City council approves new 3% hotel tax, up to half going to Honolulu rail project

Honolulu city council on Wednesday approved the creation of a 3% tax on transient accommodation, allocating between one-third and one-half of the revenue to the city’s rail transport project.

Earlier this year, the Hawaii state legislature voted to take revenue from counties from the state transitional accommodation tax, or TAT. However, the legislator authorized counties to collect their own TAT of up to 3%.

The counties of Maui and KauaÊ»i have already adopted and started collecting their respective resort taxes. Honolulu’s efforts have been stymied by discussions over whether some of the money should be directed to the besieged rail project.

But on Wednesday, Bill 40 passed its third and final reading 6-3. Council members Carol Fukunaga, Heidi Tsuneyoshi and Augie Tulba voted against.

Upon the mayor’s signature, the bill will allocate 1% of the TAT to Honolulu rail for the first two years, then 1.5% thereafter – that’s half of the TAT fund.

The remainder will go into the general city fund, with some to be used “to mitigate the impacts of visitors on public facilities and natural resources, including the restoration, operation and maintenance of beaches and parks. “.

Council member Tsuneyoshi was disappointed that the money was not going all to the general fund.

“We are very likely looking at going into this budget season with a deficit when we could consider right now it could be a most incredible day for us to go back to our ridings and say that we have passed the TAT, we have an extra 3% to work on our city parks like we always wanted to do, we can find our ocean security officers, we can fund the HPD. This could be such a transformative day for our city, ”Tsuneyoshi said .

Regardless of how much the state collects, Honolulu’s share of the TAT was previously capped at $ 45 million.

Board member Andria Tupola said she welcomed the change.

“I think this division of ourselves by separating ourselves from the state is very important because of the impact of tourism because of the need for us not to have to go begging for money sometimes the get it, sometimes don’t get it, ”Tupola said. .

Two additional amendments were tabled in the room.

Council member Calvin Say’s amendment clarified the electronic tax filing requirements, requested by the administration office. The amendment is approved unanimously.

A second amendment, by Council member Tsuneyoshi, would have removed the allowance for Honolulu rail. It was not adopted.

The bill now goes to Mayor Rick Blangiardi for promulgation. If approved, it will take effect immediately.

HART executive director and interim CEO Lori Kahikina said the new estimated cost for the railroad to reach Ala Moana is $ 11.4 billion. The previous estimate was $ 12.4 billion.

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