SB 1396

SENATE FLOOR AMENDMENT

FLOOR AMENDMENT NO.                                                     Date                                            

TO:     SENATE Bill 1396 S.D. 3, H.D. 3, C.D. 1

Section 1.  S.B. 1396, S.D. 3, H.D. 3, C.D. 1, is amended by page 15, line 9 through page 16, line 11, to read as follows:

     "3.  By amending subsection (e) to read:

     "(e)  Notwithstanding the tax rates established in subsections [(a)(5)] (a)(6) and [(c)(3),] (c)(4), the tax rates levied, assessed, and collected pursuant to subsections (a) and (c) shall be [10.25] eleven per cent 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 revenues realized from the levy, assessment, and collection of tax at the [9.25] ten per cent rate 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.

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

A BILL FOR AN ACT

RELATING TO ECONOMIC DEVELOPMENT.

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

     SECTION 1.  The legislature finds that Hawaii is experiencing a climate emergency.  The effects of climate change, such as rising temperatures, prolonged droughts, and increasingly destructive and deadly weather events, are felt across the island chain.  These impacts threaten not only our vibrant ecosystems but also the people of Hawaii and the State's economic sustainability.  To ensure the health and safety of Hawaii's lands, waters, and people, as well as its economic viability, successful mitigation of and adaptation to climate change are imperative.

     The legislature further finds that economic development cannot be separated from environmental stewardship.  Hawaii's economy is deeply reliant on its natural resources, from tourism and agriculture to marine industries and renewable energy.  Degradation of these resources due to climate change and environmental mismanagement will result in significant financial losses across multiple sectors.  By investing in sustainability, the State secures long-term economic stability while preserving its unique landscapes and biodiversity.

     The legislature also finds that climate resilience must be integrated into all economic planning efforts.  Resiliency measures, such as sustainable land use practices, shoreline protection, and forestry projects, ensure that Hawaii's economy remains robust in the face of climate-related disasters.  Without proactive investment, businesses and communities will continue to suffer financial losses due to increased flooding, wildfires, and extreme weather events.

     The legislature additionally finds that investing in Hawaii's environment is, in itself, economic development.  Furthermore, the legislature finds that as contemplated, the transient accommodations tax is intended to be applied fully and equitably whenever a transient accommodation is furnished within the State.  Whereas hotel and lodging establishments have complied with and pay their due share of transient accommodations taxes, tax collections on short-term rental operators have fallen short.  Moreover, there is currently no transient accommodations tax levied on cruise ships, which in 2024, accounted for 972,820 passenger port calls at port facilities under the jurisdiction of the department of transportation.  Supporting sustainable practices protects the islands' unique ecosystems while simultaneously fostering economic growth.  This support includes funding renewable energy projects, enhancing conservation efforts, and promoting environmental tourism initiatives.  These investments preserve natural resources, reduce carbon footprints, and stimulate economic opportunities, such as job creation in renewable energy sectors and eco-friendly tourism.

     In addition, the legislature finds that Hawaii has an opportunity to be a global leader in sustainable innovation.  By investing in conservation-focused business models, the State can attract investors and industries that prioritize sustainability.  These initiatives not only protect the environment but also diversify the economy, reducing reliance on tourism and traditional extractive industries.

     The legislature further finds that Hawaii's cultural heritage and traditions are deeply connected to its natural environment.  The protection and restoration of forests, coral reefs, and coastal ecosystems safeguard the foundation of Native Hawaiian practices and knowledge systems.  Investing in environmental conservation ensures that these traditions can continue to thrive, enriching community well-being and cultural tourism.

     The legislature also finds that a failure to act now will result in increased costs in the future.  The economic burden of climate inaction will far exceed the cost of proactive investment in mitigation and adaptation strategies.  Infrastructure damage, loss of biodiversity, increased health issues due to heat and pollution, and disruptions to tourism and agriculture will place a heavy financial strain on the State if environmental action is delayed.

     The legislature additionally finds that a strong commitment to environmental sustainability enhances Hawaii's reputation as a world-class destination for ecotourism.  Travelers are increasingly seeking destinations that prioritize sustainability, and by investing in conservation efforts, renewable energy, and sustainable tourism practices, Hawaii can maintain its competitive edge in the global tourism market while ensuring the long-term viability of its natural resources.

     The legislature therefore declares that investment in climate resilience and environmental sustainability is a fundamental component of Hawaii's economic development strategy.  By prioritizing policies and funding mechanisms that support climate action, conservation, and sustainable industries, Hawaii can build a more resilient, prosperous, and environmentally secure future for all residents and visitors.

     Accordingly, the purpose of this Act is to:

     (1)  Increase the transient accommodations tax rate for transient accommodations and resort time shares;

     (2)  Assess the transient accommodations tax on the gross receipts derived from cruise fares;

     (3)  Require the governor to request in the executive budget or supplemental budget that an amount of general funds that approximates the additional transient accommodations tax revenue generated by this Act be expended equally to advance certain climate change mitigation and tourism projects; and

     (4)  Amend the allowable uses of the special land and development fund and the portion of transient accommodations tax collections that are allocated to the special land and development fund.

     SECTION 2.  Chapter 37, Hawaii Revised Statutes, is amended by adding a new section to part IV to be appropriately designated and to read as follows:

     "§37-    Climate change and tourism destination management; projects; budget request.  The governor shall request, in the budget or the supplemental budget submitted to the legislature pursuant to section 37-71 or 37-72, that an amount of general funds that approximates the additional revenue generated by any increase to the transient accommodations tax rates pursuant to section 237D-2(a)(6) and (c)(4) beginning on January 1, 2026, and section 237D-2(e) beginning on July 1, 2026, and by assessment of the transient accommodations tax on gross rental proceeds derived from cruise fares pursuant to section 237D-2(a) be expended equally to advance specific projects to:

     (1)  Protect, manage, and restore the State's natural resources, including native forests, native plants and animals, aquatic resources, coastal lands, and freshwater resources;

     (2)  Increase the resilience of structures and infrastructure to natural and climate-related disasters, such as hurricanes and sea level rise, and perform hazard mitigation activities, such as wildfire and flood mitigation; and

     (3)  Improve the visitor experience, mitigate the impacts of tourism on the natural environment, ensure that the State's natural resources are maintained for future residents and visitors, and support destination management, such as park improvements and beach improvement, nourishment, and maintenance projects."

     SECTION 3.  Section 171-19, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

     "(a)  There is created in the department a special fund to be designated as the "special land and development fund".  Subject to the Hawaiian Homes Commission Act of 1920, as amended, and section 5(f) of the Admission Act of 1959, all proceeds of sale of public lands, including interest on deferred payments; all moneys collected under section 171-58 for mineral and water rights; all rents from leases, licenses, and permits derived from public lands; all moneys collected from lessees of public lands within industrial parks; all fees, fines, and other administrative charges collected under this chapter and chapter 183C; a portion of the highway fuel tax collected under chapter 243; a portion of the transient accommodations tax under chapter 237D; all moneys collected by the department for the commercial use of public trails and trail accesses under the jurisdiction of the department; and private contributions for the management, maintenance, and development of trails and accesses shall be set apart in the fund and shall be used only as authorized by the legislature for the following purposes:

     (1)  To reimburse the general fund of the State for advances made that are required to be reimbursed from the proceeds derived from sales, leases, licenses, or permits of public lands;

     (2)  For the planning, development, management, operations, or maintenance of all lands and improvements under the control and management of the board pursuant to title 12, including but not limited to permanent or temporary staff positions who may be appointed without regard to chapter 76;

     (3)  To repurchase any land, including improvements, in the exercise by the board of any right of repurchase specifically reserved in any patent, deed, lease, or other documents or as provided by law;

     (4)  For the payment of all appraisal fees; provided that all fees reimbursed to the board shall be deposited in the fund;

     (5)  For the payment of publication notices as required under this chapter; provided that all or a portion of the expenditures may be charged to the purchaser or lessee of public lands or any interest therein under rules adopted by the board;

     (6)  For the management, maintenance, and development of trails and trail accesses under the jurisdiction of the department;

     (7)  For the payment to private land developers who have contracted with the board for development of public lands under section 171-60;

     (8)  For the payment of debt service on revenue bonds issued by the department, including revenue bonds issued for the purposes of section 237D-6.5(b)(4), and the establishment of debt service and other reserves deemed necessary by the board;

     (9)  To reimburse the general fund for debt service on general obligation bonds issued to finance departmental projects, including projects under section 237D-6.5(b)(4), where the bonds are designated to be reimbursed from the special land and development fund;

    (10)  For the protection, planning, management, and regulation of water resources under chapter 174C; [and]

    (11)  For the purposes of section 237D-6.5(b)(4); and

   [(11)] (12)  For other purposes of this chapter."

