HB 2147: Constitutional Amendment; Public Education; Residential Investment Property Surcharge

A BILL FOR AN ACT

PROPOSING AMENDMENTS TO ARTICLES VIII AND X OF THE CONSTITUTION OF THE STATE OF HAWAII TO AUTHORIZE THE LEGISLATURE TO ESTABLISH A SURCHARGE ON RESIDENTIAL INVESTMENT PROPERTY TO INCREASE FUNDING FOR PUBLIC EDUCATION.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

     SECTION 1.  The legislature finds that article X, section 1, of the Constitution of the State of Hawaii requires the State to provide a system of public education, which includes K-12 and post-secondary education institutions.  Compared to other states, Hawaii is unique because the State is responsible for funding public education and has only one public higher education system.  As a result, funding for public education in Hawaii is primarily sourced from the State's general revenues.

     The legislature further finds that public education in Hawaii is not adequately funded.  According to a 2017 analysis of real property tax in Hawaii performed by the department of business, economic development, and tourism, education expenditures in Hawaii – at 27.3 per cent combined state and local government expenditures – ranked the lowest in the nation.  At $12,855 per child, Hawaii trailed mainland school districts of similar size when adjusted for cost of living.  A December 2024 research brief further reports that, despite having the fourth-highest median household income, Hawaii ranks thirty-ninth nationally in public school spending per $1,000 of per capita income.  This persistent underfunding has contributed to one of the highest private school enrollment rates in the country, as many families opt out of the public school system.

     The legislature additionally finds that sixty-six per cent of Hawaii's public schools and public charter schools are designated as Title I schools by the United States Department of Education, meaning they serve high concentrations of low-income students and receive federal funding to help ensure all children meet academic standards.  A majority of public school students are now considered high-needs, which includes students who qualify for free or reduced-price lunch, English language learners, and students receiving special education services.

     The legislature further finds that chronic underfunding undermines the State's goals of providing quality education and preparing a well-educated workforce.  This leads to delayed repairs to school facilities, overheated classrooms, larger class sizes, inadequate classroom supplies, elimination of arts and career and technical education courses, budget cuts for special education and English language learner programs, higher in-state tuition at the university of Hawaii, and more vacant teacher positions statewide.

     The legislature additionally finds that Hawaii has consistently ranked among the worst states for teachers in terms of salary competitiveness and working conditions.  Teachers in Hawaii earn 15.5 per cent less than other residents with bachelor's degrees.  Research shows that low teacher pay contributes to high attrition rates, which in turn negatively affects student outcomes.

     The legislature also finds that Hawaii's K-12 school and university facilities are aging and require investment.  As of 2022, the average age of public school buildings in Hawaii was seventy-two years old, and approximately twenty per cent of public schools were over one hundred years old.  Similarly, many buildings at the university of Hawaii were constructed more than forty years ago.  Classroom facilities, student housing, campus infrastructure, and support systems have not received adequate investment for proper maintenance or modernization.

     The legislature further finds that funding for public higher education in the State has declined as a portion of the state budget from nine per cent in 2013 to seven per cent in 2022.  Meanwhile, college costs continue to rise nationally.  The 2022 Hawaii Databook notes that faculty, staff, and personnel at the university of Hawaii declined between 2019 to 2022.  Reduced state funding threatens the sustainability and availability of programs at the State's only public higher education institution.

     The legislature further notes that the cost of housing is a major barrier to affordability in Hawaii.  Real estate owned by nonresident investors contributes to housing unaffordability and economic inequality.  At the same time, the State needs a highly educated local workforce to support its industries and communities.

     The legislature believes that it is necessary to develop a new means of funding public education to ensure that Hawaii can meet the social and economic demands of the twenty-first century.  Enabling funding from real estate speculation to support public education infrastructure is both necessary and rational.

