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The business of aloha

Kauai County asking state for more tourism-related dollars

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Léo Azambuja/The Garden Island

Rebecca Hay pays Kainoa Naihe for a take-out lunch at Sweet Marie’s Bakery in Lihue Friday.

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LIHUE — Marie Cassel, owner of Sweet Marie’s Bakery, opened her bakery in Kapaa a few years ago.

In 2011, she moved her glutten-free specialized desserts to a bigger location in Lihue, about a mile from the airport.

Since the beginning, Sweet Marie’s has had a steady flow of visitors, Cassel said, many of whom are tourists.

“I have a lot of visitors who come here, and many are repeat customers,” she said.

Her business isn’t alone in that it captures visitor dollars.

In the last three years, the County of Kauai was able to somewhat stabilize visitor-related expenses at around $44 million, while tourists dollars inside the county have been incrementally increasing. But does the county put out more than it takes in when it comes to playing host?

The short answer is yes.

The county still spends more than three dollars in visitor-related services and facilities to every dollar visitors pay toward the state Transient Accommodation Tax. The tax is a 9.25 percent surcharge on hotel rooms implemented to have tourism pay for itself.

In 2009, Kauai’s visitor industry rebounded from the crash of the economy and since then continues to grow annually — at a 5 percent rate in visitor arrivals and 10 percent in visitor spending, according to the county.

Proportionally, Kauai’s contribution to the TAT has also grown each year. It was $11.2 million in fiscal year 2010 and $13.48 million in FY 2012.

Yet since 2010, the counties’ share of the TAT has been capped at $93 million by state lawmakers. Kauai receives $13.7 million, or 14.5 percent, of the pot.

Council Chair Jay Furfaro said two weeks ago the expected amount to be collected statewide by the TAT this year is $352 million, representing a  $98 million increase from 2011 TAT collection. If the state had not capped the counties’ share of the TAT three years ago, Kauai’s share would have grown to $16.3 million, according to Furfaro.

So the county could be losing out on money.

That’s why it is asking  the state Legislature to double the counties’ share of the TAT, which means Kauai would receive $27.4 million.

Because, although Kauai’s contribution to the TAT has been increasing, it is still less than what the county gets back, and asking for additional funding may be difficult to defend at the 2014 Legislature, Furfaro said.

But operational costs related to the visitor industry are $10 million beyond what the council receives from the TAT, he said. And then there are monies spent on capital improvement projects which also address visitors.

Council legislative assistant Ashley Bunda said the county spent $44.24 million in total visitor-related expenses in FY 2012, including $24.81 million in operations and $19.43 million from the county’s CIP budget.

The equation is simple. During FY 2012, there were 21,717 visitors on Kauai each day, while the island’s population was 68,434. So 24 percent of the island’s de facto population is made up of visitors.

A large chunk of operational costs comes from safety services. Many land and ocean rescues, some of which resulted in casualties, include visitors.

Visitor-related expenses in FY 2012 for the Kauai Fire Department was $5.44 million, and for the Kauai Police Department was $6.32 million.

A spreadsheet put together by Bunda and Nakamura shows there were 275 ocean rescues in 2010 (five out of nine drowning deaths were from visitors), 196 in 2011 (10 out of 14 drowning deaths were from visitors), and 108 in 2012 (one out of six drowning deaths were visitors).

By comparison, 10 out of 21 land rescues in 2011 were from visitors (16 on state land), and 23 out of 43 land rescues in 2012 were from visitors (29 on state land). There is no data available for land rescues prior to 2011.

Additionally, 902 out of 5,535 calls received by KFD during FY 2013 involved a visitor.

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Léo Azambuja/The Garden Island

Rebecca Hay pays Kainoa Naihe for a take-out lunch at Sweet Marie’s Bakery in Lihue Friday.

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