     SECTION 4.  Section 237D-1, Hawaii Revised Statutes, is amended as follows:

     1.  By adding three new definitions to be appropriately inserted and to read:

     ""Cruise fare" means the total amount paid by a transient for a cruise ship cabin on a cruise ship, inclusive of any mandatory fees imposed by a cruise ship operator, owner, or representative thereof on a transient for the use of shipboard services, facilities, meals, and onboard entertainment, but does not include optional charges for shipboard services, meals, excursions, and onboard entertainment beyond the mandatory fee amount.

     "Cruise ship" means any ship that docks at any port in the State that charges a fee for and provides cruise ship cabins to transients.

     "Cruise ship cabin" means an accommodation or living quarter on a cruise ship that is provided to a transient."

     2.  By amending the definition of "gross rental" or "gross rental proceeds" to read:

     "Gross rental" or "gross rental proceeds" means the gross receipts, cash or accrued, of the taxpayer received as compensation for the furnishing of transient accommodations or entering into arrangements to furnish transient accommodations and the value proceeding or accruing from the furnishing of transient accommodations or entering into arrangements to furnish transient accommodations, including resort fees without any deductions on account of the cost of property or services sold, the cost of materials used, labor cost, taxes, royalties, interest, discounts, or any other expenses whatsoever.  "Gross rental" or "gross rental proceeds" includes the gross receipts derived from cruise fares.  Every taxpayer shall be presumed to be dealing on a cash basis unless the taxpayer proves to the satisfaction of the department of taxation that the taxpayer is dealing on an accrual basis and the taxpayer's books are so kept, or unless the taxpayer employs or is required to employ the accrual basis for the purposes of the tax imposed by chapter 237 for any taxable year in which event the taxpayer shall report the taxpayer's gross income for the purposes of this chapter on the accrual basis for the same period.

     The words "gross rental" or "gross rental proceeds" shall not be construed to include the amounts of taxes imposed by chapter 237 or this chapter on operators of transient accommodations, transient accommodations brokers, travel agencies, and tour packagers and passed on, collected, and received from the consumer as part of the receipts received as compensation for the furnishing of transient accommodations or entering into arrangements to furnish transient accommodations.

     Where transient accommodations are furnished through arrangements made by a transient accommodations broker, travel agency, or tour packager at noncommissionable negotiated contract rates and the gross income is divided between the operator of transient accommodations on the one hand and the transient accommodations broker, travel agency, or tour packager on the other hand, the tax imposed by this chapter shall apply to each operator and transient accommodations broker, travel agency, or tour packager with respect to that person's respective portion of the proceeds and no more.

     For purposes of this definition, where the operator maintains a schedule of rates for identifiable groups of individuals, such as kamaainas, upon which the accommodations are leased, let, or rented, gross rental or gross rental proceeds means the receipts collected and received based upon the scheduled rates and recorded as receipts in its books and records."

     SECTION 5.  Section 237D-2, Hawaii Revised Statutes, is amended as follows:

     1.  By amending subsection (a) to read:

     "(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[, and thereafter;] to December 31, 2025; and

     (6)  Ten 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[.]; provided that an operator of a cruise ship shall be assessed and pay a tax of eleven per cent under this subsection on all gross rental proceeds derived from cruise fares prorated by the percentage of days docked at any port in the State in comparison to the total number of days of the voyage."

     2.  By amending subsection (c) to read:

     "(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, [and thereafter.] to December 31, 2025; and

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

     3.  By amending subsection (e) to read:

     "(e)  Notwithstanding the tax rates established in subsections [(a)(5)] (a)(6) and [(c)(3),] (c)(4), the tax rates levied, assessed, and collected pursuant to subsections (a) and (c) shall be [10.25] eleven per cent 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 revenues realized from the levy, assessment, and collection of tax at the [9.25] ten per cent rate 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.

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

     SECTION 6.  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), 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, and improvement costs of public lands, including beaches[, connected with enhancing the visitor experience.]; and

          (D)  Any related debt service and financing agreement costs.

     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 7.  If any provision of this Act, or the application thereof to any person or circumstance, is held invalid, the invalidity does not affect other provisions or applications of the Act that can be given effect without the invalid provision or application, and to this end the provisions of this Act are severable.

     SECTION 8.  Statutory material to be repealed is bracketed and stricken.  New statutory material is underscored.

     SECTION 9.  This Act shall take effect on January 1, 2026; provided that section 2 shall take effect on July 1, 2025.

Report Title:

Transient Accommodations Tax; Increase; Natural Resources; Climate Change Mitigation; Special Land and Development Fund; Cruise Fares; Mass Transit Special Fund

Description:

Beginning 7/1/2025, requires the Governor to request in the executive budget or supplemental budget that an amount of general funds that approximates the additional Transient Accommodations Tax revenue generated by this Act be expended to advance certain climate change mitigation and tourism projects.  Increases the Transient Accommodations Tax rate beginning on 1/1/2026.  Assesses the Transient Accommodations Tax on gross rental proceeds derived from cruise fares.  Amends the amount of Transient Accommodation Tax that shall be deposited into the Mass Transit Special Fund.  Amends the allowable uses of the Special Land and Development Fund and the portion of Transient Accommodations Tax collections that are allocated to the Special Land and Development Fund.  Effective 1/1/2026.  (CD2)

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

HOUSE FLOOR AMENDMENT

FLOOR AMENDMENT NO.                                                     Date                                            

TO:     SENATE Bill 1396 S.D. 3, H.D. 3, C.D. 1

Section 1.  S.B. 1396, S.D. 3, H.D. 3, C.D. 1, is amended by page 15, line 9 through page 16, line 11, to read as follows:

     "3.  By amending subsection (e) to read:

     "(e)  Notwithstanding the tax rates established in subsections [(a)(5)] (a)(6) and [(c)(3),] (c)(4), the tax rates levied, assessed, and collected pursuant to subsections (a) and (c) shall be [10.25] eleven per cent 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 revenues realized from the levy, assessment, and collection of tax at the [9.25] ten per cent rate 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.

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

A BILL FOR AN ACT

RELATING TO ECONOMIC DEVELOPMENT.

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

     SECTION 1.  The legislature finds that Hawaii is experiencing a climate emergency.  The effects of climate change, such as rising temperatures, prolonged droughts, and increasingly destructive and deadly weather events, are felt across the island chain.  These impacts threaten not only our vibrant ecosystems but also the people of Hawaii and the State's economic sustainability.  To ensure the health and safety of Hawaii's lands, waters, and people, as well as its economic viability, successful mitigation of and adaptation to climate change are imperative.