     The purpose of this Act is to propose an amendment to the Constitution of the State of Hawaii to repeal the counties' exclusive power to tax real property, and to authorize the legislature to establish a state surcharge on real property taxes levied by the counties on certain residential investment properties, for the purpose of helping to fund public education for all of Hawaii's children and adults.

     SECTION 2.  Article VIII, section 3, of the Constitution of the State of Hawaii is amended to read as follows:

"TAXATION AND FINANCE

     Section 3.  The taxing power shall be reserved to the State, except so much thereof as may be delegated by the legislature to the political subdivisions[, and except]; provided that all functions, powers and duties relating to the taxation of real property shall be exercised [exclusively] by the counties, with the exception of the county of Kalawao[.]; provided further that the legislature may establish a surcharge on the counties' taxation of residential investment property as provided in Article X, Section 1.  The legislature shall have the power to apportion state revenues among the several political subdivisions."

     SECTION 3.  Article X, section 1, of the Constitution of the State of Hawaii is amended to read as follows:

"PUBLIC EDUCATION

     Section 1.  The State shall provide for the establishment, support and control of a statewide system of public schools free from sectarian control, a state university, public libraries and [such] other educational institutions as may be deemed desirable, including physical facilities therefor.  There shall be no discrimination in public educational institutions because of race, religion, sex or ancestry; nor shall public funds be appropriated for the support or benefit of any sectarian or nonsectarian private educational institution[, except]; provided that proceeds of special purpose revenue bonds authorized or issued under section 12 of Article VII may be appropriated to finance or assist:

     1.  Not-for-profit corporations that provide early childhood education and care facilities serving the general public; and

     2.  Not-for-profit private [nonsectarian and] sectarian and nonsectarian elementary schools, secondary schools, colleges and universities.

     The legislature may by law establish a surcharge on real property taxation levied by the counties on residential investment property valued at $3,000,000 or more to help fund public education for all of Hawaii's children and adults; provided that the surcharge shall not apply to any affordable housing development that is subject to a regulatory agreement with the State or a county.

     For the purposes of this section:

     "Residential investment property" means all real property, including apartments and condominiums and appurtenances thereto, including buildings, structures, fences and improvements erected on or affixed to the real property, and any fixture that is erected on or affixed to the land, buildings, structures, fences and improvements; and all machinery and other mechanical or other allied equipment, and the foundations thereof, that are dedicated for residential use and that do not serve as the owner's primary residence.

     "Surcharge" means an additional amount imposed on an existing tax."

     SECTION 4.  The question to be printed on the ballot shall be as follows:

     "Shall the Hawaii State Constitution be amended to:

     (1)  Repeal the counties' exclusive authority to exercise functions, powers, and duties relating to the taxation of real property; and

     (2)  Authorize the legislature to establish, through the enactment of legislation, a state surcharge on real property taxation levied by the counties on residential investment properties valued at $3,000,000 or more, exempting from the surcharge any property that serves as an owner's primary residence, for the purpose of helping to fund public education for all of Hawaii's children and adults?"

     SECTION 5.  Constitutional material to be repealed is bracketed and stricken.  New constitutional material is underscored.

     SECTION 6.  This Act shall take effect on July 1, 3000, and this amendment shall take effect upon compliance with article XVII, section 3, of the Constitution of the State of Hawaii.

Report Title:

Constitutional Amendment; Public Education; Residential Investment Property Surcharge

Description:

Proposes amendments to the Hawaii State Constitution to repeal the counties' exclusive power to tax real property, and to authorize the Legislature to establish a state surcharge on real property taxes levied by the counties on certain residential investment properties, for the purpose of helping to fund public education for all of Hawaii's children and adults.  Effective 7/1/3000.  (HD2)

The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.

