HB 604: RELATING TO TAX REVENUES.

A BILL FOR AN ACT

RELATING TO TAX REVENUES.

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

     SECTION 1.  Section 213, Hawaiian Homes Commission Act, 1920, as amended, is amended by amending subsection (c) to read as follows:

     "(c)  Hawaiian home general loan fund.  Moneys appropriated by the legislature for the construction of homes but not otherwise set aside for a particular fund, for construction of replacement homes, for home repairs or additions, or for the development and operation of a farm, ranch, or aquaculture operation; moneys transferred from other funds; moneys received pursuant to section 237D-2(f), Hawaii Revised Statutes; and installments of principal paid by the lessees upon loans made to them from this fund, or as payments representing reimbursements on account of advances, but not including interest on such loans or advances, shall be deposited into this fund.  The moneys in the fund shall be used for purposes enumerated in section 214 and for payments provided in section 209; provided that, in addition to the conditions enumerated in section 215, farm loans shall be subject to the following conditions:

     (1)  To be eligible for a farm loan the applicant shall derive, or present an acceptable plan to derive, a major portion of the applicant's income from farming;

     (2)  Farm loans made for the purpose of soil and water conservation shall not exceed $20,000 and shall be for a term not to exceed ten years;

     (3)  Subsidies and grants or cost-sharing funds entitled and received by the lessee for soil and water conservation purposes shall be assigned to the department for the repayment of the outstanding farm indebtedness; and

     (4)  The lessee shall carry out recommended farm management practices approved by a qualified agricultural agency.

     The department may create an account within this fund to support the guarantee of repayment of loans made by government agencies or private lending institutions to a holder of a lease under section 207(a) or license issued under section 207(c)(1)(B).

     The department may create an account within this fund for moneys borrowed from government agencies or private lending institutions to be used for any of the purposes enumerated in section 214.  Installments of principal and that part of the interest equal to the interest charged to the department by the lender paid by the lessees on the loans made to them from this account shall be deposited into the same account.  Any additional interest or other earnings arising out of investments from this account shall be credited to and deposited into the Hawaiian home receipts fund."

     SECTION 2.  Section 237D-2, Hawaii Revised Statutes, is amended to read as follows:

     "§237D-2  Imposition and rates.  (a)  There is levied and shall be assessed and collected each month a tax of:

     (1)  Five per cent for the period beginning on January 1, 1987, to June 30, 1994;

     (2)  Six per cent for the period beginning on July 1, 1994, to December 31, 1998;

     (3)  7.25 per cent for the period beginning on January 1, 1999, to June 30, 2009;

     (4)  8.25 per cent for the period beginning on July 1, 2009, to June 30, 2010; [and]

     (5)  9.25 per cent for the period beginning on July 1, 2010, to December 31, 2025; and [thereafter;]

     (6)  10.25 per cent for the period beginning on January 1, 2026, and thereafter;

on the gross rental or gross rental proceeds derived from furnishing transient accommodations.

     (b)  Every transient accommodations broker, travel agency, and tour packager who arranges transient accommodations at noncommissioned negotiated contract rates and every operator or other taxpayer who receives gross rental proceeds shall pay to the State the tax imposed by subsection (a), as provided in this chapter.

     (c)  There is levied and shall be assessed and collected each month, on the occupant of a resort time share vacation unit, a transient accommodations tax of:

     (1)  7.25 per cent on the fair market rental value until December 31, 2015;

     (2)  8.25 per cent on the fair market rental value for the period beginning on January 1, 2016, to December 31, 2016; [and]

     (3)  9.25 per cent on the fair market rental value for the period beginning on January 1, 2017, to December 31, 2025; and [thereafter.]

     (4)  10.25 per cent on the fair market rental value for the period beginning on January 1, 2026, and thereafter.

     (d)  Every plan manager shall be liable for and pay to the State the transient accommodations tax imposed by subsection (c) as provided in this chapter.  Every resort time share vacation plan shall be represented by a plan manager who shall be subject to this chapter.

     (e)  Notwithstanding the tax rates established in subsections [(a)(5)] (a) and [(c)(3),] (c) the tax rates levied, assessed, and collected pursuant to subsections (a) and (c) shall be [10.25 per cent] increased by one percentage point for the period beginning on January 1, 2018, to December 31, 2030; provided that:

     (1)  The tax revenues levied, assessed, and collected pursuant to this subsection that are in excess of the lower revenues that otherwise would have been realized from the levy, assessment, and collection of tax at the [9.25 per cent rate] rates established pursuant to subsections (a) and (c) shall be deposited quarterly into the mass transit special fund established under section 248-2.7; and

     (2)  If a court of competent jurisdiction determines that the amount of county surcharge on state tax revenues deducted and withheld by the State, pursuant to section 248-2.6, violates statutory or constitutional law and, as a result, awards moneys to a county with a population greater than five hundred thousand, then an amount equal to the monetary award shall be deducted and withheld from the tax revenues deposited under paragraph (1) into the mass transit special fund, and those funds shall be a general fund realization of the State.