     The legislature further finds that economic development cannot be separated from environmental stewardship.  Hawaii's economy is deeply reliant on its natural resources, from tourism and agriculture to marine industries and renewable energy.  Degradation of these resources due to climate change and environmental mismanagement will result in significant financial losses across multiple sectors.  By investing in sustainability, the State secures long-term economic stability while preserving its unique landscapes and biodiversity.

     The legislature also finds that climate resilience must be integrated into all economic planning efforts.  Resiliency measures, such as sustainable land use practices, shoreline protection, and forestry projects, ensure that Hawaii's economy remains robust in the face of climate-related disasters.  Without proactive investment, businesses and communities will continue to suffer financial losses due to increased flooding, wildfires, and extreme weather events.

     The legislature additionally finds that investing in Hawaii's environment is, in itself, economic development.  Furthermore, the legislature finds that as contemplated, the transient accommodations tax is intended to be applied fully and equitably whenever a transient accommodation is furnished within the State.  Whereas hotel and lodging establishments have complied with and pay their due share of transient accommodations taxes, tax collections on short-term rental operators have fallen short.  Moreover, there is currently no transient accommodations tax levied on cruise ships, which in 2024, accounted for 972,820 passenger port calls at port facilities under the jurisdiction of the department of transportation.  Supporting sustainable practices protects the islands' unique ecosystems while simultaneously fostering economic growth.  This support includes funding renewable energy projects, enhancing conservation efforts, and promoting environmental tourism initiatives.  These investments preserve natural resources, reduce carbon footprints, and stimulate economic opportunities, such as job creation in renewable energy sectors and eco-friendly tourism.

     In addition, the legislature finds that Hawaii has an opportunity to be a global leader in sustainable innovation.  By investing in conservation-focused business models, the State can attract investors and industries that prioritize sustainability.  These initiatives not only protect the environment but also diversify the economy, reducing reliance on tourism and traditional extractive industries.

     The legislature further finds that Hawaii's cultural heritage and traditions are deeply connected to its natural environment.  The protection and restoration of forests, coral reefs, and coastal ecosystems safeguard the foundation of Native Hawaiian practices and knowledge systems.  Investing in environmental conservation ensures that these traditions can continue to thrive, enriching community well-being and cultural tourism.

     The legislature also finds that a failure to act now will result in increased costs in the future.  The economic burden of climate inaction will far exceed the cost of proactive investment in mitigation and adaptation strategies.  Infrastructure damage, loss of biodiversity, increased health issues due to heat and pollution, and disruptions to tourism and agriculture will place a heavy financial strain on the State if environmental action is delayed.

     The legislature additionally finds that a strong commitment to environmental sustainability enhances Hawaii's reputation as a world-class destination for ecotourism.  Travelers are increasingly seeking destinations that prioritize sustainability, and by investing in conservation efforts, renewable energy, and sustainable tourism practices, Hawaii can maintain its competitive edge in the global tourism market while ensuring the long-term viability of its natural resources.

     The legislature therefore declares that investment in climate resilience and environmental sustainability is a fundamental component of Hawaii's economic development strategy.  By prioritizing policies and funding mechanisms that support climate action, conservation, and sustainable industries, Hawaii can build a more resilient, prosperous, and environmentally secure future for all residents and visitors.

     Accordingly, the purpose of this Act is to:

     (1)  Increase the transient accommodations tax rate for transient accommodations and resort time shares;

     (2)  Assess the transient accommodations tax on the gross receipts derived from cruise fares;

     (3)  Require the governor to request in the executive budget or supplemental budget that an amount of general funds that approximates the additional transient accommodations tax revenue generated by this Act be expended equally to advance certain climate change mitigation and tourism projects; and

     (4)  Amend the allowable uses of the special land and development fund and the portion of transient accommodations tax collections that are allocated to the special land and development fund.

     SECTION 2.  Chapter 37, Hawaii Revised Statutes, is amended by adding a new section to part IV to be appropriately designated and to read as follows:

     "§37-    Climate change and tourism destination management; projects; budget request.  The governor shall request, in the budget or the supplemental budget submitted to the legislature pursuant to section 37-71 or 37-72, that an amount of general funds that approximates the additional revenue generated by any increase to the transient accommodations tax rates pursuant to section 237D-2(a)(6) and (c)(4) beginning on January 1, 2026, and section 237D-2(e) beginning on July 1, 2026, and by assessment of the transient accommodations tax on gross rental proceeds derived from cruise fares pursuant to section 237D-2(a) be expended equally to advance specific projects to:

     (1)  Protect, manage, and restore the State's natural resources, including native forests, native plants and animals, aquatic resources, coastal lands, and freshwater resources;

     (2)  Increase the resilience of structures and infrastructure to natural and climate-related disasters, such as hurricanes and sea level rise, and perform hazard mitigation activities, such as wildfire and flood mitigation; and

     (3)  Improve the visitor experience, mitigate the impacts of tourism on the natural environment, ensure that the State's natural resources are maintained for future residents and visitors, and support destination management, such as park improvements and beach improvement, nourishment, and maintenance projects."

     SECTION 3.  Section 171-19, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

     "(a)  There is created in the department a special fund to be designated as the "special land and development fund".  Subject to the Hawaiian Homes Commission Act of 1920, as amended, and section 5(f) of the Admission Act of 1959, all proceeds of sale of public lands, including interest on deferred payments; all moneys collected under section 171-58 for mineral and water rights; all rents from leases, licenses, and permits derived from public lands; all moneys collected from lessees of public lands within industrial parks; all fees, fines, and other administrative charges collected under this chapter and chapter 183C; a portion of the highway fuel tax collected under chapter 243; a portion of the transient accommodations tax under chapter 237D; all moneys collected by the department for the commercial use of public trails and trail accesses under the jurisdiction of the department; and private contributions for the management, maintenance, and development of trails and accesses shall be set apart in the fund and shall be used only as authorized by the legislature for the following purposes:

     (1)  To reimburse the general fund of the State for advances made that are required to be reimbursed from the proceeds derived from sales, leases, licenses, or permits of public lands;

     (2)  For the planning, development, management, operations, or maintenance of all lands and improvements under the control and management of the board pursuant to title 12, including but not limited to permanent or temporary staff positions who may be appointed without regard to chapter 76;

     (3)  To repurchase any land, including improvements, in the exercise by the board of any right of repurchase specifically reserved in any patent, deed, lease, or other documents or as provided by law;

     (4)  For the payment of all appraisal fees; provided that all fees reimbursed to the board shall be deposited in the fund;

     (5)  For the payment of publication notices as required under this chapter; provided that all or a portion of the expenditures may be charged to the purchaser or lessee of public lands or any interest therein under rules adopted by the board;

     (6)  For the management, maintenance, and development of trails and trail accesses under the jurisdiction of the department;

     (7)  For the payment to private land developers who have contracted with the board for development of public lands under section 171-60;

     (8)  For the payment of debt service on revenue bonds issued by the department, including revenue bonds issued for the purposes of section 237D-6.5(b)(4), and the establishment of debt service and other reserves deemed necessary by the board;

     (9)  To reimburse the general fund for debt service on general obligation bonds issued to finance departmental projects, including projects under section 237D-6.5(b)(4), where the bonds are designated to be reimbursed from the special land and development fund;

    (10)  For the protection, planning, management, and regulation of water resources under chapter 174C; [and]

    (11)  For the purposes of section 237D-6.5(b)(4); and

   [(11)] (12)  For other purposes of this chapter."

     SECTION 4.  Section 237D-1, Hawaii Revised Statutes, is amended as follows:

     1.  By adding three new definitions to be appropriately inserted and to read:

     ""Cruise fare" means the total amount paid by a transient for a cruise ship cabin on a cruise ship, inclusive of any mandatory fees imposed by a cruise ship operator, owner, or representative thereof on a transient for the use of shipboard services, facilities, meals, and onboard entertainment, but does not include optional charges for shipboard services, meals, excursions, and onboard entertainment beyond the mandatory fee amount.

