The Counties Are in Different Stages of Creating Their Own Hotel Room Tax Increases
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.
The state for many years distributed to the counties a portion of the revenue it collected from the 10.25% tax on hotel room stays and other short-term rentals, but it stopped doing so when the coronavirus pandemic squeezed its budget.
State lawmakers then passed legislation repealing the county allocation, and instead gave counties the authority to levy their own transient accommodations tax up to 3% — on top of the 10.25%.
The state Attorney General’s office said the state tax office does not have the authority to collect the taxes for the individual counties, so the counties are now tasked with collecting the revenue themselves.
The Kauaʻi County Council recently passed a bill adding a 3% surcharge to the hotel tax. Mayor Derek Kawakami signed it into law so the county could begin collecting revenue as soon as Nov. 1. The other counties aren't far behind.
Honolulu City Council Chair Tommy Waters says the council needs to hold the first vote on its hotel room tax 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 three 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.
"So I owe the mayor a phone call today just to make sure he’s on board with this. And I may need his help whipping some votes among the councilmembers who may be a little apprehensive to do it. The Sunshine Law prohibits me from going out there, whipping votes myself, so I need to rely on the mayor to get out there and support the bill," he said.
Waters said those funds will help the city make up for the $44 million it used to get from the state, its share of the TAT.
"So that's gone — $44 million that we use to repair our roads, our sewers, our parks, picking up garbage, our lifeguards, police, fires, stormwater and streams," he said.
Maui County has also passed a TAT measure at a first reading just a week ago. Hawaiʻi County’s deputy finance director says it is massaging its plan and will likely follow the other counties using 89-day temporary hires to staff up as needed.
This interview aired on The Conversation on Sept. 28, 2021.