Testimonies received from BFED Committee

Testimony Opposing the FY-2027 Budget Structure Related to Transient Accommodations Tax (TAT)

Budget, Finance, and Economic Development Committee
April 20, 2026

Chair Sugimura and Members of the Committee,

I am submitting testimony regarding the proposed Fiscal Year 2027 budget, specifically the increasing reliance on Transient Accommodations Tax (TAT) revenue as a funding source for new permanent programs and revolving funds.

At the same time this budget structure is being proposed, Maui County is actively pursuing policies that will significantly reduce the number of visitor accommodations operating on this island. Bill 9 proposes the phased removal of thousands of vacation rental units currently operating in apartment districts. Those units are part of the economic base that generates Transient Accommodations Tax revenue.

This creates a fundamental fiscal contradiction.

On one hand, the County is proposing to dedicate portions of TAT revenue to new programs, including environmental, climate, and other revolving funds that will require ongoing financial support. On the other hand, the County is simultaneously advancing land-use policy that reduces the number of accommodations that generate that revenue in the first place.

Budgets must be built on stable and predictable revenue assumptions. When government creates permanent spending commitments tied to a revenue stream that it is actively shrinking through policy decisions, the result is predictable: either the programs will become underfunded or the burden will eventually shift onto local taxpayers through other forms of taxation.

Residents should be very concerned about this structure. Tourism taxes are often politically described as “visitor-funded,” but when tourism revenue declines, the programs that depend on those funds do not simply disappear. They are typically maintained through property taxes, fees, or other local revenue sources.

The County should not be creating new dedicated funds that rely heavily on TAT revenue until it clearly demonstrates how those revenues will remain stable in the face of major structural changes to the visitor accommodation market.

At a minimum, before expanding programs tied to tourism tax revenue, the Council should require a transparent fiscal analysis addressing several questions:

How much Transient Accommodations Tax revenue currently comes from the visitor units affected by Bill 9?

What is the projected loss of revenue if those units leave the visitor market?

What portion of that demand will realistically shift to hotels or resort districts?

How will the County fund the programs proposed in this budget if tourism tax revenue declines?

Without answering these questions, the current budget proposal appears to expand spending commitments while ignoring the long-term stability of the revenue source that is expected to fund them.

Responsible budgeting requires aligning policy decisions with financial reality. At present, the proposed FY-2027 budget does not appear to reconcile those two things.

For these reasons, I urge the Council to reconsider the expansion of programs funded by Transient Accommodations Tax revenue until a clear, transparent, and realistic fiscal analysis is presented to the public.

Thank you for the opportunity to testify.

Edward Codelia, Maui Resident