     (f)  Tax revenues levied, assessed, and collected pursuant to the rates in subsections (a)(6) and (c)(4) that are in excess of the lower revenues that otherwise would have been realized under the tax rates effective under subsections (a)(5) and (c)(3) shall be deposited quarterly into the Hawaiian home general loan fund established pursuant to section 213 of the Hawaiian Homes Commission Act, 1920, as amended.

     (g)  The [remaining] tax revenues levied, assessed, and collected at the [9.25 per cent] tax [rate] rates established pursuant to subsections (a) and (c), other than the revenues required to be deposited pursuant to subsections (e) and (f), shall be deposited [into the general fund in accordance with] and distributed pursuant to section 237D-6.5(b)."

     SECTION 3.  Section 237D-6.5, Hawaii Revised Statutes, is amended by amending subsection (b) to read as follows:

     "(b)  Except for the revenues collected pursuant to section 237D-2(e)[,] and (f), revenues collected under this chapter shall be distributed in the following priority, with the excess revenues to be deposited into the general fund:

     (1)  $1,500,000 shall be allocated to the Turtle Bay conservation easement special fund beginning July 1, 2015, for the reimbursement to the state general fund of debt service on reimbursable general obligation bonds, including ongoing expenses related to the issuance of the bonds, the proceeds of which were used to acquire the conservation easement and other real property interests in Turtle Bay, Oahu, for the protection, preservation, and enhancement of natural resources important to the State, until the bonds are fully amortized;

     (2)  $11,000,000 shall be allocated to the convention center enterprise special fund established under section 201B-8;

     (3)  An allocation shall be deposited into the tourism emergency special fund, established in section 201B-10, in a manner sufficient to maintain a fund balance of $5,000,000 in the tourism emergency special fund; and

     (4)  $3,000,000 shall be allocated to the special land and development fund established under section 171-19; provided that the allocation shall be expended in accordance with the Hawaii tourism authority strategic plan for:

          (A)  The protection, preservation, maintenance, and enhancement of natural resources, including beaches, important to the visitor industry;

          (B)  Planning, construction, and repair of facilities; and

          (C)  Operation and maintenance costs of public lands, including beaches, connected with enhancing the visitor experience.

     All transient accommodations taxes shall be paid into the state treasury each month within ten days after collection and shall be kept by the state director of finance in special accounts for distribution as provided in this subsection."

     SECTION 4.  This Act does not affect rights and duties that matured, penalties that were incurred, and proceedings that were begun before its effective date.

     SECTION 5.  Statutory material to be repealed is bracketed and stricken.  New statutory material is underscored.

     SECTION 6.  This Act shall take effect on July 1, 3000.

Report Title:

TAT; HHCA; Tax Revenues; Deposits; Hawaiian Home General Loan Fund

Description:

Beginning on 1/1/2026, increases transient accommodations tax rates by 1 percentage point.  Deposits the increased revenues into the Hawaiian Home General Loan Fund established under the Hawaiian Homes Commission Act, 1920, as amended.  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

RELATING TO TAX REVENUES.

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

     SECTION 1.  Section 213, Hawaiian Homes Commission Act, 1920, as amended, is amended by amending subsection (c) to read as follows:

     "(c)  Hawaiian home general loan fund.  Moneys appropriated by the legislature for the construction of homes but not otherwise set aside for a particular fund, for construction of replacement homes, for home repairs or additions, or for the development and operation of a farm, ranch, or aquaculture operation; moneys transferred from other funds; moneys received pursuant to section 237D-2(f), Hawaii Revised Statutes; and installments of principal paid by the lessees upon loans made to them from this fund, or as payments representing reimbursements on account of advances, but not including interest on such loans or advances, shall be deposited into this fund.  The moneys in the fund shall be used for purposes enumerated in section 214 and for payments provided in section 209; provided that, in addition to the conditions enumerated in section 215, farm loans shall be subject to the following conditions:

     (1)  To be eligible for a farm loan the applicant shall derive, or present an acceptable plan to derive, a major portion of the applicant's income from farming;

     (2)  Farm loans made for the purpose of soil and water conservation shall not exceed $20,000 and shall be for a term not to exceed ten years;

     (3)  Subsidies and grants or cost-sharing funds entitled and received by the lessee for soil and water conservation purposes shall be assigned to the department for the repayment of the outstanding farm indebtedness; and

     (4)  The lessee shall carry out recommended farm management practices approved by a qualified agricultural agency.

     The department may create an account within this fund to support the guarantee of repayment of loans made by government agencies or private lending institutions to a holder of a lease under section 207(a) or license issued under section 207(c)(1)(B).

