Thursday, March 28, 2024
Hawai'i Free Press

Current Articles | Archives

Sunday, April 30, 2017
Making Money at the County Level
By Tom Yamachika @ 6:01 AM :: 4441 Views :: Taxes

Making Money at the County Level

by Tom Yamachika, President, Tax Foundation Hawaii

When we speak of and follow government in this space, we usually concentrate on state government and the state legislature. But we mustn’t forget that there are county governments as well. They supply important services such as police, fire, park and road maintenance, trash and sewer disposal, and water supply.

How does a county raise money to pay for these services?

Under the Hawaii Constitution, the counties have exclusive authority over only the real property tax. By exclusive authority we mean that the counties can determine the different classifications of property to tax, and the rates to be applied to each. In 2002, in a case called Anzai v. Honolulu, our supreme court said that the State has no right to force the counties to exempt anything, and generally can’t tell the counties what to do with real property tax money.

In contrast, the State has general taxing power and can (and does) impose taxes on many different things. The State may also delegate its taxing power to the counties, and if it does so, it does have some say over how the revenue is going to be spent. This is how the Honolulu rail surcharge came about. The State set up the mechanics of the surcharge, and then said that each county could participate if it wished. Any county wishing to participate, however, needed to enact a taxing ordinance, and it needed to use the funds on transportation projects. The City & County of Honolulu was the only county that bought in.

The State also gives the counties authority to impose a gallonage tax on fuel, a weight tax on motor vehicles, and an annual registration fee for motor vehicles. All counties presently impose these taxes at varying rates. So, for example, Maui adds 23 cents per gallon of gas as county tax, while the Big Island adds 8.8 cents.

Another statute gives the counties authority to impose user fees. All counties use this authority as well. A 1999 case called State v. Medeiros showed that this authority had limits. The Hawaii Supreme Court said that a legitimate user fee “(1) applies to the direct beneficiary of a particular service, (2) is allocated directly to defraying the costs of providing the service, and (3) is reasonably proportionate to the benefit received.” The City & County of Honolulu slapped a so-called user fee on each criminal convicted to cover costs of prosecution, but the fee was found to be a general revenue raising measure, and was invalidated as being actually a tax.

The State also has been sharing the transient accommodations tax, or TAT, with the counties since 1990. The amount shared has been a bone of contention in recent years. When the TAT was imposed at 7.25%, after satisfying specified earmarks, 44.8% was distributed to the counties.  The TAT rate was increased (on a “temporary” basis) to 9.25% under a 2009 law, and in 2013 the 9.25% rate was made permanent while fixing $93 million as the amount to be shared among the counties. The counties complained about their allocations, thinking that they should get 45% of the current TAT take, which is more like $150 million. (Ironically, the counties argued that they needed stable and predictable funding. Isn’t a fixed amount stable and predictable?) The debate over this sharing has raged over the past four years and is still ongoing. Most counties now find that the TAT sharing is an indispensable item in their revenue budget, second only to the real property tax.

Given the limited amount of dollars that taxpayers are willing or able to share with any government, our lawmakers must keep in mind that the funding of services at all levels needs to be balanced and reflective of the priorities of the constituency. There will be and should be an ongoing healthy debate over these services, and the mechanisms for funding them.

Links

TEXT "follow HawaiiFreePress" to 40404

Register to Vote

2aHawaii

808 Silent Majority

Aloha Pregnancy Care Center

AntiPlanner

Antonio Gramsci Reading List

A Place for Women in Waipio

Ballotpedia Hawaii

Broken Trust

Build More Hawaiian Homes Working Group

Christian Homeschoolers of Hawaii

Cliff Slater's Second Opinion

DVids Hawaii

FIRE

Fix Oahu!

Frontline: The Fixers

Genetic Literacy Project

Grassroot Institute

Habele.org

Hawaii Aquarium Fish Report

Hawaii Aviation Preservation Society

Hawaii Catholic TV

Hawaii Christian Coalition

Hawaii Cigar Association

Hawaii ConCon Info

Hawaii Debt Clock

Hawaii Defense Foundation

Hawaii Family Forum

Hawaii Farmers and Ranchers United

Hawaii Farmer's Daughter

Hawaii Federalist Society

Hawaii Federation of Republican Women

Hawaii History Blog

Hawaii Homeschool Association

Hawaii Jihadi Trial

Hawaii Legal News

Hawaii Legal Short-Term Rental Alliance

Hawaii Matters

Hawaii's Partnership for Appropriate & Compassionate Care

Hawaii Public Charter School Network

Hawaii Rifle Association

Hawaii Shippers Council

Hawaii Smokers Alliance

Hawaii State Data Lab

Hawaii Together

HIEC.Coop

HiFiCo

Hiram Fong Papers

Homeschool Legal Defense Hawaii

Honolulu Moms for Liberty

Honolulu Navy League

Honolulu Traffic

House Minority Blog

Imua TMT

Inouye-Kwock, NYT 1992

Inside the Nature Conservancy

Inverse Condemnation

Investigative Project on Terrorism

July 4 in Hawaii

Kakaako Cares

Keep Hawaii's Heroes

Land and Power in Hawaii

Legislative Committee Analysis Tool

Lessons in Firearm Education

Lingle Years

Managed Care Matters -- Hawaii

Malama Pregnancy Center of Maui

MentalIllnessPolicy.org

Military Home Educators' Network Oahu

Missile Defense Advocacy

MIS Veterans Hawaii

NAMI Hawaii

Natatorium.org

National Christian Foundation Hawaii

National Parents Org Hawaii

NFIB Hawaii News

No GMO Means No Aloha

Not Dead Yet, Hawaii

NRA-ILA Hawaii

Oahu Alternative Transport

Obookiah

OHA Lies

Opt Out Today

OurFutureHawaii.com

Patients Rights Council Hawaii

PEACE Hawaii

People vs Machine

Practical Policy Institute of Hawaii

Pritchett Cartoons

Pro-GMO Hawaii

P.U.E.O.

RailRipoff.com

Rental by Owner Awareness Assn

ReRoute the Rail

Research Institute for Hawaii USA

Rick Hamada Show

RJ Rummel

Robotics Organizing Committee

School Choice in Hawaii

SenatorFong.com

Sink the Jones Act

Statehood for Guam

Talking Tax

Tax Foundation of Hawaii

The Real Hanabusa

Time Out Honolulu

Trustee Akina KWO Columns

UCC Truths

US Tax Foundation Hawaii Info

VAREP Honolulu

Waagey.org

West Maui Taxpayers Association

What Natalie Thinks

Whole Life Hawaii

Yes2TMT