Deal to fund rail hikes hotel room tax
State lawmakers reached a deal to fund construction of the train to Ala Moana Center by proposing to hike the hotel room tax instead of extending the half percent excise tax.
HONOLULU - It's being hailed as a clever way to shift the burden on visitors.
Almost all the hotels in Waikiki are now said to are owned by outside entities.
The Transient Accommodation tax is a way to have tourists ease the burden on local residents who are already struggling to make ends meet.
Lawmakers say by not extending the excise tax to pay for rail gives a break to the poor, and elderly.
And gives the city money up front to complete rail to Ala Moana.
“This proposal will generate another $1.3 billion in the first seven years and that will help paying off debt earlier than later," said House Majority Leader Scott Saiki.
"It also leaves the city with a lot of room to do some bonding to do this project and gives them the where-with-all to do the bonding. So, we’ve given the city a lot of tools," said Senate Majority Leader J. Kalani English.
The question is, will it be enough to satisfy the Federal Transit Authority to release additional moneys. The mayor said he hopes so, but he also said the city may still be a billion dollars short.
He said the city could be faced with stressing Oahu residents with fee hikes or property tax hikes either now, or later.
"We have to find it somewhere. I am going to have to work with the council. Where do we make up this shortfall? At the end of the day they have several revenue raising measures before them, or they have to make deeper cuts in certain programs," said Honolulu Mayor Kirk Caldwell.
Lawmakers protected the neighbor islands from the TAT hikes, Former Mayor Mufi Hanneman, a rail proponent, is cautious.
"We have to be very careful about our number one industry. It’s all about fairness and equity. I can appreciate how difficult the decision was, but we are faced with constant challenges to remain in business and be competitive,"said Mufi Hannemann who is now head of the Hawaii Tourism and Lodging Association.
Hannemann thinks the state and counties should do more to go after uncollected taxes from vacation rentals.
The deal also creates a special fund to fund public schools.
The Hawaii State Teacher’s Association couldn’t be happier saying the money could help special education, and go toward reducing class size.
This bill accommodation over ten years will bring in $500 million for education. There are many ways we could use it to help our kids,” said Corey Rosenlee who represents public school teachers.
House and Senate leadership still have to sell the deal to its members but already there are procedural questions.
"This is a tax increase that the public didn’t weigh in on. There were no public hearings, I'm not for, or against the measure. I am just saying, I think it’s a serious flaw," said Se. Donna Mercado Kim.
Kim believes the bill could be open for a veto, or a court challenge down the road.
Lawmakers are to vote on the rail bill Tuesday.