A BILL FOR AN ACT

PROPOSING AMENDMENTS TO ARTICLES VIII AND X OF THE CONSTITUTION OF THE STATE OF HAWAII TO AUTHORIZE THE LEGISLATURE TO ESTABLISH A SURCHARGE ON RESIDENTIAL INVESTMENT PROPERTY TO INCREASE FUNDING FOR PUBLIC EDUCATION.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

     SECTION 1.  The legislature finds that article X, section 1, of the Constitution of the State of Hawaii requires the State to provide a system of public education, which includes K-12 and post-secondary education institutions.  Compared to other states, Hawaii is unique because the State is responsible for funding public education and has only one public higher education system.  As a result, funding for public education in Hawaii is primarily sourced from the State's general revenues.

     The legislature further finds that public education in Hawaii is not adequately funded.  According to a 2017 analysis of real property tax in Hawaii performed by the department of business, economic development, and tourism, education expenditures in Hawaii – at 27.3 per cent combined state and local government expenditures – ranked the lowest in the nation.  At $12,855 per child, Hawaii trailed mainland school districts of similar size when adjusted for cost of living.  A December 2024 research brief further reports that, despite having the fourth-highest median household income, Hawaii ranks thirty-ninth nationally in public school spending per $1,000 of per capita income.  This persistent underfunding has contributed to one of the highest private school enrollment rates in the country, as many families opt out of the public school system.

     The legislature additionally finds that sixty-six per cent of Hawaii's public schools and public charter schools are designated as Title I schools by the United States Department of Education, meaning they serve high concentrations of low-income students and receive federal funding to help ensure all children meet academic standards.  A majority of public school students are now considered high-needs, which includes students who qualify for free or reduced-price lunch, English language learners, and students receiving special education services.

     The legislature further finds that chronic underfunding undermines the State's goals of providing quality education and preparing a well-educated workforce.  This leads to delayed repairs to school facilities, overheated classrooms, larger class sizes, inadequate classroom supplies, elimination of arts and career and technical education courses, budget cuts for special education and English language learner programs, higher in-state tuition at the university of Hawaii, and more vacant teacher positions statewide.

     The legislature additionally finds that Hawaii has consistently ranked among the worst states for teachers in terms of salary competitiveness and working conditions.  Teachers in Hawaii earn 15.5 per cent less than other residents with bachelor's degrees.  Research shows that low teacher pay contributes to high attrition rates, which in turn negatively affects student outcomes.

     The legislature also finds that Hawaii's K-12 school and university facilities are aging and require investment.  As of 2022, the average age of public school buildings in Hawaii was seventy-two years, and approximately twenty per cent of public schools were over one hundred years old.  Similarly, many buildings at the university of Hawaii were constructed more than forty years ago.  Classroom facilities, student housing, campus infrastructure, and support systems have not received adequate investment for proper maintenance or modernization.

     The legislature further finds that funding for public higher education in the State has declined as a portion of the state budget from nine per cent in 2013 to seven per cent in 2022.  Meanwhile, college costs continue to rise nationally.  The 2022 Hawaii Databook notes that faculty, staff, and personnel at the university of Hawaii declined between 2019 to 2022.  Reduced state funding threatens the sustainability and availability of programs at the State's only public higher education institution.

     The legislature further notes that the cost of housing is a major barrier to affordability in Hawaii.  Real estate owned by nonresident investors contributes to housing unaffordability and economic inequality.  At the same time, the State needs a highly educated local workforce to support its industries and communities.

     The legislature believes that it is necessary to develop a new means of funding public education to ensure that Hawaii can meet the social and economic demands of the twenty-first century.  Enabling funding from real estate speculation to support public education infrastructure is both necessary and rational.

     The purpose of this Act is to propose an amendment to the Constitution of the State of Hawaii to repeal the counties' exclusive power to tax real property, and to authorize the legislature to establish a state surcharge on real property taxes levied by the counties on certain residential investment properties, for the purpose of helping to fund public education for all of Hawaii's children and adults.

