Hawaii’s four mayors stood together before the House and Senate money committees Wednesday afternoon in the Capitol Auditorium and asked the Legislature to give the counties a broad new taxing authority.

But the reaction from state lawmakers suggests their plea for the power to raise the General Excise Tax by as much as 1 percent will not pass this legislative session.

Finance Chair Sylvia Luke said the Legislature would be more inclined to go through a series of contentious hearings on the bill if the proposal also had broad support from the county councils.

“Without that, I think it’s too premature,” she said.

As state lawmakers grilled the mayors over their request, the Hawaii State Association of Counties held a special meeting across the street at Honolulu Hale. The group, which represents the four councils, unanimously voted to support the mayors’ proposed legislation and add the bill to HSAC’s legislative package.

HSAC’s support would normally go a long way toward assuring the Legislature that the councils were unified in their position. But on the GET issue, the group only passed the measure at the executive level — circumventing the normal process which involves first sending it back to each respective council for its approval.

HSAC’s bylaws allow this move because the GET deals with home rule and generating revenue. But the group’s unanimous vote doesn’t mean there’s similar support at each council.

Kauai County Councilwoman JoAnn Yukimura, who was at Wednesday’s legislative briefing, said it’s premature for HSAC to take a stand in favor of an unrestricted 1 percent excise taxing power when that position has not been endorsed by all county councils.

“The excise taxing power, especially as structured in Hawaii, is an extremely regressive tax — that is, its impacts are proportionately hardest on the poor and lower income households,” Yukimura said in her testimony to HSAC.

HSAC President Mel Rapozo, a Kauai County Council member and Yukimura’s longtime political adversary, said the group will try to go back to the councils and secure resolutions of support but he was unsure how that process would work.

HSAC member Michael Victorino said he would be willing to ask his colleagues on the Maui County Council to pass a resolution, but was unsure of the end result.

“I’d be interested to see what the vote from each council would be,” he said.

Senate President Donna Mercado Kim and Senate Ways and Means Chair David Ige are also hesitant to give the counties the general excise taxing authority.

As Kim has pointed out, the Legislature gave the counties the opportunity in 2005 to ask voters to let them levy a half-percent GET surcharge. Honolulu was the only county to take the state up on its offer, with voters approving the measure to fund the rail project.

Honolulu Mayor Kirk Caldwell told the House and Senate money committees Wednesday that there are no plans to try to raise the GET should the Legislature give the county the power to do so.

He said he is joining his fellow mayors in support of the proposal because he wants the sunset provision removed on the current surcharge, which is set to expire in 2022. Keeping the half-percent GET would help the county fund rail and bus operations, he said.

Kauai Mayor Bernard Carvalho Jr., Maui Mayor Alan Arakawa and Big Island Mayor Billy Kenoi said they want the state to give them the power to levy up to a 1 percent GET so the counties have another tool to raise revenues for county projects and services aside from increasing property taxes and fees.

Hotel Tax Money on House Speaker’s Table

One of the primary drivers in county leaders’ push for the new taxing authority is the political game state lawmakers are prone to playing each session with the Transient Accommodations Tax.

The TAT, currently a 9.25 percent tax hotels charge guests, is the second biggest revenue source for the counties after property taxes. The Legislature has capped the counties’ share of TAT revenue at $93 million, putting all the excess money generated by the rebounding tourism industry in recent years into state coffers.

State lawmakers have tried to make deals with county leaders in the past that involved trading the TAT for the GET, but the counties want both.

House Speaker Joe Souki asked reps in his Opening Day floor speech Wednesday to consider removing the cap placed on the TAT.

“In this strong economy, should we not be thinking about a greater partnership with our counties, who provide much of the services that directly support tourism?” he said.

“They are the ones who maintain our roads and parks and provide the law enforcement officers and first-responders who directly serve our visitors as well as our kamaaina.”

Souki considered the move “long overdue,” saying the state could make up for the lost revenues by collecting a sales tax from out-of-state online companies.

“Every day, they compete toe-to-toe with local companies on a playing field that is clearly tilted in their favor. It’s time we level the playing field,” he said. “We should also consider joining other states who have banded together to look at this issue for a collective solution, as well as consult with our congressional delegation on actions being considered at the federal level.”

Ultimately, politics will likely decide the fate of any changes to the GET or TAT.

Even if the state gives the counties the power to raise the GET, Luke said it is still politically hard for the state to raise taxes.

Caldwell said the county councils and mayors would take a “huge political hit” if they tried to raise the general excise tax. That’s part of why he said he wants the sunset provision removed from Honolulu’s current half-percent surcharge.

Read the mayors’ testimony and proposed legislation here:

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