     "Cruise ship" means any ship that docks at any port in the State that charges a fee for and provides cruise ship cabins to transients.

     "Cruise ship cabin" means an accommodation or living quarter on a cruise ship that is provided to a transient."

     2.  By amending the definition of "gross rental" or "gross rental proceeds" to read:

     "Gross rental" or "gross rental proceeds" means the gross receipts, cash or accrued, of the taxpayer received as compensation for the furnishing of transient accommodations or entering into arrangements to furnish transient accommodations and the value proceeding or accruing from the furnishing of transient accommodations or entering into arrangements to furnish transient accommodations, including resort fees without any deductions on account of the cost of property or services sold, the cost of materials used, labor cost, taxes, royalties, interest, discounts, or any other expenses whatsoever.  "Gross rental" or "gross rental proceeds" includes the gross receipts derived from cruise fares.  Every taxpayer shall be presumed to be dealing on a cash basis unless the taxpayer proves to the satisfaction of the department of taxation that the taxpayer is dealing on an accrual basis and the taxpayer's books are so kept, or unless the taxpayer employs or is required to employ the accrual basis for the purposes of the tax imposed by chapter 237 for any taxable year in which event the taxpayer shall report the taxpayer's gross income for the purposes of this chapter on the accrual basis for the same period.

     The words "gross rental" or "gross rental proceeds" shall not be construed to include the amounts of taxes imposed by chapter 237 or this chapter on operators of transient accommodations, transient accommodations brokers, travel agencies, and tour packagers and passed on, collected, and received from the consumer as part of the receipts received as compensation for the furnishing of transient accommodations or entering into arrangements to furnish transient accommodations.

     Where transient accommodations are furnished through arrangements made by a transient accommodations broker, travel agency, or tour packager at noncommissionable negotiated contract rates and the gross income is divided between the operator of transient accommodations on the one hand and the transient accommodations broker, travel agency, or tour packager on the other hand, the tax imposed by this chapter shall apply to each operator and transient accommodations broker, travel agency, or tour packager with respect to that person's respective portion of the proceeds and no more.

     For purposes of this definition, where the operator maintains a schedule of rates for identifiable groups of individuals, such as kamaainas, upon which the accommodations are leased, let, or rented, gross rental or gross rental proceeds means the receipts collected and received based upon the scheduled rates and recorded as receipts in its books and records."

     SECTION 5.  Section 237D-2, Hawaii Revised Statutes, is amended as follows:

     1.  By amending subsection (a) to read:

     "(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[, and thereafter;] to December 31, 2025; and

     (6)  Ten 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[.]; provided that an operator of a cruise ship shall be assessed and pay a tax of eleven per cent under this subsection on all gross rental proceeds derived from cruise fares prorated by the percentage of days docked at any port in the State in comparison to the total number of days of the voyage."

     2.  By amending subsection (c) to read:

     "(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, [and thereafter.] to December 31, 2025; and

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

     3.  By amending subsection (e) to read:

     "(e)  Notwithstanding the tax rates established in subsections [(a)(5)] (a)(6) and [(c)(3),] (c)(4), the tax rates levied, assessed, and collected pursuant to subsections (a) and (c) shall be [10.25] eleven per cent 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 revenues realized from the levy, assessment, and collection of tax at the [9.25] ten per cent rate 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.

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

     SECTION 6.  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), 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, and improvement costs of public lands, including beaches[, connected with enhancing the visitor experience.]; and

          (D)  Any related debt service and financing agreement costs.

     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 7.  If any provision of this Act, or the application thereof to any person or circumstance, is held invalid, the invalidity does not affect other provisions or applications of the Act that can be given effect without the invalid provision or application, and to this end the provisions of this Act are severable.

     SECTION 8.  Statutory material to be repealed is bracketed and stricken.  New statutory material is underscored.

     SECTION 9.  This Act shall take effect on January 1, 2026; provided that section 2 shall take effect on July 1, 2025.

Report Title:

Transient Accommodations Tax; Increase; Natural Resources; Climate Change Mitigation; Special Land and Development Fund; Cruise Fares; Mass Transit Special Fund

Description:

Beginning 7/1/2025, requires the Governor to request in the executive budget or supplemental budget that an amount of general funds that approximates the additional Transient Accommodations Tax revenue generated by this Act be expended to advance certain climate change mitigation and tourism projects.  Increases the Transient Accommodations Tax rate beginning on 1/1/2026.  Assesses the Transient Accommodations Tax on gross rental proceeds derived from cruise fares.  Amends the amount of Transient Accommodation Tax that shall be deposited into the Mass Transit Special Fund.  Amends the allowable uses of the Special Land and Development Fund and the portion of Transient Accommodations Tax collections that are allocated to the Special Land and Development Fund.  Effective 1/1/2026.  (CD2)

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 ECONOMIC DEVELOPMENT.

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

     SECTION 1.  The legislature finds that Hawaii is experiencing a climate emergency.  The effects of climate change, such as rising temperatures, prolonged droughts, and increasingly destructive and deadly weather events, are felt across the island chain.  These impacts threaten not only our vibrant ecosystems but also the people of Hawaii and the State's economic sustainability.  To ensure the health and safety of Hawaii's lands, waters, and people, as well as its economic viability, successful mitigation of and adaptation to climate change are imperative.

     The legislature further finds that economic development cannot be separated from environmental stewardship.  Hawaii's economy is deeply reliant on its natural resources, from tourism and agriculture to marine industries and renewable energy.  Degradation of these resources due to climate change and environmental mismanagement will result in significant financial losses across multiple sectors.  By investing in sustainability, the State secures long-term economic stability while preserving its unique landscapes and biodiversity.

     The legislature also finds that climate resilience must be integrated into all economic planning efforts.  Resiliency measures, such as sustainable land use practices, shoreline protection, and forestry projects, ensure that Hawaii's economy remains robust in the face of climate-related disasters.  Without proactive investment, businesses and communities will continue to suffer financial losses due to increased flooding, wildfires, and extreme weather events.

     The legislature additionally finds that investing in Hawaii's environment is, in itself, economic development.  Furthermore, the legislature finds that as contemplated, the transient accommodations tax is intended to be applied fully and equitably whenever a transient accommodation is furnished within the State.  Whereas hotel and lodging establishments have complied with and pay their due share of transient accommodations taxes, tax collections on short-term rental operators have fallen short.  Moreover, there is currently no transient accommodations tax levied on cruise ships, which in 2024, accounted for 972,820 passenger port calls at port facilities under the jurisdiction of the department of transportation.  Supporting sustainable practices protects the islands' unique ecosystems while simultaneously fostering economic growth.  This support includes funding renewable energy projects, enhancing conservation efforts, and promoting environmental tourism initiatives.  These investments preserve natural resources, reduce carbon footprints, and stimulate economic opportunities, such as job creation in renewable energy sectors and eco-friendly tourism.

     In addition, the legislature finds that Hawaii has an opportunity to be a global leader in sustainable innovation.  By investing in conservation-focused business models, the State can attract investors and industries that prioritize sustainability.  These initiatives not only protect the environment but also diversify the economy, reducing reliance on tourism and traditional extractive industries.

     The legislature further finds that Hawaii's cultural heritage and traditions are deeply connected to its natural environment.  The protection and restoration of forests, coral reefs, and coastal ecosystems safeguard the foundation of Native Hawaiian practices and knowledge systems.  Investing in environmental conservation ensures that these traditions can continue to thrive, enriching community well-being and cultural tourism.

     The legislature also finds that a failure to act now will result in increased costs in the future.  The economic burden of climate inaction will far exceed the cost of proactive investment in mitigation and adaptation strategies.  Infrastructure damage, loss of biodiversity, increased health issues due to heat and pollution, and disruptions to tourism and agriculture will place a heavy financial strain on the State if environmental action is delayed.

