Neighbor Islands should not pay for rail

The state Legislature’s special session is scheduled from Aug 28 through Sept 1 and aims to address the issue of how to fund Oahu’s controversial rail system. The latest proposal unveiled to the public – created behind closed doors – calls for increasing Hawaii’s hotel room tax, or transient accommodations tax (TAT), by 1 percentage point through 2030 statewide. The increase would raise the tax from 9.25 percent to 10.25 percent. The proposal would also extend on Oahu residents only, for three additional years, a 0.5 percent general excise tax surcharge (GET).

Why is this a bad plan for Neighbor Islands?

Impact of TAT on Neighbor Islands
• Oahu occupancy rates are 10 points ahead of Maui, 13 ahead of Kauai and nearly 20 points ahead of Big Island
• From Calendar Year 2006 to CY 2016, Oahu GET base grew by 15% while Neighbor Islands remain below 2006 levels
• One percent increase in TAT would remove over $30 million from our Neighbor Island communities and economies, sending it to Oahu.

The State has already grown their share of the TAT significantly.
• The State has increased its share of TAT from $17.1 million to $291.1 million since 2007
• Since then the Counties share has dropped to $93 million, a loss of $7.8 million
• The cost of Police, Fire and Parks departments in the four counties has increased by $264 million while Counties share has been reduced.
• Without a rate increase State share will likely increase to $326 million in FY2018
• With a 1% rate increase, State share will likely increase by another $58 million to $384 million.

Neighbor Islands are again being offered the opportunity to pass the same .5% GET Surcharge for our transportation needs.
• The concern that the neighbor islands have had for years is that once we pass the GET surcharge, the Legislature will take away ALL of our TAT revenue.
• Some of us have been told directly over the years that this is their intent.
• The Neighbor Islands favor keeping a visitor-generated TAT to pay for visitor –related services. It makes no sense to shift the cost of visitor services to our resident population through either GET or property taxes when the visitors have already paid their fair share.
• The GET generated by the .5% surcharge would be just slightly higher than the amount of TAT we are currently getting.

State should work on ensuring all TAT taxing options and compliance issues are addressed before simply increasing the rate
• The State is not receiving a significant portion of the TAT revenue even though the visitors are paying the TAT or an equivalent. Amend TAT statute to ensure collection of taxes from accommodation remarketers instead of just operators. Maui County has drafted a bill to correct the problem, and it will likely be part of the HSAC package. $60-80 million in added revenue.
• Increase the basis of the calculation of TOT on Timeshares from 50% of maintenance fee to a higher percentage.
• Work with Counties to ensure vacation rentals are operating legally and paying both State and county taxes. Maui County will be contracting with internet service that will identify location and ownership of rentals being advertised on the internet.
• Instead of TAT, evaluate a Rhode Island-type 1% tax on food and beverages consumed at restaurants, bars and hotels. Restaurant Association estimates the Hawaii base at $4.6 billion. $46 million in added tax revenue

Both the Hawaii State Association of Counties (HSAC) and the Hawaii Council of Mayors (HCOM) stand in support of the position to fund rail by extending the .5% GET surcharge.
• The proposal extends the GET surcharge for just three years to 2030.
• The $1.3 billion raised by the TAT increase would be unnecessary if the GET was extended through 2033. The 3 additional years of surcharge would generate the same $1.3 billion.
• If the use of TAT fails the stress test of the Federal Transit Authority and is disqualified as a source to fund rail, will the TAT increase be reversed?

Our Legislators push the counties to increase property taxes instead of asking for more TAT.
• Hawaii has lower property tax rates, but significantly higher home values.
• Hawaii’s median home value is 5 times higher than West Virginia and three time higher than Idaho.
• Even with lower rates, the average tax on the median home value is $1,430 in Hawaii vs $1,250 in Idaho and $660 in West Virginia.
• Hawaii property taxes represent 2.1% of median household income. This compares to 2.6% in Idaho and 1.5% in West Virginia.

Distribution to Local governments of taxes generated from Lodging Revenues
• Nationwide, taxes on lodging have been established to cover the cost of services and infrastructure needed to support the visitors.
• Nationwide, 67% of ALL taxes (GET & TAT) on Lodging revenue go to the local government.
• In Hawaii, only 14% of GET & TAT generated is given to local Governments
• The Hawaii TAT accounts for about 68% of the taxes on lodging. If we were to get the Average Local government share we would get almost all of the current TAT revenue.

Hawaii is not the only small state with large expenditures on Education and other government functions, but tax distribution is very different.
• With similar populations to Hawaii, state expenditures on education in West Virginia and Idaho are close to Hawaii’s.
• When Hawaii spent $1.6 billion or 23% of its General Fund (GF) on education, Idaho spent $1.6 billion (51% of GF) and West Virginia spent $1.9 billion (43% of GF) on education.
• West Virginia has a 6% state sales tax and a 6% room tax (TAT) on lodging revenue. All proceeds from the 6% room tax go to the local government.
• Idaho also has a 6% state sales tax and authorizes local government to impose “local option” taxes on lodging accommodations, drinks by-the-glass, retail sales, etc. The total taxes in resort areas appear to be about 12%. The state receives the 6% sales tax and the local government receives the rest.
• This type of comparison deserves a closer look if we hope to bring a stronger sense of “partnership” to the relationship between our state and counties.