     The department may create an account within this fund for moneys borrowed from government agencies or private lending institutions to be used for any of the purposes enumerated in section 214.  Installments of principal and that part of the interest equal to the interest charged to the department by the lender paid by the lessees on the loans made to them from this account shall be deposited into the same account.  Any additional interest or other earnings arising out of investments from this account shall be credited to and deposited into the Hawaiian home receipts fund."

     SECTION 2.  Section 237D-2, Hawaii Revised Statutes, is amended to read as follows:

     "§237D-2  Imposition and rates.  (a)  There is levied and shall be assessed and collected each month a tax of:

     (1)  Five per cent for the period beginning on January 1, 1987, to June 30, 1994;

     (2)  Six per cent for the period beginning on July 1, 1994, to December 31, 1998;

     (3)  7.25 per cent for the period beginning on January 1, 1999, to June 30, 2009;

     (4)  8.25 per cent for the period beginning on July 1, 2009, to June 30, 2010; [and]

     (5)  9.25 per cent for the period beginning on July 1, 2010, to December 31, 2025; and [thereafter;]

     (6)  10.25 per cent for the period beginning on January 1, 2026, and thereafter;

on the gross rental or gross rental proceeds derived from furnishing transient accommodations.

     (b)  Every transient accommodations broker, travel agency, and tour packager who arranges transient accommodations at noncommissioned negotiated contract rates and every operator or other taxpayer who receives gross rental proceeds shall pay to the State the tax imposed by subsection (a), as provided in this chapter.

     (c)  There is levied and shall be assessed and collected each month, on the occupant of a resort time share vacation unit, a transient accommodations tax of:

     (1)  7.25 per cent on the fair market rental value until December 31, 2015;

     (2)  8.25 per cent on the fair market rental value for the period beginning on January 1, 2016, to December 31, 2016; [and]

     (3)  9.25 per cent on the fair market rental value for the period beginning on January 1, 2017, to December 31, 2025; and [thereafter.]

     (4)  10.25 per cent on the fair market rental value for the period beginning on January 1, 2026, and thereafter.

     (d)  Every plan manager shall be liable for and pay to the State the transient accommodations tax imposed by subsection (c) as provided in this chapter.  Every resort time share vacation plan shall be represented by a plan manager who shall be subject to this chapter.

     (e)  Notwithstanding the tax rates established in subsections [(a)(5)] (a) and [(c)(3),] (c) the tax rates levied, assessed, and collected pursuant to subsections (a) and (c) shall be [10.25 per cent] increased by one percentage point for the period beginning on January 1, 2018, to December 31, 2030; provided that:

     (1)  The tax revenues levied, assessed, and collected pursuant to this subsection that are in excess of the lower revenues that otherwise would have been realized from the levy, assessment, and collection of tax at the [9.25 per cent rate] rates established pursuant to subsections (a) and (c) shall be deposited quarterly into the mass transit special fund established under section 248-2.7; and

     (2)  If a court of competent jurisdiction determines that the amount of county surcharge on state tax revenues deducted and withheld by the State, pursuant to section 248-2.6, violates statutory or constitutional law and, as a result, awards moneys to a county with a population greater than five hundred thousand, then an amount equal to the monetary award shall be deducted and withheld from the tax revenues deposited under paragraph (1) into the mass transit special fund, and those funds shall be a general fund realization of the State.

     (f)  Tax revenues levied, assessed, and collected pursuant to the rates in subsections (a)(6) and (c)(4) that are in excess of the lower revenues that otherwise would have been realized under the tax rates effective under subsections (a)(5) and (c)(3) shall be deposited quarterly into the Hawaiian home general loan fund established pursuant to section 213 of the Hawaiian Homes Commission Act, 1920, as amended.

     (g)  The [remaining] tax revenues levied, assessed, and collected at the [9.25 per cent] tax [rate] rates established pursuant to subsections (a) and (c), other than the revenues required to be deposited pursuant to subsections (e) and (f), shall be deposited [into the general fund in accordance with] and distributed pursuant to section 237D-6.5(b)."

