TWENTY-EIGHTH LEGISLATURE, 2016
STATE OF HAWAII
A BILL FOR AN ACT
relating to the transient accommodations tax.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:
SECTION 1. This Act addresses the allocation of transient accommodations tax revenues by:
(1) Making permanent the annual allocation of $103,000,000 of transient accommodations tax revenues to the counties; and
(2) Establishing a state-county functions working group on July 1, 2022.
The state-county functions working group created under Act 174, Session Laws of Hawaii 2014, issued a report on the transient accommodations tax revenue allocation, which included data indicating that the State spends about eighty per cent of the total government expenditures in Hawaii while the counties spend about twenty per cent. See exhibit 2-12 of the "State-County Functions Working Group Report," dated December 2015.
The legislature finds that the allocation of transient accommodations tax revenues should be based upon the proportionate expenditure by the State and counties for all public services, not just for visitor-related services as relied upon by the working group. Consequently, the legislature finds that the $103,000,000 annual allocation to the counties is reasonable. The legislature notes that the allocation to the counties would have reverted to $93,000,000 annually on July 1, 2016, under Act 174, Session Laws of Hawaii 2014.
The legislature also finds that the allocation of an amount definitely set, rather than calculated as a percentage of revenues, promotes better budgetary practice. A specific allocation allows the actual dollars forgone by the State to be determined when projecting revenues for formulating the state budget.
In addition, the legislature recognizes that the issue of state-county relations should be reviewed again in the future to determine if the transient accommodations tax revenue allocation should be changed. Consequently, this Act establishes another working group in 2022 and requires that working group to submit a report to the legislature for consideration during the regular session of 2023. The legislature intends that the 2022 working group base its recommendation upon the division of duties and responsibilities between the State and counties for all public services, not exclusively visitor-related services.
SECTION 2. Section 237D-6.5, Hawaii Revised Statutes, is amended by amending subsection (b) to read as follows:
"(b) Revenues collected under this chapter shall be distributed in the following priority, with the excess revenues to be deposited into the general fund:
(1) $1,500,000 shall be allocated to the Turtle Bay conservation easement special fund beginning July 1, 2015, for the reimbursement to the state general fund of debt service on reimbursable general obligation bonds, including ongoing expenses related to the issuance of the bonds, the proceeds of which were used to acquire the conservation easement and other real property interests in Turtle Bay, Oahu, for the protection, preservation, and enhancement of natural resources important to the State, until the bonds are fully amortized;
(2) $26,500,000 shall be allocated to the convention center enterprise special fund established under section 201B-8;
(3) $82,000,000 shall be allocated to the tourism special fund established under section 201B-11; provided that:
(A) Beginning on July 1, 2012, and ending on June 30, 2015, $2,000,000 shall be expended from the tourism special fund for development and implementation of initiatives to take advantage of expanded visa programs and increased travel opportunities for international visitors to Hawaii;
(B) Of the $82,000,000 allocated:
(i) $1,000,000 shall be allocated for the operation of a Hawaiian center and the museum of Hawaiian music and dance at the Hawaii convention center; and
(ii) 0.5 per cent of the $82,000,000 shall be transferred to a sub-account in the tourism special fund to provide funding for a safety and security budget, in accordance with the Hawaii tourism strategic plan 2005-2015; and
(C) Of the revenues remaining in the tourism special fund after revenues have been deposited as provided in this paragraph and except for any sum authorized by the legislature for expenditure from revenues subject to this paragraph, beginning July 1, 2007, funds shall be deposited into the tourism emergency special fund, established in section 201B-10, in a manner sufficient to maintain a fund balance of $5,000,000 in the tourism emergency special fund;
(4) $103,000,000 [
for fiscal year 2014-2015,
$103,000,000 for fiscal year 2015-2016, and $93,000,000 for each fiscal year
thereafter] shall be allocated as follows: Kauai county shall receive 14.5
per cent, Hawaii county shall receive 18.6 per cent, city and county of
Honolulu shall receive 44.1 per cent, and Maui county shall receive 22.8 per
cent; provided that commencing with fiscal year 2018-2019, a sum that
represents the difference between a county public employer's annual required
contribution for the separate trust fund established under section 87A-42 and
the amount of the county public employer's contributions into that trust fund
shall be retained by the state director of finance and deposited to the credit
of the county public employer's annual required contribution into that trust
fund in each fiscal year, as provided in section 87A-42, if the respective
county fails to remit the total amount of the county's required annual
contributions, as required under section 87A-43; and
(5) $3,000,000 shall be allocated to the special land and development fund established under section 171-19; provided that the allocation shall be expended in accordance with the Hawaii tourism authority strategic plan for:
(A) The protection, preservation, maintenance, and enhancement of natural resources, including beaches, important to the visitor industry;
(B) Planning, construction, and repair of facilities; and
(C) Operation and maintenance costs of public lands, including beaches, connected with enhancing the visitor experience.
All transient accommodations taxes shall be paid into the state treasury each month within ten days after collection and shall be kept by the state director of finance in special accounts for distribution as provided in this subsection.
As used in this subsection, "fiscal year" means the twelve-month period beginning on July 1 of a calendar year and ending on June 30 of the following calendar year."
SECTION 3. (a) There shall be established a state-county functions working group on July 1, 2022.
The working group shall:
(1) Evaluate the division of duties and responsibilities between the State and counties relating to the provision of all public services; and
(2) Submit a recommendation to the legislature on the appropriate allocation of the transient accommodations tax revenues between the State and counties that properly reflects the division of duties and responsibilities relating to the provision of public services.
(b) The working group shall be comprised of thirteen members appointed without regard to section 26-34, Hawaii Revised Statutes, as follows:
(1) Four members, each of whom shall be appointed by a different county mayor;
(2) Four members appointed by the governor;
(3) Two members appointed by the president of the senate;
(4) Two members appointed by the speaker of the house of representatives; and
(5) One member appointed by the chief justice, who shall serve as the chair of the working group.
The members appointed under paragraphs (3), (4), and (5) shall not be employed by the State or any county at the time of their appointment.
(c) The working group shall be administratively placed in the office of the auditor. The auditor shall initiate the organization of, and provide staff support to, the working group.
(d) Members of the working group shall serve without compensation, but shall be reimbursed for necessary expenses incurred during the performance of their duties. The reimbursements shall be made by the auditor, who shall submit a request to the legislature for an appropriation equal to the reimbursements made and expected to be made. The auditor shall submit the request for inclusion in the legislature's budget act of 2022.
(e) The working group shall submit a report of its findings and recommendation to the legislature, governor, and each county mayor and council not later than twenty days prior to the convening of the regular session of 2023.
(f) The working group shall cease to exist upon the adjournment sine die of the regular session of 2023.
SECTION 4. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.
SECTION 5. This Act shall take effect on June 30, 2016.
Transient Accommodations Tax; Counties' Allocation, 2022 State-County Functions Working Group
Makes permanent the annual $103,000,000 allocation of transient accommodations tax revenues to the counties. Requires the establishment of a state-county functions working group in 2022 to recommend the allocation of transient accommodation tax revenues between the State and counties based upon the division of duties and responsibilities for the provision of public services.
The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.