Status of 2017 Legislative Tax Measures

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Below is our list of 2017 Legislative Tax Measures.

The first page of the list is the list of bills introduced by the Executive Branch.  These are organized by agency:

  • BED = Dept. of Business, Economic Development, and Tourism
  • BUF = Dept. of Budget and Finance
  • CCA = Dept. of Commerce and Consumer Affairs
  • PSD = Dept. of Public Safety
  • TAX = Dept. of Taxation
  • TRN = Dept. of Transportation

Subsequent pages in the list are organized by tax type, and within tax type by bill number.

Numbers in strikethrough text are measures that appear to be dead, either because they missed a deadline or because they were deferred by a committee hearing the measure.  However, no measure is permanently dead until the legislative session adjourns.

Continue reading Status of 2017 Legislative Tax Measures →

SB 4, 1st Special Session (ver. 2)

General Excise (HRS 237), Transient Accommodations Tax (HRS 237D)

SUBJECT:  GENERAL EXCISE, TRANSIENT ACCOMMODATIONS, Extend existing county surcharge and raise TAT rate to fund Honolulu rail

BILL NUMBER:  SB 4

INTRODUCED BY:  Kouchi by request

EXECUTIVE SUMMARY:  This bill is a compromise measure that uses a combination of tax types to assist the Honolulu mass transit project sometimes known as “Honolulu Rail.”  The tax types employed are:

  • The surcharge on General Excise Tax, which is extended by this bill. To the extent that this tax type is used, we caution that there may be limits on the State’s ability to withhold or restrict distribution of moneys collected.  The major advantage of this tax type is that it is already being imposed, so very little disruption will result.

 

  • The Transient Accommodations Tax, which is increased by this bill. This tax is clearly the State’s to impose and distribute as it sees fit.  The major advantage of this tax type is that it may bring in revenue now while the GET surcharge extension will bring in incremental revenue starting ten years in the future.  If moneys are borrowed now to be repaid with the incremental GET revenue, a significant amount of interest will need to be paid, adding to the burden upon taxpayers.

 

  • The Real Property Tax, which necessarily will be used by the county to pay for expenses required by the project that are not covered by the foregoing tax types, such as operation and maintenance costs of the project. This tax is clearly the county’s kuleana.

The Foundation is concerned that the proposed disbursement controls are not valid as they relate to county surcharge funds because those funds are city moneys, and is proposing corrective language.

The Foundation is also concerned that a proposed provision requiring any losses resulting from its suit against the State to be completely reimbursed by the City & County of Honolulu is unconstitutional, and recommends that the provision be deleted.

Continue reading SB 4, 1st Special Session (ver. 2) →

SB 4, 1st Special Session

General Excise (HRS 237), Transient Accommodations Tax (HRS 237D)

SUBJECT:  GENERAL EXCISE, TRANSIENT ACCOMMODATIONS, Extend existing county surcharge and raise TAT rate to fund Honolulu rail

BILL NUMBER:  SB 4

INTRODUCED BY:  Kouchi by request

EXECUTIVE SUMMARY:  This bill is a compromise measure that uses a combination of tax types to assist the Honolulu mass transit project sometimes known as “Honolulu Rail.”  The tax types employed are:

  • The surcharge on General Excise Tax, which is extended by this bill. To the extent that this tax type is used, we caution that there may be limits on the State’s ability to withhold or restrict distribution of moneys collected.  The major advantage of this tax type is that it is already being imposed, so very little disruption will result.

 

  • The Transient Accommodations Tax, which is increased by this bill. This tax is clearly the State’s to impose and distribute as it sees fit.  The major advantage of this tax type is that it may bring in revenue now while the GET surcharge extension will bring in incremental revenue starting ten years in the future.  If moneys are borrowed now to be repaid with the incremental GET revenue, a significant amount of interest will need to be paid, adding to the burden upon taxpayers.

 

  • The Real Property Tax, which necessarily will be used by the county to pay for expenses required by the project that are not covered by the foregoing tax types, such as operation and maintenance costs of the project. This tax is clearly the county’s kuleana.

The Foundation is concerned that the proposed disbursement controls are not valid as they relate to county surcharge funds because those funds are city moneys.

The Foundation is also concerned that a proposed provision requiring any losses resulting from its suit against the State to be completely reimbursed by the City & County of Honolulu is unconstitutional.

Continue reading SB 4, 1st Special Session →

Honolulu Rail Informational Briefing, August 14, 2017

General Excise (HRS 237), Real Property (HRS 246)

SUBJECT:  Honolulu Rail Informational Briefing, August 14, 2017.  This information is submitted in response to the Notice of Informational Briefing by the Senate Committees on TRE, PSM, and WAM, and the House Committees on TRN and FIN.

EXECUTIVE SUMMARY:  The Committees are considering various options to assist the City & County of Honolulu in financing a rapid transit system.  This testimony discusses various financing options and constitutional and statutory restrictions on them.

General Excise Tax Surcharge:  It must be remembered that this surcharge is not the State’s money.  The State authorized the counties to adopt taxing ordinances under certain conditions and is assisting with collecting and remitting the surcharge funds to the counties; however, the tax is imposed by county ordinance, not state statute.  The county ordinance only impacts businesses and residents of the county enacting it.  The State’s ability to enact oversight restrictions and conditions affecting this money is limited.

State Tax Monies:  Monies raised from statewide taxes, such as the General Excise Tax and the Transient Accommodations Tax, do belong to the State and may be disbursed by the State.  Because the tax is imposed by state statute, it impacts businesses and residents throughout the State.  The State’s ability to enact oversight restrictions and conditions affecting this money is broad.