     SECTION 2.  Article VIII, section 3, of the Constitution of the State of Hawaii is amended to read as follows:

"TAXATION AND FINANCE

     Section 3.  The taxing power shall be reserved to the State, except so much thereof as may be delegated by the legislature to the political subdivisions[, and except]; provided that all functions, powers and duties relating to the taxation of real property shall be exercised [exclusively] by the counties, with the exception of the county of Kalawao[.]; provided further that the legislature may establish a surcharge on the counties' taxation of residential investment property as provided in Article X, Section 1.  The legislature shall have the power to apportion state revenues among the several political subdivisions."

     SECTION 3.  Article X, section 1, of the Constitution of the State of Hawaii is amended to read as follows:

"PUBLIC EDUCATION

     Section 1.  The State shall provide for the establishment, support and control of a statewide system of public schools free from sectarian control, a state university, public libraries and [such] other educational institutions as may be deemed desirable, including physical facilities therefor.  There shall be no discrimination in public educational institutions because of race, religion, sex or ancestry; nor shall public funds be appropriated for the support or benefit of any sectarian or nonsectarian private educational institution[, except]; provided that proceeds of special purpose revenue bonds authorized or issued under section 12 of Article VII may be appropriated to finance or assist:

     1.  Not-for-profit corporations that provide early childhood education and care facilities serving the general public; and

     2.  Not-for-profit private [nonsectarian and] sectarian and nonsectarian elementary schools, secondary schools, colleges and universities.

     The legislature may by law establish a surcharge on real property taxation levied by the counties on residential investment property valued at three million dollars or more to help fund public education for all of Hawaii's children and adults.

     For the purposes of this section:

     "Residential investment property" means all real property including apartments and condominiums and appurtenances thereto, including buildings, structures, fences and improvements erected on or affixed to the real property, and any fixture that is erected on or affixed to the land, buildings, structures, fences and improvements; and all machinery and other mechanical or other allied equipment, and the foundations thereof, that are dedicated for residential use and that do not serve as the owner's primary residence; provided that the surcharge shall not apply to any affordable housing development that is subject to a regulatory agreement with the State or a county.

     "Surcharge" means an additional charge prescribed by a tax."

     SECTION 4.  The question to be printed on the ballot shall be as follows:

     "Shall the legislature be authorized to improve funding for public education by establishing a surcharge on residential investment properties valued at three million dollars ($3,000,000) or more, not including any property that serves as an owner's primary residence?"

     SECTION 5.  Constitutional material to be repealed is bracketed and stricken.  New constitutional material is underscored.

     SECTION 6.  This Act shall take effect on July 1, 3000, and this amendment shall take effect upon compliance with article XVII, section 3, of the Constitution of the State of Hawaii.

Report Title:

Constitutional Amendment; Public Education; Residential Investment Property Surcharge

Description:

Proposes amendments to the Hawaii State Constitution to repeal the counties' exclusive power to tax real property, and to authorize the Legislature to establish a state surcharge on real property taxes levied by the counties on certain residential investment properties, for the purpose of helping to fund public education for all of Hawaii's children and adults.  Effective 7/1/3000.  (HD1)

The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.

A BILL FOR AN ACT

PROPOSING AMENDMENTS TO ARTICLES VIII AND X OF THE CONSTITUTION OF THE STATE OF HAWAII TO AUTHORIZE THE LEGISLATURE TO ESTABLISH A SURCHARGE ON RESIDENTIAL INVESTMENT PROPERTY TO INCREASE FUNDING FOR PUBLIC EDUCATION.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

     SECTION 1.  The legislature finds that article X, section 1, of the Constitution of the State of Hawaii requires the State to provide a system of public education, which includes K-12 and post-secondary education institutions.  Compared to other states, Hawaii is unique because the State is responsible for funding public education and has only one public higher education system.  As a result, funding for public education in Hawaii is primarily sourced from the State's general revenues.

