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Gov. Ige Plans to Veto Hotel Tax System Overhaul, Some Pandemic Relief Allocations

Office of Governor David Ige

Hawai‘i Gov. David Ige said Monday he intends to veto 28 bills passed during the 2021 legislative session, including measures that would allocate pandemic relief money for the public school system and overhaul the transient accommodation tax system. The announcement does not guarantee he will veto all 28 bills, but he is not allowed to veto any measure not announced Monday.

The governor said one key factor is an improvement in the state’s finances since the legislature adjourned at the end of April. Ige also said that the spike in visitor numbers since the legislature closed its session has led the state Council on Revenues to increase its forecast for the state’s general fund revenue by more than $6 billion over the next 7 years.

"The state’s economic position has significantly brightened since the beginning of the legislative session, and most definitely since the legislature concluded its work. This is a direct result of substantial federal funding that we have received to address the range of pandemic-related costs," he said.

The governor said he planned to use his line-item veto power to strike a provision of a budget bill that would have used federal coronavirus pandemic relief money to repay debt. Ige said guidance the U.S. Treasury Department issued after lawmakers adjourned in April specified the money may not be used in this way.

Ige indicated he may also veto a measure to boost the conveyance tax on non-commercial property worth more than $4 million because Hawai‘i's fiscal situation has improved greatly compared to the early days of the coronavirus pandemic.

For similar reasons, he said he may veto a bill that would take some money from the state's tobacco settlement fund and use it for other government expenses.

Under the Hawai‘i constitution, Ige had until Monday to inform lawmakers whether he may veto a bill. If he doesn't veto any of the bills on the announced list, he will either sign them or they will become law without his signature on July 6.

The governor explained his potential veto of a measure to use federal coronavirus pandemic relief funds for teacher bonuses by saying the use doesn't comply with guidance from the U.S. Department of Education.

Ige said legislatures don't have the authority to limit how an education agency — in this case the Hawai‘i Department of Education — uses federal relief money. He also said local education agencies are supposed to develop a spending plan after consulting the community, but in contrast, lawmakers awarded the bonuses in conference committee “and it is unclear whether any meaningful community consultation occurred.”

Legislation passed by lawmakers would overhaul the transient accommodations tax, which is the state's levy on hotel room stays and other short-term rentals. The measure would repeal provisions that allocate a portion of the revenue to the counties and instead allow counties to impose their own surcharge on the tax.

It would also deprive the Hawai‘i Tourism Authority of receiving revenue from this tax. Ige said this was a problem for the agency, which had long concentrated on marketing the islands to travelers but has been transitioning to managing the effects of mass tourism on Hawai‘i's natural resources and communities.

“I’m very concerned that the changes in this bill will severely damage HTA’s shift to destination management. We have heard loud and clear that our community is concerned, and it’s not about attracting more visitors. It’s about managing those who we invite to come,” Ige said at a news conference.

If lawmakers want to override any of the governor’s vetoes, they must convene a special session by noon on July 6. House Speaker Scott Saiki said in a statement that House members will meet this week to discuss the governor’s list.

“The Governor has not made his rationale for vetoes clear in his written notice. We hope that he will provide further rationale in the next few days. At that time, we will decide whether to override any vetoes,” Saiki said.

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