opposed to being very quick to embrace a new tax.”;

Hannemann said three months ago that he would sign a two-year labor contract with the Hawaii Government Employees Association, with the option of using days without pay—furlough days—with city employees.

“;We will definitely use furloughs”; in the coming fiscal year, he said.

Lingle has been correct in warning against tax increases during a recession, but her suggestion to raid county hotel tax funds would force counties to do just that. Such a move eventually would put both county and state governments onto a slippery slope of appeasing public employees who insist they should be immune from economic conditions.