     The legislature further finds that public education in Hawaii is not adequately funded.  According to a 2017 analysis of real property tax in Hawaii performed by the department of business, economic development, and tourism, education expenditures in Hawaii – at 27.3 per cent combined state and local government expenditures – ranked the lowest in the nation.  At $12,855 per child, Hawaii trailed mainland school districts of similar size when adjusted for cost of living.  A December 2024 research brief further reports that, despite having the fourth-highest median household income, Hawaii ranks thirty-ninth nationally in public school spending per $1,000 of per capita income.  This persistent underfunding has contributed to one of the highest private school enrollment rates in the country, as many families opt out of the public school system.

     The legislature additionally finds that sixty-six per cent of Hawaii's public schools and public charter schools are designated as Title I schools by the United States Department of Education, meaning they serve high concentrations of low-income students and receive federal funding to help ensure all children meet academic standards.  A majority of public school students are now considered high-needs, which includes students who qualify for free or reduced-price lunch, English language learners, and students receiving special education services.

     The legislature notes that the Trump administration is proposing substantial reductions and eliminations in federal education funding that will place additional pressure on state and local education systems.  The administration's proposed federal budget would cut the United States Department of Education's overall budget by approximately fifteen per cent and eliminate all funding for English language learner and migrant education programs.  It would also consolidate eighteen existing funding streams — including programs supporting rural schools, civics education, at-risk youth, and students experiencing homelessness — and reduce the combined funding from roughly $6,500,000,000 to $2,000,000,000.  According to a tool developed by the Education Law Center and New York University's Metropolitan Center for Research on Equity and the Transformation of Schools, Hawaii public schools may lose an estimated $72,457,243 in federal K-12 funding under these proposed 2026 cuts.  These federal funding shifts underscore the urgency of generating new, reliable revenue tools to support Hawaii's K-12 and post-secondary education systems.

     The legislature further finds that chronic underfunding undermines the State's goals of providing quality education and preparing a well-educated workforce.  It leads to delayed repairs to school facilities, overheated classrooms, larger class sizes, inadequate classroom supplies, elimination of arts and career and technical education courses, budget cuts for special education and English language learner programs, higher in-state tuition at the university of Hawaii, and more vacant teacher positions statewide.

     The legislature additionally finds that Hawaii has consistently ranked among the worst states for teachers in terms of salary competitiveness and working conditions.  Teachers in Hawaii earn 15.5 per cent less than other residents with bachelor's degrees.  Research shows that low teacher pay contributes to high attrition rates, which in turn negatively affects student outcomes.

     The legislature also finds that Hawaii's K-12 school and university facilities are aging and require investment.  As of 2022, the average age of public school buildings in Hawaii was seventy-two years, and approximately twenty per cent of public schools were over one hundred years old.  Similarly, many buildings at the university of Hawaii were constructed more than forty years ago.  Classroom facilities, student housing, campus infrastructure, and support systems have not received adequate investment for proper maintenance or modernization.

     The legislature further finds that funding for public higher education in the State has declined as a portion of the state budget from nine per cent in 2013 to seven per cent in 2022.  Meanwhile, college costs continue to rise nationally.  The 2022 Hawaii Databook notes that faculty, staff, and personnel at the university of Hawaii declined between 2019 to 2022.  Reduced state funding threatens the sustainability and availability of programs at the State's only public higher education institution.

     The legislature further notes that the cost of housing is a major barrier to affordability in Hawaii.  Real estate owned by nonresident investors contributes to housing unaffordability and economic inequality.  At the same time, the State needs a highly educated local workforce to support its industries and communities.

     The legislature believes that it is necessary to develop a new means of funding public education to ensure that Hawaii can meet the social and economic demands of the twenty-first century.  Enabling funding from real estate speculation to support public education infrastructure is both necessary and rational.

     The purpose of this Act is to propose an amendment to the Constitution of the State of Hawaii to repeal the counties' exclusive power to tax real property, and to authorize the legislature to establish a state surcharge on real property taxes levied by the counties on certain residential investment properties, for the purpose of helping to fund public education for all of Hawaii's children and adults.