     The legislature additionally finds that a strong commitment to environmental sustainability enhances Hawaii's reputation as a world-class destination for ecotourism.  Travelers are increasingly seeking destinations that prioritize sustainability, and by investing in conservation efforts, renewable energy, and sustainable tourism practices, Hawaii can maintain its competitive edge in the global tourism market while ensuring the long-term viability of its natural resources.

     The legislature therefore declares that investment in climate resilience and environmental sustainability is a fundamental component of Hawaii's economic development strategy.  By prioritizing policies and funding mechanisms that support climate action, conservation, and sustainable industries, Hawaii can build a more resilient, prosperous, and environmentally secure future for all residents and visitors.

     Accordingly, the purpose of this Act is to:

     (1)  Increase the transient accommodations tax rate for transient accommodations and resort time shares;

     (2)  Assess the transient accommodations tax on the gross receipts derived from cruise fares;

     (3)  Require the governor to request in the executive budget or supplemental budget that an amount of general funds that approximates the additional transient accommodations tax revenue generated by this Act be expended equally to advance certain climate change mitigation and tourism projects; and

     (4)  Amend the allowable uses of the special land and development fund and the portion of transient accommodations tax collections that are allocated to the special land and development fund.

     SECTION 2.  Chapter 37, Hawaii Revised Statutes, is amended by adding a new section to part IV to be appropriately designated and to read as follows:

     "§37-    Climate change and tourism destination management; projects; budget request.  The governor shall request, in the budget or the supplemental budget submitted to the legislature pursuant to section 37-71 or 37-72, that an amount of general funds that approximates the additional revenue generated by any increase to the transient accommodations tax rates pursuant to section 237D-2(a)(6) and (c)(4) beginning on January 1, 2026, and section 237D-2(e) beginning on July 1, 2026, and by assessment of the transient accommodations tax on gross rental proceeds derived from cruise fares pursuant to section 237D-2(a) be expended equally to advance specific projects to:

     (1)  Protect, manage, and restore the State's natural resources, including native forests, native plants and animals, aquatic resources, coastal lands, and freshwater resources;

     (2)  Increase the resilience of structures and infrastructure to natural and climate-related disasters, such as hurricanes and sea level rise, and perform hazard mitigation activities, such as wildfire and flood mitigation; and

     (3)  Improve the visitor experience, mitigate the impacts of tourism on the natural environment, ensure that the State's natural resources are maintained for future residents and visitors, and support destination management, such as park improvements and beach improvement, nourishment, and maintenance projects."

     SECTION 3.  Section 171-19, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

     "(a)  There is created in the department a special fund to be designated as the "special land and development fund".  Subject to the Hawaiian Homes Commission Act of 1920, as amended, and section 5(f) of the Admission Act of 1959, all proceeds of sale of public lands, including interest on deferred payments; all moneys collected under section 171-58 for mineral and water rights; all rents from leases, licenses, and permits derived from public lands; all moneys collected from lessees of public lands within industrial parks; all fees, fines, and other administrative charges collected under this chapter and chapter 183C; a portion of the highway fuel tax collected under chapter 243; a portion of the transient accommodations tax under chapter 237D; all moneys collected by the department for the commercial use of public trails and trail accesses under the jurisdiction of the department; and private contributions for the management, maintenance, and development of trails and accesses shall be set apart in the fund and shall be used only as authorized by the legislature for the following purposes:

     (1)  To reimburse the general fund of the State for advances made that are required to be reimbursed from the proceeds derived from sales, leases, licenses, or permits of public lands;

     (2)  For the planning, development, management, operations, or maintenance of all lands and improvements under the control and management of the board pursuant to title 12, including but not limited to permanent or temporary staff positions who may be appointed without regard to chapter 76;

     (3)  To repurchase any land, including improvements, in the exercise by the board of any right of repurchase specifically reserved in any patent, deed, lease, or other documents or as provided by law;

     (4)  For the payment of all appraisal fees; provided that all fees reimbursed to the board shall be deposited in the fund;

     (5)  For the payment of publication notices as required under this chapter; provided that all or a portion of the expenditures may be charged to the purchaser or lessee of public lands or any interest therein under rules adopted by the board;

     (6)  For the management, maintenance, and development of trails and trail accesses under the jurisdiction of the department;

     (7)  For the payment to private land developers who have contracted with the board for development of public lands under section 171-60;

     (8)  For the payment of debt service on revenue bonds issued by the department, including revenue bonds issued for the purposes of section 237D-6.5(b)(4), and the establishment of debt service and other reserves deemed necessary by the board;

     (9)  To reimburse the general fund for debt service on general obligation bonds issued to finance departmental projects, including projects under section 237D-6.5(b)(4), where the bonds are designated to be reimbursed from the special land and development fund;

    (10)  For the protection, planning, management, and regulation of water resources under chapter 174C; [and]

    (11)  For the purposes of section 237D-6.5(b)(4); and

   [(11)] (12)  For other purposes of this chapter."

     SECTION 4.  Section 237D-1, Hawaii Revised Statutes, is amended as follows:

     1.  By adding three new definitions to be appropriately inserted and to read:

     ""Cruise fare" means the total amount paid by a transient for a cruise ship cabin on a cruise ship, inclusive of any mandatory fees imposed by a cruise ship operator, owner, or representative thereof on a transient for the use of shipboard services, facilities, meals, and onboard entertainment, but does not include optional charges for shipboard services, meals, excursions, and onboard entertainment beyond the mandatory fee amount.

     "Cruise ship" means any ship that docks at any port in the State that charges a fee for and provides cruise ship cabins to transients.

     "Cruise ship cabin" means an accommodation or living quarter on a cruise ship that is provided to a transient."

     2.  By amending the definition of "gross rental" or "gross rental proceeds" to read:

     "Gross rental" or "gross rental proceeds" means the gross receipts, cash or accrued, of the taxpayer received as compensation for the furnishing of transient accommodations or entering into arrangements to furnish transient accommodations and the value proceeding or accruing from the furnishing of transient accommodations or entering into arrangements to furnish transient accommodations, including resort fees without any deductions on account of the cost of property or services sold, the cost of materials used, labor cost, taxes, royalties, interest, discounts, or any other expenses whatsoever.  "Gross rental" or "gross rental proceeds" includes the gross receipts derived from cruise fares.  Every taxpayer shall be presumed to be dealing on a cash basis unless the taxpayer proves to the satisfaction of the department of taxation that the taxpayer is dealing on an accrual basis and the taxpayer's books are so kept, or unless the taxpayer employs or is required to employ the accrual basis for the purposes of the tax imposed by chapter 237 for any taxable year in which event the taxpayer shall report the taxpayer's gross income for the purposes of this chapter on the accrual basis for the same period.

     The words "gross rental" or "gross rental proceeds" shall not be construed to include the amounts of taxes imposed by chapter 237 or this chapter on operators of transient accommodations, transient accommodations brokers, travel agencies, and tour packagers and passed on, collected, and received from the consumer as part of the receipts received as compensation for the furnishing of transient accommodations or entering into arrangements to furnish transient accommodations.

     Where transient accommodations are furnished through arrangements made by a transient accommodations broker, travel agency, or tour packager at noncommissionable negotiated contract rates and the gross income is divided between the operator of transient accommodations on the one hand and the transient accommodations broker, travel agency, or tour packager on the other hand, the tax imposed by this chapter shall apply to each operator and transient accommodations broker, travel agency, or tour packager with respect to that person's respective portion of the proceeds and no more.

     For purposes of this definition, where the operator maintains a schedule of rates for identifiable groups of individuals, such as kamaainas, upon which the accommodations are leased, let, or rented, gross rental or gross rental proceeds means the receipts collected and received based upon the scheduled rates and recorded as receipts in its books and records."