County Property Tax Monies:  Monies raised from real property taxes unquestionably belong to the counties under the Hawaii Constitution as it now exists.  The State has no ability to enact oversight restrictions and conditions affecting this money.

Continue reading Honolulu Rail Informational Briefing, August 14, 2017 →

SB 1146, HD-2

Miscellaneous

SUBJECT:  MISCELLANEOUS, Exempt Affordable Housing from School Impact Fees

BILL NUMBER:  SB 1146, HD-2

INTRODUCED BY:  House Committee on Education

EXECUTIVE SUMMARY:  Our Department of Education now may require real estate developers to pay it an “education impact fee” for the anticipated costs of new school facilities.  Although the law as originally designed explicitly requires government housing projects and affordable housing projects to pay this fee as well, this bill proposes to exempt such projects from the fee.  The question left unanswered is:  Who is expected to pay the freight for the projects that are exempted?

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SB 1183, HD-1

Miscellaneous

SUBJECT:  MISCELLANEOUS, Extend, and Change 10% Skim Off, County Surcharge

BILL NUMBER:  SB 1183, HD-1

INTRODUCED BY:  House Committee on Transportation

EXECUTIVE SUMMARY:  A contributing factor to the financial woes of the City and County of Honolulu is the fact that the state is siphoning 10% of all rail surcharge collections into the general fund.  This diversion was supposed to represent payment to the state for the costs incurred in administering the surcharge, but the amount diverted turns is a massive amount of money, roughly $25 million a year which is almost as much as the entire operating budget of the department of taxation.  The amount is obviously far in excess of the costs involved.  The Foundation has contended that a diversion of the City and County’s revenue of that magnitude is unconstitutional and its lawsuit is still pending in the court system.

This bill changes the 10% diversion to an unspecified amount, together with an unspecified amount for the State Department of Transportation for state highway projects.  This does not solve the constitutional problems, namely that the State is skimming money off a county-imposed tax to fund state projects where the burden of paying the tax is borne only by the county residents and businesses.

Continue reading SB 1183, HD-1 →

HB 1593, SD-1

Miscellaneous

SUBJECT:  MISCELLANEOUS, Raid GEMS for Rebate Program

BILL NUMBER:  HB 1593, SD-1

INTRODUCED BY:  Senate Committees on Transportation and Energy and Commerce, Consumer Protection, and Health

EXECUTIVE SUMMARY:  Proposes a rebate program for energy storage systems.  Funds the program by raiding the GEMS fund, which may well be in breach of the bond indentures signed when the initial $150 million for the GEMS fund was raised on the bond market.

Deletes the PUC’s regulatory authority over GEMS.

Continue reading HB 1593, SD-1 →

HB 1044, SD-1

Net Income (HRS 235)

SUBJECT:  INCOME, Renewable Fuels Credit Administration

BILL NUMBER:  HB 1044, SD-1

INTRODUCED BY:  Senate Committees on Transportation and Energy and Economic Development, Tourism, and Technology

EXECUTIVE SUMMARY:  Provides that DBEDT will no longer certify, administer, and verify claims for this credit.  Instead, DBEDT would receive an independent, third-party certified statement from the credit claimant and would acknowledge receipt of the statement.  DBEDT would keep tabs on the $3 million annual aggregate cap, but complains that it lacks the required resources or expertise.

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HB 547, SD-1

Net Income (HRS 235)

SUBJECT:  NET INCOME, Credit for Exchange Student Host Families

BILL NUMBER:  HB 547, SD-1

INTRODUCED BY:  Senate Committees on Education and International Affairs and the Arts

EXECUTIVE SUMMARY:  Adds a new credit for expenses paid by families hosting foreign exchange students.  A direct appropriation would be preferable as it would provide some accountability for the taxpayer funds being utilized to support this effort.

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HB 1244, SD-1

Net Income (HRS 235)

SUBJECT:  INCOME, Modify Tax Credit for Cesspool Conversion

BILL NUMBER:  HB 1244, SD-1

INTRODUCED BY:  Senate Committees on Commerce, Consumer Protection, and Health and Agriculture and Environment

EXECUTIVE SUMMARY:  Amends the cesspool upgrade, conversion, or connection income tax credit to: (1) make the tax credit refundable; (2) disallow the tax credit for taxpayers whose federal adjusted gross income exceeds certain amounts; (3) expand the criteria for cesspools that qualify for the tax credit; and (4) extend the sunset date to 12/31/2022.  Requires that all cesspools in the State be upgraded or converted to septic or aerobic treatment unit systems or connected to sewer systems.  Establishes a grant program to assist with cesspool upgrade or conversion costs.

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HB 552, SD-1

Net Income (HRS 235)

SUBJECT:  INCOME, Extend Obamacare Individual Mandate to Hawaii Law

BILL NUMBER:  HB 552, SD-1

INTRODUCED BY:  Senate Committee on Commerce, Consumer Protection, and Health

EXECUTIVE SUMMARY:  Reacting to threatened changes to Obamacare, this bill attempts to enact Obamacare, together with its individual mandate, in Hawaii.  The federal effort to repeal Obamacare has run into a roadblock, perhaps making it premature to adopt legislation like this in Hawaii.

If it is decided that this legislation is needed now, we urge great care.  Adapting a 900-page federal act to state law is not easy, and doing it in a 32-page bill probably means things are going to be missed.

Continue reading HB 552, SD-1 →