Mayor Rick Blangiardi backs bill allowing to levy 3% visitor tax

Mayor Rick Blangiardi announced his support Wednesday for a measure awaiting Gov. David Ige’s signature that would allow the city to levy its own 3% Transient Accommodations Tax to recoup the state funds the measure takes away from counties.

The state currently shares with each of the counties about $103 million of the funds collected through the 10.25% tax on the tourism industry. Oahu receives 44% of that amount, which equals about $45 million.

However, House Bill 862 would take those state funds away from counties, but allow them to impose an additional 3% hotel room tax.

Blangiardi voiced his support for the measure, which has yet to be signed by Ige.

“As Mayor, it is my responsibility to make sure the City has the financial resources necessary to maintain core City services and provide for the needs of residents and visitors alike,” he said in a written statement.

“I support HB 862 as it provides the City the option of restoring a revenue base which has been lost — allowing us to continue services to our people.”

The Transient Accommodations Tax was meant to help support counties to pay for tourism-related expenses such as lifeguard services, infrastructure maintenance and police. Due to the pandemic, the city has been operating without TAT revenue for the entirety of fiscal year 2021, which began on July 1, 2020, and ends on June 30.

If the measure is signed into law, and the city imposed its own 3% hotel tax, it would bring in about $48 million, according to the state’s calculations.

According to the same projections, only Maui County and Honolulu would immediately see an increase in funds by implementing the new 3% tax and no longer receiving their portion of the state’s tax. Maui Mayor Michael Victorino also has voiced his support for the bill.

It would take Hawaii County until fiscal year 2025 and Kauai County until fiscal year 2024 to see an increase. That means if Ige signs the bill into law, and the counties all are able to implement their own 3% hotel tax, Hawaii County and Kauai County actually would see a reduction in funds for several years.

However, the state believes that these projections are probably low because it is based on the Council on Revenues forecast for visitor arrivals, which is lower than what Hawaii is currently experiencing.

It is unclear if counties would be able to use federal American Rescue Plan Act funds to replace any revenue lost if the measure becomes a law. In the official guidance released about using ARPA funds, it said the federal dollars cannot be used to replace revenue lost due to laws passed after March 3.

For Oahu to implement its own 3% hotel tax, it would have to be approved by both the city council and mayor.

The deadline is Monday for Ige to notify the state Legislature of the bills he intends to veto.