Ka‘ū News Briefs, Tuesday, July 6, 2021

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BY OVERRIDING GOV. DAVID IGE'S VETO, HAWAI`I LEGISLATORS TODAY TOOK AWAY MONEY FROM THE COUNTIES that is usually collected through the Transient Accommodations Taxes. They gave it all to the state, but will allow the counties to recoup the funding by tacking on an additional Transient Accommodations Tax of up to 3 percent of the cost of an accommodation.
    The current Transient Accommodations Tax on rooms in hotels, B&Bs, inns and vacation rentals is 10.25 percent on this island. Combined with the General Excise tax of 4.5 percent, the tax on any accommodation is 14.75 percent. If the county approves a 3 percent hike, the tax to rent an  accommodation will go to 17.75 percent.

Image from Destination Maui

    Mayor Mitch Roth said earlier he opposes the legislation that takes away the county's estimated $19 million share of the TAT and puts it all in state coffers but lets the county implement an additional tax. He said that a hike in the tax by the county would reduce the ability of local residents to take staycations affordably and could event price them out of taking a vacation in this state. The O'ahu mayor supports the tax hike. Kaua'i and Maui mayors were neutral but are expected to approve the hike now that the TAT money is taken from them. The Hawai'i Lodging & Tourism Association, led by former 
Honolulu Mayor Mufi Hannemann, opposed the measure that would lead to higher taxes on acommodations.
    The rationale behind the TAT money being shared with the counties was that counties are responsible for many facilities and services used by visitors, including neighborhood and beach parks, lifeguard, ocean and hiking rescue operations, maintenance of roads traveled by tourists and the police department for safety and managing tourism traffic.
    By overriding the governor's veto, the legislators also enacted a 24 percent cut in the Hawai`i Tourism Authority's budget and allow the state Department of Land & Natural Resources to charge for ocean recreation.
    In his veto message today, before the Legislature succeeded in overriding the governor's veto of HB862, Ige said, "the counties would be unable to administer the new county TAT tax because the bill does not provide for how it is to be levied, assessed, and collected." The governor contended that "it is inefficient to create an entirely new set of tax collection systems for each county. Previously, the Legislature granted the state the authority to assist the counties with tax collection administration, such as county surcharges. The Legislature did not grant the state this authority in this bill."

    He said he also vetoed the bill with "concerns that the measure will severely damage Hawai'i Tourism Authority's ability to refocus its efforts beyond marketing, to destination management." Said Ige, "Now more than ever, we need to strike a more sustainable balance with respect to tourism's impact on our communities across the state."
    He also said the Hawai'i Convention Center will be put at risk and that "the lack of special fund appropriation makes it impossible to re-establish convention activity in Hawai'i. This is vital to developing a more sustainable tourist industry based on quality, not quantity of visitors. The bill does not allow for long-term planning and the execution of a strategic plan for the operations of the Hawai'i Tourism Authority and the Hawai'i Convention Center."

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TWENTY-SIX BILLS PASSED BY THE 2021 HAWAI`I LEGISLATURE WERE VETOED today by Gov. David Ige, including (read above) a bill concerning the Transient Accommodations Tax and Hawai'i Tourism Authority, which the Legislature today managed to override. The governor made the announcement sending a Statement of Objections for each of the bills he vetoed to the Hawai'i State Legislature, as required by the State Constitution.
    "There are more bills than usual on the list this year, for two pandemic-related reasons, and the Legislature had no control over the timing of either," said the governor.
    He said the first reason for some bills no longer being needed is that the state's economic position is much brighter than it was at the start of this year's legislative session, and federal COVID-19 relief funds have significantly helped the state address pandemic relief efforts. Also, the return of visitors to  of Hawai'i led the Council on Revenues to increase its general fund revenue projections by $6.1 billion over a seven-year period.
    "This means we no longer need to take some of the extraordinary revenue actions that were proposed this legislative session," said Ige.
     The second reason some bills are not needed, said the governor, is that the state did not receive the U.S. Treasury guidance regarding allowable uses of the federal rescue funding until after the legislative session ended on April 29.
    "To comply with the Treasury's guidance, I am forced to veto several bills, leaving a gap in the state's budget that must be addressed," said the governor. "I will be working with the House and Senate to resolve this issue. It is critical that we forge an agreement -- otherwise, we will be unable to move forward with the new CIP projects that were included in HB200 – Relating to the State Budget.
      HB53 – Relating to State Bonds and HB54 – Relating to the State Budget, plus two line-items in HB200 were vetoed because they appropriated federal relief funds for uses that were subsequently prohibited by U.S. Treasury Guidance, said the governor.
      HB613 – Relating to Education was vetoed because of concerns about compliance with federal guidelines for spending rescue funds. Hawai'i is the only state in the country with a state education agency that is also a local education agency. According to guidance issued by the U.S. Department of Education, state legislatures do not have the ability to limit a local education agency's use of funds appropriated through the CARES Act or ARPA. "For this reason, I have vetoed HB613. We cannot risk having to pay money back to the federal government," Gov. Ige said.     The governor said he also vetoed other bills because of concerns about policy and implementation.
    SB811 – Relating to the Department of Education, a bill for COVID-19 Testing in Public Schools is vetoed because the Department of Education and the Department of Health have already established protocols to report cases, notify contacts and prevent transmission in Hawai'i's public schools. The measure would increase the potential for individuals to be identified and bullied, especially students who live in small communities.   
     Not vetoed was HB817 – Relating to Agriculture, it was taken off the veto list and signed into law on Friday, July 2. The initial concerns included budget costs and operational impacts for some state departments. "However, it was determined that the bill would help create demand for local food products, which supports Gov. Ige's goal of doubling local food production across the state," said a statement from the governor's office.