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LIHUE, Kauai — State hotel tax revenue — and how much of it the counties should get to offset the impacts of millions of island visitors — emerged at a candidates forum Tuesday as a new issue in the Democratic primary race for governor.
Gov. David Ige and Congresswoman Colleen Hanabusa both support lifting the $103 million cap that the state imposes on the four counties that divide the money it collects through the 10.25 percent transient accommodations tax.
But that could prove hard for either candidate to push through the Legislature, which has had no trouble finding ways to spend the hundreds of millions of dollars in additional revenue that has flowed into state coffers as the tourism industry soars to record heights.
In what may have been the final forum between the two candidates before the Aug. 11 primary, Ige and Hanabusa also fielded questions about vacation rentals, the #MeToo movement, housing, agriculture, water quality, an investment property tax for education and disaster response.
Hanabusa finds herself trailing in the polls just 11 days before the election — especially on Kauai. Ige had 58 percent support from Kauai’s likely Democratic primary voters who were polled earlier this month by Civil Beat, compared to Hanabusa’s 21 percent. There were 15 percent undecided on the island.
Both candidates grew up on Oahu — Ige in Pearl City and Hanabusa in Waianae. They each enjoy strong name recognition statewide given their elected positions, but their neighbor island support was notably split in the poll. Ige was strong on Kauai and the Big Island while Hanabusa had a 15 percentage-point advantage in Maui County.
Hanabusa wasted no time trying to relate to Kauai residents, explaining how growing up on the rural west side she found Oahu to be Honolulu-centric — a sentiment that neighbor islanders often express.
Ige applauded the island’s utility, the Kauai Island Utility Cooperative, for leading the state in renewable energy. He highlighted how his administration cooled off classrooms in Kauai schools with air conditioning. And he posed for photos with teachers, whose union endorsed him, after the 90-minute event, which was held in a ballroom at the Kauai Beach Resort.
The issue of hotel tax revenues came up in one direct question about lifting the cap on how much counties can receive, but the candidates returned to TAT revenues in their answers to other questions.
Before the cap on the share of hotel tax revenues was put in place during the Great Recession, Ige said, the counties each received a percentage of the overall TAT revenue. So in good times, they got more money and in bad times they got less.
County mayors and council members have strongly advocated for a return to that system for the past several years, which Ige said he supports.
The Legislature was making cuts to deal with a floundering economy when the limit was put in place, Ige said. Since then TAT revenue has grown tremendously and the counties’ share, while slightly increased, has not risen nearly as much as the state’s share.
In addition to upping the amount the counties receive, Ige also proposed increasing the amount that goes to beach replenishment and parks, as well as using the TAT for infrastructure costs.
Join the conversation in-person at Civil Beat’s final two events on the gubernatorial race — “Know Your Candidates” — at Hawaii Pacific University’s Aloha Tower Marketplace. For more information, please visit our event page.
Join the conversation in-person at Civil Beat’s final two events on the gubernatorial race — “Know Your Candidates” — at Hawaii Pacific University’s Aloha Tower Marketplace.
For more information, please visit our event page.
During the forum hosted by the Kauai Chamber of Commerce, Hanabusa did not stake out a position on the issue of lifting the cap. But when asked afterward, Keith DeMello, her campaign spokesman, said she “would lift the cap.”
Hanabusa said during the forum that her concern is over the use of the TAT, which she believes is a “special tax” that must have a connection to tourism.
“It is to address the impacts that tourists have on our natural environment and facilities,” she said.
She cautioned the audience to “not be fooled,” saying the TAT generates about $500 million a year and the bulk currently goes to the state general fund.
“We need to reassess,” Hanabusa said, adding that the hotel tax revenue could be used to fix the state’s airports, parks and infrastructure.
Legislative leaders — including the powerful foursome who endorsed Hanabusa, Senate President Ron Kouchi, Ways and Means Chair Donovan Dela Cruz, House Speaker Scott Saiki and Finance Chair Sylvia Luke — have been reticent to lift the cap. They have supported incremental increases but have balked at bills to go back to giving the counties a set percentage of the overall hotel tax revenue each year.
Kauai County had received 14.5 percent, Hawaii County 18.6 percent, Honolulu 44.1 percent and Maui County 22.8 percent. The same formula is still applied — but only up to the $103 million maximum.
Ige and Hanabusa found common ground on several other issues. They both support a proposed constitutional amendment, which voters will consider in November, that would allow for a tax on investment properties to fund public education.
They also both view Airbnb and vacation rentals in general as a serious problem facing the state. Too many operate illegally, removing housing from the inventory for residents, they said in calling for the counties to crack down first since it’s largely a zoning issue.
Hanabusa took a few swipes at Ige during the forum but he stayed focused on his own points about what his administration had accomplished or hopes to do if he gets another four-year term.
Responding to a question about gender discrimination and the nationwide movement against sexual harassment, Hanabusa said the most important thing to come out of the marches and stories that have been shared is that women have found their voices.
“We should not in any way silence that,” she said.
Hanabusa drew applause when she said that maybe it’s time for a woman governor, adding that no one has ever accused her of not speaking up.
“Matter of fact, I’ve been accused of being too critical by Gov. Ige,” she said.
A group of female lawmakers held a press conference recently and accused Ige of trying to silence women, based on an ad his campaign ran that says Hanabusa’s campaign strategy is too focused on criticism.
Ige said there should be zero tolerance for sexual harassment.
He said there should be multiple access points for people to report sexual harassment if it’s uncomfortable doing so inside their own organization.
“It really is about vigilance,” Ige said. “You’ve got to live it.”
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