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Honolulu City Council moves hotel bed tax bill forward

Catherine Cruz

A Honolulu City Council committee voted Wednesday to move forward with a bill that would implement a 3% tax on hotel stays on Oʻahu. Part of the money would go to the city’s rail transit project.

The Honolulu City Council’s Budget Committee voted 4-to-1 to move Bill 40 on to the second of three hearings. It would establish a Transient Accommodations Tax, directing money to facilities and infrastructure impacted by tourism, as well as rail transit. But it does not specify how much would go to each pot.

The City's managing director, Michael Formby, told the committee that the administration of Mayor Rick Blangiardi is committed to what he called a functioning rail system that runs from East Kapolei to Ala Moana. He said the key question of how much TAT money the city will request for the rail project will be determined by an ongoing fiscal study to be presented to council members on Nov. 17.

Budget Chair Calvin Say wondered whether it would be better to remove language concerning rail, and simply have the bill reference the money going into the city’s general fund.

But Formby opposed that.

"I believe in situations like this that it's important to make the tough decisions up front," Formby said. "I think to just pass it out as 3% and to come back later and say now we know how much money is coming into the General Fund and we want to take a percentage of that and give it to rail is much more difficult."

Council member Heidi Tsuneyoshi was the lone dissenter to moving the bill forward. She previously expressed her opposition to any money from the TAT being used on the rail project, which is facing a deficit of some $3.5 billion.

"I don't think it's fiscally responsible," Tsuneyoshi said. "Nor do I think it's responsible as elected officials to move out a budget of this nature and this degree of significance to taxpayers with pukas. And it's going through too far of the process with unanswered questions and not filled in responses as far as percentages to move it forward in this way."

The Honolulu Authority for Rapid Transportation, the caretaker of the project, is trying to come up with a viable financial plan to present to the Federal Transit Administration. Part of that depends on on how much TAT money will be allocated to rail.

Still, HART officials have said they are not counting on the TAT money alone to cover the entire projected deficit.

The 20.2 mile rail system has been plagued by cost overruns, management turmoil at HART, and technical problems including malfunctioning train doors and mismatched train wheels that do not allow the vehicles to run at full efficiency.

Bill 40 is a response to a move by the Hawaiʻi Legislature this year to strip the counties of funds from the state transient accommodations tax. But in return the Legislature gave the counties the ability to levy their own hotel bed tax of up to three percent.

The Legislature’s action took roughly $45 million away from Oʻahu.

Scott Kim was a news editor at Hawaiʻi Public Radio.
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