Hotel room tax can prop up state services, senators say

Two state senators are urging colleagues to consider using the hotel room tax as a means of funding programs and services that have been scaled back in recent years because of budget concerns.

Citing a new report showing strong hotel occupancy and room rates that pushed Hawaii’s hotel room revenue in 2011 to $2.87 billion — its highest point since 2007 — Sens. Clayton Hee and Malama Solomon said hotel room tax money might be better spent propping up state parks, harbors, social safety net programs and other areas.

Their remarks came during Wednesday’s floor session.

"This is the perfect time, in this economy, to revisit issues like this that can raise funds from mostly out-of-staters, to contribute to help local people," Hee (D, Kahuku-Kaneohe) said afterward.

Solomon (D, Hilo-Honokaa) agreed, noting the impact of tourists on the state’s resources.

"Most of that money now should be reinvested back into the product — into Hawaii — so we can start to improve our natural resources that both the residents and the visitor can enjoy," she said.

But while all methods of increasing state revenue will be examined, the Senate’s money chairman said, an increase in the hotel room tax, known as the transient accommodations tax or TAT, was off the table.

"There’s a number of proposals that are looking at tweaking how the TAT is spent," Senate Ways and Means Chairman David Ige (D, Aiea-Pearl City) said. "Where we end up is still to be determined, but we definitely are not looking at raising the TAT, that’s for sure."

Rep. Marcus Oshiro (D, Wahiawa-Poamoho), the House Finance Committee chairman, said House leaders also have not considered increasing the room tax, but that if the Senate passed a bill it would be evaluated.

The room tax has been in play in recent years as a funding source eyed by lawmakers to close sizable budget deficits. Lawmakers considered scooping some or all of it the past two years, before deciding last year to cap the amounts going to the counties and the tourism special fund.

Counties have lobbied hard against losing any of the $93 million allocated to them, and Ige said there were no plans to consider the issue this year.

Keith Vieira, senior vice president and director of operations for Starwood Hotels and Resorts for Hawaii and French Polynesia, said increasing the tax burden on visitors could drive tourists to cheaper destinations and affect the state’s slow economic recovery.