Airbnb Revenue Loss Leaves a $33M Hole in Executive Budget

Feb 28, 2018

Senate Ways and Means Committee Meeting
Credit Wayne Yoshioka

State lawmakers are tallying spending bills to balance the budget. But, as HPR’s Wayne Yoshioka reports, there are some bumps in the road.


(L-R) State director of finance, Laurel Johnston, Department of Taxation director, Linda Chu Takayama and Governor's administrative director, Ford Fuchigami, testify before WAM.
Credit Wayne Yoshioka

The governor’s fiscal year 2019 operating budget request is $7.4 billion in state general funds.  But, 25 percent of that money is required to pay-down the unfunded liabilities for public employee retirement and health benefits.  Budget Program Planning and Management Division administrator, Neal Miyahira, says the state’s annual required contribution or ARC has also gone up.


“The increase as part of pre-funding for the unfunded liability, and that’s $25 million.  And then, benefit payments for the current year, we need another $23 million.  So, overall, we’re looking at $48.9 million going out.”


The governor’s financial plan included revenue increases and $33 million in projected revenue from online accommodations marketing company, Airbnb.   The governor’s administrative director, Ford Fuchigami, says the Airbnb tax collection offer is currently off the table…


“A couple of days ago we received a letter from Airbnb saying that they will not

WAM chair, Donovan Delacruz and vice chair, Gilbert Keith Agaron, confer on the measures.
Credit Wayne Yoshioka


voluntarily participate as a collection agent.  That kinda threw a loop in it.  Prior to that, there should have been no reason why we couldn’t collect the $33 million.”


But the state constitution requires payment of public employee retirement and health benefits up front, before all other funding.  State director of finance, Laurel Johnston, says the administration could impose spending restrictions on state departments to make up part of the shortfall.


“When we do our restrictions, which we do in an abundance of caution, we would find about $40 million for a 5 percent restriction.  And we don’t restrict the non-discretionary stuff, obviously, this is what we call discretionary.”


But, Senate Ways and Means Committee Chair, Donovan Delacruz, says the state should pursue the Airbnb option and expand the incentives available to them.”


“You know we gave them amnesty on the taxation component.  But what about the land use component.  We should meet with the counties in regards to land use violations to see if that would help bring everybody to the table.  We need a carrot and a big stick.”


For HPR News, I’m Wayne Yoshioka.