     SECTION 5.  Section 237D-2, Hawaii Revised Statutes, is amended as follows:

     1.  By amending subsection (a) to read:

     "(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[, and thereafter;] to December 31, 2025; and

     (6)  Ten 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[.]; provided that an operator of a cruise ship shall be assessed and pay a tax of eleven per cent under this subsection on all gross rental proceeds derived from cruise fares prorated by the percentage of days docked at any port in the State in comparison to the total number of days of the voyage."

     2.  By amending subsection (c) to read:

     "(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, [and thereafter.] to December 31, 2025; and

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

     3.  By amending subsection (e) to read:

     "(e)  Notwithstanding the tax rates established in subsections [(a)(5)] (a)(6) and [(c)(3),] (c)(4), the tax rates levied, assessed, and collected pursuant to subsections (a) and (c) shall be [10.25] eleven per cent for the period beginning on January 1, 2018, to December 31, 2030; provided that:

     (1)  [The] 0.98 per cent of the tax revenues levied, assessed, and collected pursuant to this [subsection that are in excess of the revenues realized from the levy, assessment, and collection of tax at the 9.25 per cent rate] section 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.

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

     SECTION 6.  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), 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, and improvement costs of public lands, including beaches[, connected with enhancing the visitor experience.]; and

          (D)  Any related debt service and financing agreement costs.

     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 7.  If any provision of this Act, or the application thereof to any person or circumstance, is held invalid, the invalidity does not affect other provisions or applications of the Act that can be given effect without the invalid provision or application, and to this end the provisions of this Act are severable.

     SECTION 8.  Statutory material to be repealed is bracketed and stricken.  New statutory material is underscored.

     SECTION 9.  This Act shall take effect on January 1, 2026; provided that section 2 shall take effect on July 1, 2025.

Report Title:

Transient Accommodations Tax; Increase; Natural Resources; Climate Change Mitigation; Special Land and Development Fund; Cruise Fares; Mass Transit Special Fund

Description:

Beginning 7/1/2025, requires the Governor to request in the executive budget or supplemental budget that an amount of general funds that approximates the additional Transient Accommodations Tax revenue generated by this Act be expended to advance certain climate change mitigation and tourism projects.  Increases the Transient Accommodations Tax rate beginning on 1/1/2026.  Assesses the Transient Accommodations Tax on gross rental proceeds derived from cruise fares.  Amends the amount of Transient Accommodation Tax that shall be deposited into the Mass Transit Special Fund.  Amends the allowable uses of the Special Land and Development Fund and the portion of Transient Accommodations Tax collections that are allocated to the Special Land and Development Fund.  Effective 1/1/2026.  (CD1)

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 ECONOMIC DEVELOPMENT.

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

     SECTION 1.  The legislature finds that Hawaii is experiencing a climate emergency.  The effects of climate change, such as rising temperatures, prolonged droughts, and increasingly destructive and deadly weather events, are felt across the island chain.  These impacts threaten not only our vibrant ecosystems but also the people of Hawaii and the State's economic sustainability.  To ensure the health and safety of Hawaii's lands, waters, and people, as well as its economic viability, successful mitigation of and adaptation to climate change are imperative.

     The legislature further finds that economic development cannot be separated from environmental stewardship.  Hawaii's economy is deeply reliant on its natural resources, from tourism and agriculture to marine industries and renewable energy.  Degradation of these resources due to climate change and environmental mismanagement will result in significant financial losses across multiple sectors.  By investing in sustainability, the State secures long-term economic stability while preserving its unique landscapes and biodiversity.

     The legislature also finds that climate resilience must be integrated into all economic planning efforts.  Resiliency measures, such as sustainable land use practices, shoreline protection, and forestry projects, ensure that Hawaii's economy remains robust in the face of climate-related disasters.  Without proactive investment, businesses and communities will continue to suffer financial losses due to increased flooding, wildfires, and extreme weather events.

     The legislature additionally finds that investing in Hawaii's environment is, in itself, economic development.  Furthermore, the legislature finds that as contemplated, the transient accommodations tax is intended to be applied fully and equitably whenever a transient accommodation is furnished within the State.  Whereas hotel and lodging establishments have complied with and pay their due share of transient accommodations taxes, tax collections on short-term rental operators have fallen short.  Moreover, there is currently no transient accommodations tax levied on cruise ships, which in 2024, accounted for 972,820 passenger port calls at port facilities under the jurisdiction of the department of transportation.  Supporting sustainable practices protects the islands' unique ecosystems while simultaneously fostering economic growth.  This support includes funding renewable energy projects, enhancing conservation efforts, and promoting environmental tourism initiatives.  These investments preserve natural resources, reduce carbon footprints, and stimulate economic opportunities, such as job creation in renewable energy sectors and eco-friendly tourism.

     In addition, the legislature finds that Hawaii has an opportunity to be a global leader in sustainable innovation.  By investing in conservation-focused business models, the State can attract investors and industries that prioritize sustainability.  These initiatives not only protect the environment but also diversify the economy, reducing reliance on tourism and traditional extractive industries.

     The legislature further finds that Hawaii's cultural heritage and traditions are deeply connected to its natural environment.  The protection and restoration of forests, coral reefs, and coastal ecosystems safeguard the foundation of Native Hawaiian practices and knowledge systems.  Investing in environmental conservation ensures that these traditions can continue to thrive, enriching community well-being and cultural tourism.

     The legislature also finds that a failure to act now will result in increased costs in the future.  The economic burden of climate inaction will far exceed the cost of proactive investment in mitigation and adaptation strategies.  Infrastructure damage, loss of biodiversity, increased health issues due to heat and pollution, and disruptions to tourism and agriculture will place a heavy financial strain on the State if environmental action is delayed.

     The legislature additionally finds that a strong commitment to environmental sustainability enhances Hawaii's reputation as a world-class destination for ecotourism.  Travelers are increasingly seeking destinations that prioritize sustainability, and by investing in conservation efforts, renewable energy, and sustainable tourism practices, Hawaii can maintain its competitive edge in the global tourism market while ensuring the long-term viability of its natural resources.

     The legislature therefore declares that investment in climate resilience and environmental sustainability is a fundamental component of Hawaii's economic development strategy.  By prioritizing policies and funding mechanisms that support climate action, conservation, and sustainable industries, Hawaii can build a more resilient, prosperous, and environmentally secure future for all residents and visitors.

     Accordingly, the purpose of this Act is to:

     (1)  Increase the transient accommodations tax;

     (2)  Amend the allowable uses of the special land and development fund and the portion of transient accommodations tax collections that are allocated to the special land and development fund; and

     (3)  Assess the transient accommodations tax on cruise ship cabins based on the total time the cruise ship is docked at any port in the State,

to create a source of revenue for environmental stewardship, climate and hazard mitigation, and sustainable tourism, to be implemented through additional funding to the department of land and natural resources.