The promise to make permanent the $103 million to the Counties is questionable.
• The Legislature’s history on keeping promises is weak. We all know that any action taken by today’s body can be reversed in any future session.
• There was a promise that the 2% increase in TAT after the recession in 2008 would sunset after 5 years. It is not likely it will ever sunset.
• The $103 million to the Counties still falls short in terms of the Counties being awarded their fair share.

There was hope that the recommendations of State-County Working Group would be taken seriously
• The Counties’ share of the TAT would have been $184 million this past year if the legislature accepted the findings of the working group they established.
• The working Group found that Counties provided 56% of visitor related expenditures from State or County general funds
• Counties were willing to accept the lower 45% share compromise reached in the working group.
• The Legislature has ignored the Working Group findings, maintained the cap and taken all of the increased revenue.

Tax Review Commission recommendations would increase revenues by over $300 million per year
• Not all the recommendations are popular
• Sugary beverage tax of $.02 per ounce – $50 million
• Increase collection of taxes on e-commerce/online retail sales – $30-40 million

I encourage Maui County residents to contact state legislators. Call or email them at reps@capitol.hawaii.gov and sens@capitol.hawaii.gov to let your voice be heard.

Posted in Legislation | 16 Comments

E-Cycling Now Open Through September 30th for Computer-Related Items

PRESS RELEASE
For Immediate Release
August 9, 2017

E-Cycling Now Open Through September 30th for Computer-Related Items

WAILUKU, Maui, Hawai‘i – The Maui County-sponsored Electronics Recycling Program,
E-Cycling, will be open through Saturday, Sept. 30, 2017 to accept limited types of items including computers, monitors, keyboards and mouse controllers.

E-Cycling will close again for the month of October and will reopen on Saturday, October 31, to accept all types of electronics for recycling. Televisions cannot be accepted on Maui until Saturday, October 31, however Molokai and Lanai have no restrictions.

“We’ve had to re-arrange our schedule in the short-term because the pounds of electronics recycled in Maui County has outstripped the pounds manufacturers must pay for in accordance with the State electronics recycling law,” said Marty McMahon, E-Cycling Program Manager for program sponsor Habitat for Humanity Maui. “In other words, congratulations, Maui! Once again our community is over-achieving in the recycling arena.”

Habitat is the yearly recipient of a County Recycling Grant that helps pay for the program; the grant amount for FY18 is $152,100. E-waste processors pay all shipping costs, over $300,000 per year, and there is no charge to the County to process E-waste.

The County’s Environmental Protection and Sustainability Division is developing a long-term solution to address financial and logistical challenges of Maui’s over-production. During this transition period, the public is asked to respect the work of Habitat’s E-Cycling staff and refrain from dumping electronics at the gate. Dumped E-waste is an eyesore for the community and a health and safety hazard for everyone. The County could also be fined.

“The County has provided free E-Cycling for eight years for the benefit of Maui, Molokai and Lanai residents and businesses. We ship off one 40-foot container every week, at a minimum,” reports McMahon. “Full restoration of services is just a few months away, and until then, we ask everyone to be patient.”

Up-to-date information on E-Cycling dates, hours and types of electronics accepted are stated on the E-Cycling information line, ph. 280-6460, and the Habitat for Humanity website, www.habitat-maui.org. For general recycling information call the Recycling Hotline at ph. 270-7880 or visit www.mauicounty.gov/recycle.

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Update: Makawao Avenue Pavement Repairs to Begin Wednesday

PRESS RELEASE
For Immediate Release
July 20, 2017

Makawao Avenue Pavement Repairs to Begin Wednesday

WAILUKU, Maui, Hawai‘i – The Department of Public Works, Highways Division advises motorists that pavement repairs to Makawao Avenue are scheduled to begin Wednesday, July 26 and continue through Monday, August 7, 2017. The work will affect traffic along Makawao Avenue between Eddie Tam Memorial Center and the Pukalani side of Laie Drive.

The pavement repair work will take place Monday through Friday, weather-permitting, from 7 a.m. to 3:30 p.m., excluding weekends. Phase 1 of the project will be from Eddie Tam to Makani Road. Signs and traffic control notices will be posted. Crews will contraflow traffic but motorists should plan for delays.

Residents with driveways in the work zone that need access will be notified accordingly. Due to work at Makawao Avenue and Makani Road, intersection access to Makani Road may be detoured temporarily via Apana Road.

During Phase 2, Pukalani-bound traffic will detour via Laie Drive and Makawao-bound motorists will have diversions through the work zone. Signs and traffic control will be posted and motorists should expect delays.

The Highways Division thanks the public for its understanding and cooperation. For more information on the project contact the Makawao Highways Division at 876-4535.

