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Gov. David Ige has vetoed a bill that would allow short-term accommodations brokers, such as Airbnb, to act as tax collection agents for the state, along with six other measures that he found problematic for various reasons.
House Bill 1850, which became known as the “Airbnb bill” because of the company’s heavy lobbying efforts to get it passed, would have potentially helped the state collect millions in unpaid transient accommodations taxes. Officials with the Hawaii Department of Taxation supported the bill.
However, opponents of the measure argued that the bill would undermine efforts to crack down on Hawaii’s pervasive illegal vacation rentals.
“When you look at this bill from purely the state’s perspective and the state’s desire to collect the state taxes owed, this measure would provide a mechanism to allow us to achieve this goal,” Ige said during a Tuesday press conference called to discuss his vetoes. “However, the use of an intermediary as a tax accommodations broker also provided a shield for owners who choose not to comply with county laws, and this was a big concern of mine.”
Ige said that the bill would have encouraged the illegal vacation rental market “at a time when affordable rental housing is in such short supply in our communities and homelessness remains to be a critical concern statewide.”
Airbnb has executed similar tax agreements with other states in recent weeks, including South Carolina, Pennsylvania, Arizona and Connecticut.
The company launched a social media campaign in recent weeks to pressure the governor not to veto to the bill.
“Hawaii legislators, business leaders, tourism officials and even Gov. Ige’s own tax department worked hard to craft this sensible measure that would increase transparency and allowed the state to receive tens of millions of dollars in tax revenue,” Alison Schumer, manager of public affairs for Airbnb, said in a statement following the veto. “We are deeply disappointed that Hawaii did not embrace streamlining tax collection for today’s economy, unlike the other 190 jurisdictions where we collect and remit on behalf of our community.”
The governor also vetoed six other bills on his original list of nine bills that had been submitted to the Legislature late last month as candidates for veto action.
This includes Senate Bill 2077, which provided a package of severance payments and early retirement and health benefits to approximately 1,400 unionized Maui County hospital workers who are affected by the privatization of their facilities.
Also vetoed were:
>> House Bill 1739, which would have prohibited employers from accessing or obtaining employees’ social media accounts by coercion or other means.
Ige said it was unclear whether this was occurring in workplaces at a level that would necessitate state intervention. He also said that the Hawaii Department of Labor and Industrial Relations didn’t have the resources to administer the measure, including taking complaints and collecting fines.
The veto angered Rep. Matt LoPresti (D, Ewa Villages-Ocean Pointe-Ewa Beach), who introduced the bill. He said the day should be renamed “Spy on Your Employees Day.”
>> House Bill 1747, which would have authorized police officers to have automobiles towed if a driver is arrested for driving under the influence.
Ige said the bill was too narrow and would undermine a law that allows police to tow vehicles when a driver doesn’t have a valid license or has fraudulent license plates or registration emblems.
>> House Bill 2016, which would have required the Employees’ Retirement System to transfer contributions by retirees and beneficiaries to the Hawaii Employer Union Benefits Trust Fund for health insurance payments. Beginning Jan. 1 the ERS would have been required to authorize electronic payments to EUTF in lieu of withholding.
Ige said that the measure would require computer system changes and that the state probably couldn’t meet the 2017 deadline.
>> House Bill 2277, which sought to clarify the membership and mission of the King Kamehameha Celebration Commission.
Ige said that the bill was flawed because it deleted the number of commission members, making it impossible to determine a quorum.
>> Senate Bill 3102, which would have required state agencies to implement interagency agreements without entering into a memorandum of agreement or memorandum of understanding. The measure also sought to establish the High-Growth Grant Program to help diversify the economy and appropriated $1 million to provide business grants.
Ige said the bill lacked a clear rationale as to the need for interagency agreements. Furthermore, he said the purpose of the grant program was “very broad” and that the program’s special fund would likely not have been self-sustaining.
Ige allowed two bills that he had originally considering vetoing to become law:
>> House Bill 1370 authorizes the Employees’ Retirement System to make direct payments to a divorced spouse of an ERS member or retired ERS member upon court order.
>> Ige also allowed to become law Senate Bill 2542, which establishes funding and budgetary procedures for the routine repair and maintenance of state-owned buildings.
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