     SECTION 2.  Section 171-19, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

     "(a)  There is created in the department a special fund to be designated as the "special land and development fund".  Subject to the Hawaiian Homes Commission Act of 1920, as amended, and section 5(f) of the Admission Act of 1959, all proceeds of sale of public lands, including interest on deferred payments; all moneys collected under section 171-58 for mineral and water rights; all rents from leases, licenses, and permits derived from public lands; all moneys collected from lessees of public lands within industrial parks; all fees, fines, and other administrative charges collected under this chapter and chapter 183C; a portion of the highway fuel tax collected under chapter 243; a portion of the transient accommodations tax under chapter 237D; all moneys collected by the department for the commercial use of public trails and trail accesses under the jurisdiction of the department; and private contributions for the management, maintenance, and development of trails and accesses shall be set apart in the fund and shall be used only as authorized by the legislature for the following purposes:

     (1)  To reimburse the general fund of the State for advances made that are required to be reimbursed from the proceeds derived from sales, leases, licenses, or permits of public lands;

     (2)  For the planning, development, management, operations, or maintenance of all lands and improvements under the control and management of the board pursuant to title 12, including but not limited to permanent or temporary staff positions who may be appointed without regard to chapter 76;

     (3)  To repurchase any land, including improvements, in the exercise by the board of any right of repurchase specifically reserved in any patent, deed, lease, or other documents or as provided by law;

     (4)  For the payment of all appraisal fees; provided that all fees reimbursed to the board shall be deposited in the fund;

     (5)  For the payment of publication notices as required under this chapter; provided that all or a portion of the expenditures may be charged to the purchaser or lessee of public lands or any interest therein under rules adopted by the board;

     (6)  For the management, maintenance, and development of trails and trail accesses under the jurisdiction of the department;

     (7)  For the payment to private land developers who have contracted with the board for development of public lands under section 171-60;

     (8)  For the payment of debt service on revenue bonds issued by the department, including revenue bonds issued for the purposes of section 237D-6.5(b)(4), and the establishment of debt service and other reserves deemed necessary by the board;

     (9)  To reimburse the general fund for debt service on general obligation bonds issued to finance departmental projects, including projects under section 237D-6.5(b)(4), where the bonds are designated to be reimbursed from the special land and development fund;

    (10)  For the protection, planning, management, and regulation of water resources under chapter 174C; [and]

    (11)  For the purposes of section 237D-6.5(b)(4); and

   [(11)] (12)  For other purposes of this chapter."

SECTION 3.  Section 237D-1, Hawaii Revised Statutes, is amended as follows:

     1.  By adding two new definitions to be appropriately inserted and to read:

     ""Cruise ship" means any ship that docks at any port in the State that charges a fee for and provides cruise ship cabins to transient passengers.

     "Cruise ship cabin" means an accommodation or living quarter on a cruise ship that is provided to transient passengers."

     2.  By amending the definition of "lease", "let", or "rental" to read:

     ""Lease", "let", or "rental" means the leasing or renting of living quarters [or], sleeping or housekeeping accommodations, or cruise ship cabins in hotels, apartment hotels, motels, condominiums or units defined in chapter 514B, cooperative apartments, rooming houses, cruise ships, or other places in which lodgings are regularly furnished to transients for a consideration, without transfer of the title of such property."

     3.  By amending the definition of "transient accommodations" to read:

     ""Transient accommodations" means the furnishing of a room, apartment, suite, single family dwelling, shelter, cruise ship cabin, or the like to a transient for less than one hundred eighty consecutive days for each letting in a hotel, apartment hotel, motel, condominium or unit as defined in chapter 514B, cooperative apartment, vehicle equipped with or advertised as including sleeping accommodations, dwelling unit, [or] rooming house, or cruise ship that provides living quarters, sleeping, or housekeeping accommodations, or other place in which lodgings are regularly furnished to transients."

     SECTION 4.  Section 237D-2, Hawaii Revised Statutes, is amended as follows:

     1.  By amending subsection (a) to read:

     "(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[, and thereafter;] to December 31, 2026; and

     (6)       per cent for the period beginning on January 1, 2027, and thereafter,

on the gross rental or gross rental proceeds derived from furnishing transient accommodations[.]; provided that an operator of a cruise ship shall be assessed and pay a tax of      per cent under this subsection on all gross rental proceeds derived from the furnishing of a cruise ship cabin for the duration of the cruise lease, prorated by the percentage of total time docked at any port in the State."

     2.  By amending subsection (c) to read:

     "(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, [and thereafter.] to December 31, 2026; and

     (4)       per cent on the fair market rental value for the period beginning on January 1, 2027, and thereafter."

     3.  By amending subsection (e) to read:

     "(e)  Notwithstanding the tax rates established in subsections [(a)(5)] (a)(6) and [(c)(3),] (c)(4), the tax rates levied, assessed, and collected pursuant to subsections (a) and (c) shall be [10.25]      per cent for the period beginning on January 1, 2018, to December 31, 2030; provided that:

     (1)  [The]      per cent of the tax revenues levied, assessed, and collected pursuant to this [subsection that are in excess of the revenues realized from the levy, assessment, and collection of tax at the 9.25 per cent rate] section 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.

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

     SECTION 5.  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), 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, and improvement costs of public lands, including beaches[, connected with enhancing the visitor experience.]; and

          (D)  Any related debt service and financing agreement costs.

     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 6.  There is appropriated out of the general revenues of the State of Hawaii the sum of $           or so much thereof as may be necessary for fiscal year 2025-2026 and the same sum or so much thereof as may be necessary for fiscal year 2026-2027:

     (1)  To protect, manage, and restore the State's natural resources, including native forests; native plants and animals; aquatic resources; coastal lands; and freshwater resources; and

     (2)  For environmental stewardship, climate and hazard mitigation, and sustainable tourism.

     The sums appropriated shall be expended by the department of land and natural resources for the purposes of this Act.

     SECTION 7.  Statutory material to be repealed is bracketed and stricken.  New statutory material is underscored.

     SECTION 8.  This Act shall take effect on July 1, 3000.

Report Title:

Transient Accommodations Tax; Increase; DLNR; Natural Resources; Climate Change Mitigation; Special Land and Development Fund; Cruise Ships; Cabins; Appropriation

Description:

Amends the Transient Accommodations Tax rate beginning on 1/1/2027.  Amends the allowable uses of the Special Land and Development Fund and the portion of Transient Accommodations Tax collections that are allocated to the Special Land and Development Fund.  Assesses the Transient Accommodations Tax on cruise ship cabins based on the total time the cruise ship is docked at any port in the State.  Appropriates funds to DLNR for protection, management, and restoration of the State's natural resources as well as for environmental stewardship, climate and hazard mitigation, and sustainable tourism.  Effective 7/1/3000.  (HD3)

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 ECONOMIC DEVELOPMENT.

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

     SECTION 1.  The legislature finds that Hawaii is experiencing a climate emergency.  The effects of climate change, such as rising temperatures, prolonged droughts, and increasingly destructive and deadly weather events, are felt across the island chain.  These impacts threaten not only our vibrant ecosystems but also the people of Hawaii and the State's economic sustainability.  To ensure the health and safety of Hawaii's lands, waters, and people, as well as its economic viability, successful mitigation of and adaptation to climate change are imperative.

     The legislature further finds that economic development cannot be separated from environmental stewardship.  Hawaii's economy is deeply reliant on its natural resources, from tourism and agriculture to marine industries and renewable energy.  Degradation of these resources due to climate change and environmental mismanagement will result in significant financial losses across multiple sectors.  By investing in sustainability, the State secures long-term economic stability while preserving its unique landscapes and biodiversity.

     The legislature also finds that climate resilience must be integrated into all economic planning efforts.  Resiliency measures, such as sustainable land use practices, shoreline protection, and forestry projects, ensure that Hawaii's economy remains robust in the face of climate-related disasters.  Without proactive investment, businesses and communities will continue to suffer financial losses due to increased flooding, wildfires, and extreme weather events.

     The legislature additionally finds that investing in Hawaii's environment is, in itself, economic development.  Furthermore, the legislature finds that as contemplated, the transient accommodations tax is intended to be applied fully and equitably whenever a transient accommodation is furnished within the State.  Whereas hotel and lodging establishments have complied with and pay their due share of transient accommodations taxes, tax collections on short-term rental operators have fallen short.  Moreover, there is currently no transient accommodations tax levied on cruise ships, which in 2024, accounted for 972,820 passenger port calls at port facilities under the jurisdiction of the department of transportation.  Supporting sustainable practices protects the islands' unique ecosystems while simultaneously fostering economic growth.  This support includes funding renewable energy projects, enhancing conservation efforts, and promoting environmental tourism initiatives.  These investments preserve natural resources, reduce carbon footprints, and stimulate economic opportunities, such as job creation in renewable energy sectors and eco-friendly tourism.

