Honorable Robert Bunda

President of the Senate

Twenty-Third State Legislature

Regular Session of 2005

State of Hawaii

Sir:

Your Committee on Tourism, to which was referred H.B. No. 997, H.D. 1, entitled:

begs leave to report as follows:

The purpose of this measure is to revise the percentage allocations of the transient accommodations tax revenues and to repeal the transient accommodations tax trust fund.

Your Committee received testimony in support of this measure from the Department of Land and Natural Resources, Hawaii Tourism Authority, Tourism Liaison, Hawaii Business Roundtable, Hawaii Hotel & Lodging Association, and Sierra Club-Hawaii Chapter. Testimony in opposition was received from the Department of Budget and Finance and Department of Taxation. Comments were received from Hawaii Resort Developers Conference, Waikiki Improvement Association, and Tax Foundation of Hawaii.

The tourism industry plays a large role in the health of Hawaii's economy. Consequently, the State's growth is strongly correlated to the rate of economic expansion in U.S. and international tourist markets. Your Committee finds that an increase in funding is necessary to preserve and strengthen the tourism industry.

The Hawaii Tourism Authority provides funding for various visitor assistance programs. Moneys for these programs are derived in part from the transient accommodations tax. With a dedicated source of funding created under this Act, for safety and security programs, the Hawaii Tourism Authority will have the latitude to fund existing programs or establish new ones in each county such as the aloha aina patrol under the jurisdiction of the county. The Hawaii Tourism Authority has received numerous awards for its support of visitor safety programs and hopes to increase its efforts.

Your Committee further finds that increasing the percentage the Hawaii Tourism Authority receives from the transient accommodations tax is necessary to ensure funding for other areas as well. State parks and trail systems are in critical need of upgrade and maintenance. An increase in the percentage that the Hawaii Tourism Authority receives from the transient accommodations tax will ensure a dedicated source of revenue for state parks and the statewide trails and access program to benefit residents and visitors alike, and an increase in revenues for the general fund will assist in supporting programs such as education, health, and infrastructure.

Your Committee has amended this measure by inserting the provisions of S.B. No. 1729, S.D. 2, and adding the tax surcharge in S.B. No. 1730, S.D. 2. As amended, this measure:

As affirmed by the record of votes of the members of your Committee on Tourism that is attached to this report, your Committee is in accord with the intent and purpose of H.B. No. 997, H.D. 1, as amended herein, and recommends that it pass Second Reading in the form attached hereto as H.B. No. 997, H.D. 1, S.D. 1, and be referred to the Committee on Ways and Means.