     SECTION 2.  Article VIII, section 3, of the Constitution of the State of Hawaii is amended to read as follows:

"TAXATION AND FINANCE

     Section 3.  The taxing power shall be reserved to the State, except so much thereof as may be delegated by the legislature to the political subdivisions[, and except]; provided that all functions, powers and duties relating to the taxation of real property shall be exercised [exclusively] by the counties, with the exception of the county of Kalawao[.]; provided further that the legislature may establish a surcharge on the counties' taxation of residential investment property as provided in Article X, section 1.  The legislature shall have the power to apportion state revenues among the several political subdivisions."

     SECTION 3.  Article X, section 1, of the Constitution of the State of Hawaii is amended to read as follows:

"PUBLIC EDUCATION

     Section 1.  The State shall provide for the establishment, support and control of a statewide system of public schools free from sectarian control, a state university, public libraries and [such] other educational institutions as may be deemed desirable, including physical facilities therefor.  There shall be no discrimination in public educational institutions because of race, religion, sex or ancestry; nor shall public funds be appropriated for the support or benefit of any sectarian or nonsectarian private educational institution[, except]; provided that proceeds of special purpose revenue bonds authorized or issued under section 12 of Article VII may be appropriated to finance or assist:

     1.  Not-for-profit corporations that provide early childhood education and care facilities serving the general public; and

     2.  Not-for-profit private [nonsectarian and] sectarian and nonsectarian elementary schools, secondary schools, colleges and universities.

     The legislature may by law establish a surcharge on real property taxation levied by the counties on residential investment property valued at three million dollars or more to help fund public education for all of Hawaii's children and adults.

     For the purposes of this section:

     "Residential investment property" means all real property including apartments and condominiums and appurtenances thereto, including buildings, structures, fences and improvements erected on or affixed to the real property, and any fixture that is erected on or affixed to the land, buildings, structures, fences and improvements; and all machinery and other mechanical or other allied equipment, and the foundations thereof, that are dedicated for residential use and that do not serve as the owner's primary residence; provided that the surcharge shall not apply to any affordable housing development that is subject to a regulatory agreement with the State or a county."

     SECTION 4.  The question to be printed on the ballot shall be as follows:

     "Shall the legislature be authorized to improve funding for public education by establishing a surcharge on residential investment properties valued at three million dollars ($3,000,000) or more, not including any property that serves as an owner's primary residence?"

     SECTION 5.  Constitutional material to be repealed is bracketed and stricken.  New constitutional material is underscored.

     SECTION 6.  This amendment shall take effect upon compliance with article XVII, section 3, of the Constitution of the State of Hawaii.

Report Title:

Constitutional Amendment; Public Education; Residential Investment Property Surcharge

Description:

Proposes amendments to the Hawaii State Constitution to repeal the counties' exclusive power to tax real property, and to authorize the Legislature to establish a state surcharge on real property taxes levied by the counties on certain residential investment properties, for the purpose of helping to fund public education for all of Hawaii's children and adults.

The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.

STAND. COM. REP. NO.  1011-26

Honolulu, Hawaii

                , 2026

RE:   H.B. No. 2147

      H.D. 2

Honorable Nadine K. Nakamura

Speaker, House of Representatives

Thirty-Third State Legislature

Regular Session of 2026

State of Hawaii

Madame:

     Your Committee on Finance, to which was referred H.B. No. 2147, H.D. 2, entitled:

"A BILL FOR AN ACT PROPOSING AMENDMENTS TO ARTICLES VIII AND X OF THE CONSTITUTION OF THE STATE OF HAWAII TO AUTHORIZE THE LEGISLATURE TO ESTABLISH A SURCHARGE ON RESIDENTIAL INVESTMENT PROPERTY TO INCREASE FUNDING FOR PUBLIC EDUCATION,"

begs leave to report as follows:

     The purpose of this measure is to propose a constitutional amendment to repeal the counties' exclusive power to tax real property and authorize the Legislature to establish a state surcharge on county real property taxes on certain residential investment properties, to help fund public education for all of Hawaii's children and adults.