     SECTION 3.  Section 237D-6.5, Hawaii Revised Statutes, is amended by amending subsection (b) to read as follows:

     "(b)  Except for the revenues collected pursuant to section 237D-2(e)[,] and (f), revenues collected under this chapter shall be distributed in the following priority, with the excess revenues to be deposited into the general fund:

     (1)  $1,500,000 shall be allocated to the Turtle Bay conservation easement special fund beginning July 1, 2015, for the reimbursement to the state general fund of debt service on reimbursable general obligation bonds, including ongoing expenses related to the issuance of the bonds, the proceeds of which were used to acquire the conservation easement and other real property interests in Turtle Bay, Oahu, for the protection, preservation, and enhancement of natural resources important to the State, until the bonds are fully amortized;

     (2)  $11,000,000 shall be allocated to the convention center enterprise special fund established under section 201B-8;

     (3)  An allocation shall be deposited into the tourism emergency special fund, established in section 201B-10, in a manner sufficient to maintain a fund balance of $5,000,000 in the tourism emergency special fund; and

     (4)  $3,000,000 shall be allocated to the special land and development fund established under section 171-19; provided that the allocation shall be expended in accordance with the Hawaii tourism authority strategic plan for:

          (A)  The protection, preservation, maintenance, and enhancement of natural resources, including beaches, important to the visitor industry;

          (B)  Planning, construction, and repair of facilities; and

          (C)  Operation and maintenance costs of public lands, including beaches, connected with enhancing the visitor experience.

     All transient accommodations taxes shall be paid into the state treasury each month within ten days after collection and shall be kept by the state director of finance in special accounts for distribution as provided in this subsection."

     SECTION 4.  This Act does not affect rights and duties that matured, penalties that were incurred, and proceedings that were begun before its effective date.

     SECTION 5.  Statutory material to be repealed is bracketed and stricken.  New statutory material is underscored.

     SECTION 6.  This Act shall take effect upon its approval.

Report Title:

TAT; HHCA; Tax Revenues; Deposits; Hawaiian Home General Loan Fund

Description:

Beginning on 1/1/2026, increases transient accommodations tax rates by 1 percentage point.  Deposits the increased revenues into the Hawaiian Home General Loan Fund established under the Hawaiian Homes Commission Act, 1920, as amended.

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.  700

Honolulu, Hawaii

                , 2025

RE:   H.B. No. 604

      H.D. 1

Honorable Nadine K. Nakamura

Speaker, House of Representatives

Thirty-Third State Legislature

Regular Session of 2025

State of Hawaii

Madame:

     Your Committee on Judiciary & Hawaiian Affairs, to which was referred H.B. No. 604, H.D. 1, entitled:

"A BILL FOR AN ACT RELATING TO TAX REVENUES,"

begs leave to report as follows:

     The purpose of this measure is to increase transient accommodations tax rates by one percent, beginning on January 1, 2026, and deposit the increased revenues into the Hawaiian Home General Loan Fund established under the Hawaiian Homes Commission Act, 1920, as amended.

     Your Committee received testimony in support of this measure from the Department of Hawaiian Home Lands.  Your Committee received testimony in opposition to this measure from Kohala Coast Resort Association; Grassroot Institute of Hawaii; and one individual.  Your Committee received comments on this measure from the Department of Taxation; Hawaiʻi Tourism Authority; and Tax Foundation of Hawaii.

     Your Committee finds that this measure provides an opportunity and means by which the State can fulfill its trust obligations under the Hawaiian Homes Commission Act, 1929, as amended, and the Hawaii State Constitution by providing another source of funding to the Department of Hawaiian Home Lands to reduce it extensive applicant waiting list.

     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. 604, H.D. 1, and recommends that it be referred to your Committee on Finance.

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

STAND. COM. REP. NO.  129

Honolulu, Hawaii

                , 2025

RE:   H.B. No. 604

      H.D. 1

Honorable Nadine K. Nakamura

Speaker, House of Representatives

Thirty-Third State Legislature

Regular Session of 2025

State of Hawaii

Madame:

     Your Committees on Tourism and Housing, to which was referred H.B. No. 604 entitled:

"A BILL FOR AN ACT RELATING TO TAX REVENUES,"

beg leave to report as follows:

     The purpose of this measure is to increase transient accommodations tax rates by one percent, beginning on January 1, 2026, and deposit the increased revenues into the Hawaiian Home General Loan Fund established under the Hawaiian Homes Commission Act, 1920, as amended.

     Your Committees received testimony in support of this measure from the Department of Hawaiian Home Lands.  Your Committees received testimony in opposition to this measure from the Grassroot Institute of Hawaii.  Your Committees received comments on this measure from the Department of Taxation and Tax Foundation of Hawaii.

     Your Committees find that increasing the transient accommodations tax rate by one percent would aid the Department of Hawaiian Home Lands in addressing its extensive waiting list of applicants through a source of funds that is not currently available to the Department.

     Your Committees have amended this measure by changing its effective date to July 1, 3000, to encourage further discussion.

     As affirmed by the records of votes of the members of your Committees on Tourism and Housing that are attached to this report, your Committees are in accord with the intent and purpose of H.B. No. 604, as amended herein, and recommend that it pass Second Reading in the form attached hereto as H.B. No. 604, H.D. 1, and be referred to your Committee on Judiciary & Hawaiian Affairs.

Respectfully submitted on behalf of the members of the Committees on Tourism and Housing,