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June 17 – Mayor Rick Blangiardi on Wednesday announced his support for a measure awaiting the signing of Governor David Ige that would allow the city to collect its own 3% temporary housing tax to reclaim state funds that the measure withdraws the counties.
The state currently shares approximately $ 103 million of the funds raised through the 10.25% tax on the tourism industry with each of the counties. Oahu will receive 44% of that amount, which is roughly $ 45 million.
House Bill 862, however, would remove these state funds from the counties but allow them to levy an additional 3% hotel room tax.
Blangiardi was in favor of the measure, which Ige has yet to sign.
“As mayor, it is my responsibility to ensure that the city has the necessary financial resources to maintain the city’s core services and meet the needs of residents and visitors alike,” he said in a written statement.
“I support HB 862 as it gives the city the opportunity to restore a lost revenue base – so that we can continue our services to our employees.”
The temporary lodging tax should help counties pay for tourism-related expenses such as lifeguards, infrastructure maintenance, and police. Due to the pandemic, the city will operate with no TAT revenue throughout fiscal year 2021, which began July 1, 2020 and ends June 30.
If the measure goes into effect and the city imposes its own 3% hotel tax, it would bring in around $ 48 million, according to state calculations.
According to the same projections, only Maui County and Honolulu would see an immediate increase in funding from the introduction of the new 3% tax and would no longer receive their portion of the state tax. Maui Mayor Michael Victorino has also spoken out in favor of the law.
It would take Hawaii County through fiscal 2025 and Kauai County through fiscal 2024 to see any increase. That said, if Ige signed the law and all counties were able to get their own 3% hotel tax in place, Hawaii Counties and Kauai Counties would in fact see funding reductions for several years.
However, the state believes these projections are likely to be low because they are based on the Council on Revenues forecast for visitor arrivals, which is lower than what Hawaii is currently experiencing.
It’s unclear whether counties could use funds from the federal rescue plan bill to compensate for lost revenue if the move becomes law. The official guide to using ARPA funds states that the federal dollars cannot be used to replace lost revenue due to laws passed after March 3.
In order for Oahu to introduce its own 3% hotel tax, it would have to be approved by both the city council and the mayor.
Ige must inform state lawmakers on Monday of the bills it intends to veto.
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