     Your Committee received testimony in support of this measure from the Hawaii Teacher Standards Board; Hawaiʻi State Teachers Association; Democratic Party of Hawaiʻi Education Caucus; Hawaiʻi Scholars for Education, Social Justice, and Diversity; Hawaii Children's Action Network Speaks!; and nine individuals.  Your Committee received testimony in opposition to this measure from the Department of Budget and Fiscal Services for the City and County of Honolulu; Department of Finance for the County of Hawaii; one member of the Maui County Council; Hawaiʻi Association of REALTORS; Grassroot Institute of Hawaii; and four individuals.  Your Committee received comments on this measure from the Department of Education and Tax Foundation of Hawaii.

     Your Committee notes that the counties have different affordable rental programs that may be affected by this measure and recommends subsequent committees to consider excluding rentals from the application of the surcharge proposed by this measure.

     As affirmed by the record of votes of the members of your Committee on Finance that is attached to this report, your Committee is in accord with the intent and purpose of H.B. No. 2147, H.D. 2, and recommends that it pass Third Reading.

Respectfully submitted on behalf of the members of the Committee on Finance,

STAND. COM. REP. NO.  753-26

Honolulu, Hawaii

                , 2026

RE:   H.B. No. 2147

      H.D. 2

Honorable Nadine K. Nakamura

Speaker, House of Representatives

Thirty-Third State Legislature

Regular Session of 2026

State of Hawaii

Madame:

     Your Committee on Judiciary & Hawaiian Affairs, to which was referred H.B. No. 2147, H.D. 1, entitled:

"A BILL FOR AN ACT PROPOSING AMENDMENTS TO ARTICLES VIII AND X OF THE CONSTITUTION OF THE STATE OF HAWAII TO AUTHORIZE THE LEGISLATURE TO ESTABLISH A SURCHARGE ON RESIDENTIAL INVESTMENT PROPERTY TO INCREASE FUNDING FOR PUBLIC EDUCATION,"

begs leave to report as follows:

     The purpose of this measure is to propose an amendment to the Constitution of the State of Hawaii to repeal the counties' exclusive power to tax real property, and to authorize the Legislature to establish a state surcharge on real property taxes levied by the counties on certain residential investment properties, for the purpose of helping to fund public education for all of Hawaii's children and adults.

     Your Committee received testimony in support of this measure from the Hawaiʻi Teacher Standards Board; Early Childhood Action Strategy; Hawaiʻi State Teachers Association; Hawaiʻi Children's Action Network Speaks!; Democratic Party of Hawaiʻi Education Caucus; and seven individuals.  Your Committee received testimony in opposition to this measure from the Office of the Mayor of the County of Maui; Real Property Tax Administrator of the County of Hawaiʻi; Department of Budget and Fiscal Services of the City and County of Honolulu; Department of Finance of the County of Kauai; Hawaiʻi Association of REALTORS; Grassroot Institute of Hawaii; Law Office of Georgette A. Yaindl, LLLC; and three individuals.  Your Committee received comments on this measure from the Department of Education and Tax Foundation of Hawaii.

     Your Committee finds that the ballot question in this measure, as received by your Committee, is similar to the ballot question in S.B. No. 2922, H.D. 1, Regular Session of 2018, which was declared invalid by the Hawaii Supreme Court in City & County of Honolulu v. State, 143 Hawaiʻi 455, 431 P.3d 1228 (2018).  Accordingly, your Committee has amended the ballot question to ensure that it is clear and neither misleading nor deceptive for voters in accordance with state law.