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Special session threatens Neighbor Islands

CHAIR’S 3 MINUTES
Published in the Maui News, July 16, 2017
By MIKE WHITE

The state Legislature has scheduled a special session to discuss the controversial topic of funding Honolulu’s rail project. Planned for Aug. 28 through Sept. 1, the session could have serious consequences for Neighbor Island counties.

The legislative session ended in May without a funding mechanism for rail. The Senate voted to continue rail funding with a general excise tax surcharge for Oahu residents, but reduced the counties’ share of transient accommodations tax from $103 million to $93 million.

The House voted to maintain the counties’ TAT share at $103 million, but increase the tax on visitor accommodations by 1 percent, with the additional revenue funding rail. Neither side would budge from their position, which resulted in a stalemate and now a costly special legislative session.

All options are now on the table. One of the proposals continues to be an increase in the TAT, anywhere from 1 to 2.75 percent.

Increasing a tax on tourists seems like an easy way to close the funding gap. The problem, however, is that TAT is applied on accommodations statewide, not just Oahu. Even thinking of this solution for rail, without ample benefit to Neighbor Island counties, is simply irresponsible. Neighbor Islands receive absolutely no benefit from rail and neither will Waikiki, which generates most of Oahu’s TAT revenue.

Increasing the TAT also has implications on the overall economy. Most visitors have a fixed budget for their vacation, and an increase in the room tax will simply lead to less spending on restaurants, retail and activities. Every 1 percent increase in the TAT sends approximately $26.7 million to the state instead of remaining in the Neighbor Island communities.

Kauai, Maui and Hawaii counties generate 51 percent of TAT revenues ($247 million) while Oahu generates 49 percent ($237 million). Given this split distribution, any increases to the tax for rail should apply only to Oahu. It is unfair to expect Neighbor Islands to subsidize one of the most expensive projects in the state’s history.

The redirection of funds would also further dilute the purpose of the tax, which is to provide counties the ability to maintain the infrastructure and services necessary to support a thriving visitor industry.

Counties have absorbed additional costs in recent years since the state has failed to provide a fair share of TAT funding. From 2007 to 2017, counties have incurred over $260 million in cost increases for fire, police and parks but have only seen an additional $2.2 million from TAT revenues. Any gains have since been reduced, as the Legislature cut the counties’ annual TAT distribution from $103 million to $93 million for fiscal year 2018. Meanwhile, during the same period the state took for its operations over $220 million.

These actions have forced counties to either raise property taxes or dip into contingency funds to balance their budgets. In the end, the actions at the Legislature hit the pockets of residents despite the facade of only impacting visitors.

It is vital that the House dispense with the idea of increasing the TAT and instead focus on the Senate’s proposal, which maintains Oahu’s 0.5 percent excise tax surcharge for an additional 10 years, with no impacts on the Neighbor Islands.

As the special session approaches, I encourage Maui County residents to contact state legislators. Call or email them at reps@capitol. hawaii.gov and sens@capitol.hawaii.gov to let your voice be heard.

The Legislature must stop playing games and instead make sound and fair decisions. They have already allowed the law that granted immunity for county lifeguards to expire on June 30. The counties are now liable to defend frontline personnel at our own cost, even at state beaches.

Another hit to the Neighbor Islands is unwarranted, and we should have no part in picking up the cost of Honolulu’s rail!

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Paia Courtyard Project

The Council’s Land Use Committee held a hearing on July 11 on the proposed Paia Courtyard Project located at 120 Baldwin Avenue near the Paia Post Office. Action was deferred pending community input and a further review of the projects impacts. The applicant is requesting entitlements to build six two-story mixed-use retail and office buildings with nine upper story residential units, 56 independent senior living apartments and support facilities along with 309 parking stalls. Input and testimony on this project is encouraged and can be sent LU.Committee@MauiCounty.us.

Find out more about the project:
Information as transmitted by the Maui County Planning Department – Part 1
Information as transmitted by the Maui County Planning Department – Part 2
Information as transmitted by the Maui County Planning Department – Part 3
Information as transmitted by the Maui County Planning Department – Part 4
Presentation by developer David Spee
Final Environmental Assessment for Paia Courtyard

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Makawao Avenue Street Repairs

Press Release For Immediate Release
June 11, 2017

Makawao Avenue Street Repairs

Wailuku, MAUI – Makawao Avenue will be closed from Mahola Street near Eddie Tam Gymnasium, to the southern intersection section of Laie Drive, starting June 13 and ending on June 29. Motorists are advised to obey all traffic signs and instructions from road crews in the area during work hours.

Residents living in the area will be contacted by Public Works personnel regarding the blockage of some driveways. The work begins at 6 a.m. and lasts until 4:30 p.m. daily, excluding weekends and holidays. Work will involve crews repairing the road with hot mix asphalt in certain areas.

For more information about the project contact the Makawao Highways Division at 876-4535.

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Committees gear up to vet important county issues

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Council tackles budget, audits and polystyrene

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Legislators consider Neighbor Island taxes to fund rail

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County impacted as Legislature gets set to adjourn

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