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Honolulu City Council approves first reading of tourist accommodation 3% tax increase

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Turtle Bay Resort
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The Honolulu City Council approved last week the first reading of a bill that would allow the city to levy a 3% tax on tourist accommodations.

Bill 40 was filed after the State Legislature passed a measure taking away about $45 million in transient accommodations tax revenues from the city. At the same time, it allowed Hawaiʻi's four counties to institute their own TAT tax.

The bill will now go to the public hearing process for further evaluation. It was approved on a 7-2 vote, with council members Heidi Tsuneyoshi and Augie Tulba voting no.

Tsuneyoshi said her concern stems from the issue of whether the visitor tax will be used to help fund Honolulu’s embattled rail project.

"I agree that we need to have access to transient accommodation tax, we always should have. The way this came forth is concerning. And if we take out everything related to rail from Bill 40 and just use it for our TAT as it's supposed to be, then I could support this but this currently seeming to look as a bailout for rail is not OK," Tsuneyoshi said.

The bill would allocate the money to three areas: parks and environmental support, the general fund which supports police, fire and other services, and the city transit fund.

Budget Chair Calvin Say expressed support for the bill, saying the funds are necessary for the city to be able to meet its budget obligations.

City Council Chair Tommy Waters told HPR's The Conversation that the council needed to hold the first vote on the bill at the Oct. 6 meeting in order to get it passed before the end of the year.

The full City Council only meets once a month and the bill needs to be voted on two more times before it can be sent to Honolulu Mayor Rick Blangiardi for a signature. Waters said it’s going to take help from other city leaders to meet the Dec. 31 deadline.

Blangiardi has also backed the bill. He says he supports the rail project but wants more information from the Honolulu Authority for Rapid Transportation, which is overseeing the project, before committing TAT funds to it.

Hawaiʻi's four counties are in different stages of approving their increases to the transient accommodations tax to make up for lost revenue after the state stopped allocating its statewide tax.

Kauaʻi and Maui counties have passed bills adding the 3% increase. Kauaʻi Mayor Derek Kawakami and Maui Mayor Michael Victorino signed their respctive bills into law.

Hawaiʻi County’s deputy finance director said previously the county is massaging a plan and will likely follow the other counties.

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