     Your Committee further finds that beginning with the 2024 elections, the Office of Election will provide voters with a digital voter information guide that includes an explanation drafted by the Department of the Attorney General of each state constitutional amendment to be proposed to voters on the ballot.  Your Committee believes that this guide will aid in clarifying the constitutional question that voters are tasked with making, as recommended by the Hawaii Supreme Court.

     Your Committee has amended this measure by:

     (1)  Clarifying the definition of "surcharge";

     (2)  Clarifying the ballot question; and

     (3)  Making technical, nonsubstantive amendments for the purposes of clarity, consistency, and style.

     As affirmed by the record of votes of the members of your Committee on Judiciary & Hawaiian Affairs that is attached to this report, your Committee is in accord with the intent and purpose of H.B. No. 2147, H.D. 1, as amended herein, and recommends that it be referred to your Committee on Finance in the form attached hereto as H.B. No. 2147, H.D. 2.

Respectfully submitted on behalf of the members of the Committee on Judiciary & Hawaiian Affairs,

STAND. COM. REP. NO.  206-26

Honolulu, Hawaii

                , 2026

RE:   H.B. No. 2147

      H.D. 1

Honorable Nadine K. Nakamura

Speaker, House of Representatives

Thirty-Third State Legislature

Regular Session of 2026

State of Hawaii

Madame:

     Your Committee on Education, to which was referred H.B. No. 2147 entitled:

"A BILL FOR AN ACT PROPOSING AMENDMENTS TO ARTICLES VIII AND X OF THE CONSTITUTION OF THE STATE OF HAWAII TO AUTHORIZE THE LEGISLATURE TO ESTABLISH A SURCHARGE ON RESIDENTIAL INVESTMENT PROPERTY TO INCREASE FUNDING FOR PUBLIC EDUCATION,"

begs leave to report as follows:

     The purpose of this measure is to propose amendments to the Hawaii State Constitution to:

     (1)  Repeal the counties' exclusive power to tax real property; and

     (2)  Authorize the Legislature to establish a state surcharge on real property taxes levied by the counties on residential investment properties valued at $3,000,000 or more to increase funding for public education.

     Your Committee received testimony in support of this measure from the State Public Charter School Commission; Hawaiʻi Teacher Standards Board; Hawaiʻi State Teachers Association; Democratic Party of Hawaiʻi Education Caucus; Hawaiʻi Children's Action Network Speaks!; Early Childhood Action Strategy; Hoaloha Project; and numerous individuals.  Your Committee received testimony in opposition to this measure from the Hawaiʻi Association of REALTORS; Grassroot Institute of Hawaii; and one individual.  Your Committee received comments on this measure from the Department of Education and Tax Foundation of Hawaii.

     Your Committee finds that article X, section 1, of the Hawaii State Constitution requires the State to provide a system of public education.  Your Committee notes that Hawaii is unique compared to the other states because the State, rather than a county of local level jurisdiction, is responsible for public education, resulting in funding for public education in Hawaii being primarily sourced from the general revenues of the State.

     Your Committee further finds that public education in the State is not adequately funded.  This inadequate funding has played an influential role for many families in Hawaii choosing to enroll their children in private schools, resulting in Hawaii having one of the highest rates of private school enrollment in the nation.  Your Committee believes that a surcharge on certain residential investment property will provide additional funding for the State to better meet its educational responsibilities and prepare all students to meet the social and economic demands of the twenty-first century.

     Your Committee has amended this measure by:

     (1)  Including a definition of "surcharge";

     (2)  Changing the effective date to July 1, 3000; and

     (3)  Making technical, nonsubstantive amendments for the purposes of clarity, consistency, and style.

     As affirmed by the record of votes of the members of your Committee on Education that is attached to this report, your Committee is in accord with the intent and purpose of H.B. No. 2147, as amended herein, and recommends that it pass Second Reading in the form attached hereto as H.B. No. 2147, H.D. 1, and be referred to your Committee on Judiciary & Hawaiian Affairs.

Respectfully submitted on behalf of the members of the Committee on Education,