Tavares Testifies: Maui Shortfall will Jump to $73 Million Without TAT Revenues

By Wendy Osher

Maui Mayor Charmaine Tavares will testify today before the House of Representatives’ Committee on Finance at the State Capitol.  Tavares is expected to comment on House Bill 2598 Relating to Transient Accommodations Tax or TAT- which proposes to suspend the distribution of revenues to the counties.  The three year suspension, if approved, would run from July 1, 2010 to June 30 2013.

Tavares said that even with the county’s share of the TAT, Maui is facing a significant revenue shortfall of around $53 million.  “Without the TAT, our shortfall jumps to $70 – $73 million,” said Tavares.  “Making up for these shortfalls puts a huge burden on county taxpayers,” she said.

In written testimony dated February 16, 2010, Tavares said, “The TAT is not a hand out from the State to the Counties—it is a share of what is generated in each county.”

“The visitors will continue to pay the taxes, but if the State takes back our share, we will have an additional 17-20 million dollar shortfall that will have to be made up by County taxpayers,” said Tavares.

Tavares estimates that under the current formula, Maui County would receive 84 cents out of the $12.25 collected in taxes on a room that costs $100 per night.

Tavares said Maui County invests over $3 million in county funds to support the visitor industry.  “We recognize the importance of this industry to the economic well-being of our County,” said Tavares.  She continued, “The investment directly impacts how much TAT is collected.”

In her testimony, Tavares urged the legislature to examine all sources of state revenue including special funds and the state’s own taxing authorities.

“Shifting the responsibility from the State to the County property tax payers and the fee/rate payers for County services, is not fair and undermines the partnership with the State that we have enjoyed in the past,” said Tavares.