Lawmakers: TAT proposal won't make it

The Maui News
Sunday, April 19, 2009

By CHRIS HAMILTON, Staff Writer

HONOLULU - Mayor Charmaine Tavares and other Maui County officials have been bracing for a dreaded Legislative proposal that would skim $18 million from the county budget, but several lawmakers last week said they seriously doubt the measure will go through.

House Speaker Calvin Say of Oahu had introduced a bill that would withhold $100 million in transient accommodations taxes from the counties to help plug a $278 million state budget gap.

The state usually passes along to Maui County about 20 percent of the money it collects on occupied hotel rooms each year.

"I don't think anyone supports taking money away from counties," said Rep. Gil Keith-Agaran, D-Kahului. "Everyone who voted for it voted with reservations."

Rep. Angus McKelvey, D-West Maui, equated House Bill 1744 and its companion measure, Senate Bill 1111, to detonating an atomic bomb on Maui. It would decimate county grants to nonprofits, raise hotel rates, eliminate the county's ability to promote itself on the Mainland and most likely result in higher property taxes, McKelvey said.

"It's a bad bill," said Sen. Shan Tsutsui, D-Central Maui. "It will impact so many good programs negatively."

McKelvey said he expects enough neighbor island, and perhaps some nonurban Oahu lawmakers, to get together to block the proposal, which has broader support among Oahu delegates, who make up about 80 percent of the Legislature.

Reps. Mele Carroll, Joe Bertram and McKelvey voted against the hotel tax proposal. Some of the Maui County Senate and House lawmakers who voted "yes" said they only did so in order to be on the conference committee that negotiates the final biennium budget bill for the governor's signature by the end of the session May 7. Legislators who vote against a bill aren't included in conference committee discussions.

"I think there are enough no votes to kill it on the House side, but we'll see what happens in conference," McKelvey said.

Lawmakers have proffered a few alternatives to the hotel tax diversion. Those include adding a county-by-county transient accommodations surcharge of 5 percent, or creating a 1 percent retail sales tax for counties. Another proposal to raise the entire TAT by an undetermined percentage and distribute the excess to the counties, was expected to be discussed in conference committee Saturday afternoon.

The retail sales tax could raise $39 million for Maui County, said Sen. J. Kalani English, D-Upcountry, East Maui, Lanai, Molokai, Kahoolawe.

Maui County officials have said they would not be able to implement any of those alternatives in time to replace the TAT for fiscal year 2010, which starts July 1.

However, state legislators replied that the Senate version of the bill gives the counties an entire year before they would lose the hotel tax money.

"That makes it a tad more palatable, but we still don't like it," English said.

Rep. Kyle Yamashita, D-Upcountry, said another idea on the tablefor conference committee isto just withhold part of the TAT going to the counties.

"We just need options to work with," Yamashita said. "That's how the process works."

He said he worried that adding new taxes to solve the shortfalls would discourage an economic rebound.

Meanwhile, Maui County Council Chairman Danny Mateo and Tavares have been making the rounds at the Capitol to try and convince lawmakers not to use the transient accommodations tax. When Mateo stopped by the Legislature last week, he saidhearrivedon hisknees.

County officials last weeksaid they increasingly see the loss of the revenue as inevitable. Tavares' overall fiscal year 2010 budget is for $572.5 million, most of which is devoted to worker salaries and capital improvement projects.

Still, Sen. Roz Baker, D-West Maui, South Maui, said she wants the counties to keep the pressure on in the next couple weeks.

"I'm concerned about the nonprofits," Baker said. "And the condition of the parks. That's a major reason why we gave TAT (transient accommodations tax) to the counties in the first place in the 1990s. To help them care for the parks, which the state gave to the counties along with the TAT. The idea was that tourists use the parks as much, if not more, than locals."

* Chris Hamilton can be reached at chamilton@mauinews.com.

Original article URL: http://www.mauinews.com/page/content.detail/id/517429.html

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