     In addition, the legislature finds that Hawaii has an opportunity to be a global leader in sustainable innovation.  By investing in conservation-focused business models, the State can attract investors and industries that prioritize sustainability.  These initiatives not only protect the environment but also diversify the economy, reducing reliance on tourism and traditional extractive industries.

     The legislature further finds that Hawaii's cultural heritage and traditions are deeply connected to its natural environment.  The protection and restoration of forests, coral reefs, and coastal ecosystems safeguard the foundation of Native Hawaiian practices and knowledge systems.  Investing in environmental conservation ensures that these traditions can continue to thrive, enriching community well-being and cultural tourism.

     The legislature also finds that a failure to act now will result in increased costs in the future.  The economic burden of climate inaction will far exceed the cost of proactive investment in mitigation and adaptation strategies.  Infrastructure damage, loss of biodiversity, increased health issues due to heat and pollution, and disruptions to tourism and agriculture will place a heavy financial strain on the State if environmental action is delayed.

     The legislature additionally finds that a strong commitment to environmental sustainability enhances Hawaii's reputation as a world-class destination for ecotourism.  Travelers are increasingly seeking destinations that prioritize sustainability, and by investing in conservation efforts, renewable energy, and sustainable tourism practices, Hawaii can maintain its competitive edge in the global tourism market while ensuring the long-term viability of its natural resources.

     The legislature therefore declares that investment in climate resilience and environmental sustainability is a fundamental component of Hawaii's economic development strategy.  By prioritizing policies and funding mechanisms that support climate action, conservation, and sustainable industries, Hawaii can build a more resilient, prosperous, and environmentally secure future for all residents and visitors.

     Accordingly, the purpose of this Act is to:

     (1)  Increase the transient accommodations tax; and

     (2)  Assess the transient accommodations tax on cruise ship cabins based on the total time the cruise ship is docked at any port in the State,

to create a source of revenue for environmental stewardship, climate and hazard mitigation, and sustainable tourism, to be implemented through additional funding to the department of land and natural resources.

SECTION 2.  Section 237D-1, Hawaii Revised Statutes, is amended as follows:

     1.  By adding two new definitions to be appropriately inserted and to read:

     ""Cruise ship" means any ship that docks at any port in the State that charges a fee for and provides cruise ship cabins to transient passengers.

     "Cruise ship cabin" means an accommodation or living quarter on a cruise ship that is provided to transient passengers."

     2.  By amending the definition of "lease", "let", or "rental" to read:

     ""Lease", "let", or "rental" means the leasing or renting of living quarters [or], sleeping or housekeeping accommodations, or cruise ship cabins in hotels, apartment hotels, motels, condominiums or units defined in chapter 514B, cooperative apartments, rooming houses, cruise ships, or other places in which lodgings are regularly furnished to transients for a consideration, without transfer of the title of such property."

     3.  By amending the definition of "transient accommodations" to read:

     ""Transient accommodations" means the furnishing of a room, apartment, suite, single family dwelling, shelter, cruise ship cabin, or the like to a transient for less than one hundred eighty consecutive days for each letting in a hotel, apartment hotel, motel, condominium or unit as defined in chapter 514B, cooperative apartment, vehicle equipped with or advertised as including sleeping accommodations, dwelling unit, [or] rooming house, or cruise ship that provides living quarters, sleeping, or housekeeping accommodations, or other place in which lodgings are regularly furnished to transients."

     SECTION 3.  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[, and thereafter;] to December 31, 2026; and

     (6)       per cent for the period beginning on January 1, 2027, and thereafter,

on the gross rental or gross rental proceeds derived from furnishing transient accommodations[.]; provided that an operator of a cruise ship shall be assessed and pay a tax of      per cent under this subsection on all gross rental proceeds derived from the furnishing of a cruise ship cabin for the duration of the cruise lease, prorated by the percentage of total time docked at any port in the State.

     (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, [and thereafter.] to December 31, 2026; and

     (4)       per cent on the fair market rental value for the period beginning on January 1, 2027, 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)(6) and [(c)(3),] (c)(4), the tax rates levied, assessed, and collected pursuant to subsections (a) and (c) shall be [10.25]      per cent for the period beginning on January 1, 2018, to December 31, 2030; provided that:

     (1)  [The]      per cent of the tax revenues levied, assessed, and collected pursuant to this [subsection that are in excess of the revenues realized from the levy, assessment, and collection of tax at the 9.25 per cent rate] section 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.

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

     SECTION 4.  There is appropriated out of the general revenues of the State of Hawaii the sum of $           or so much thereof as may be necessary for fiscal year 2025-2026 and the same sum or so much thereof as may be necessary for fiscal year 2026-2027:

     (1)  To protect, manage, and restore the State's natural resources, including native forests; native plants and animals; aquatic resources; coastal lands; and freshwater resources; and

     (2)  For environmental stewardship, climate and hazard mitigation, and sustainable tourism.

     The sums appropriated shall be expended by the department of land and natural resources for the purposes of this Act.

     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:

Transient Accommodations Tax; Increase; DLNR; Natural Resources; Climate Change Mitigation; Cruise Ships; Cabins; Appropriation

Description:

Amends the Transient Accommodations Tax rate beginning on 1/1/2027.  Assesses the Transient Accommodations Tax on cruise ship cabins based on the total time the cruise ship is docked at any port in the State.  Appropriates funds to DLNR for protection, management, and restoration of the State's natural resources as well as for environmental stewardship, climate and hazard mitigation, and sustainable tourism.  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

RELATING TO ECONOMIC DEVELOPMENT.

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

     SECTION 1.  The legislature finds that Hawaii is experiencing a climate emergency.  The effects of climate change, such as rising temperatures, prolonged droughts, and increasingly destructive and deadly weather events, are felt across the island chain.  These impacts threaten not only our vibrant ecosystems but also the people of Hawaii and the State's economic sustainability.  To ensure the health and safety of Hawaii's lands, waters, and people, as well as its economic viability, successful mitigation of and adaptation to climate change are imperative.

     The legislature further finds that economic development cannot be separated from environmental stewardship.  Hawaii's economy is deeply reliant on its natural resources, from tourism and agriculture to marine industries and renewable energy.  Degradation of these resources due to climate change and environmental mismanagement will result in significant financial losses across multiple sectors.  By investing in sustainability, the State secures long-term economic stability while preserving its unique landscapes and biodiversity.

     The legislature further finds that climate resilience must be integrated into all economic planning efforts.  Resiliency measures, such as sustainable land use practices, shoreline protection, and forestry projects, ensure that Hawaii's economy remains robust in the face of climate-related disasters.  Without proactive investment, businesses and communities will continue to suffer financial losses due to increased flooding, wildfires, and extreme weather events.

     The legislature further finds that investing in Hawaii's environment is, in itself, economic development.  Supporting sustainable practices protects the islands' unique ecosystems while simultaneously fostering economic growth.  This includes funding renewable energy projects, enhancing conservation efforts, and supporting environmental tourism initiatives.  These investments preserve natural resources, reduce carbon footprints, and stimulate economic opportunities, such as job creation in renewable energy sectors and eco-friendly tourism.

     The legislature further finds that Hawaii has an opportunity to be a global leader in sustainable innovation.  By investing in conservation-focused business models, the State can attract investors and industries that prioritize sustainability.  These initiatives not only protect the environment but also diversify the economy, reducing reliance on tourism and traditional extractive industries.

     The legislature further finds that Hawaii's cultural heritage and traditions are deeply connected to its natural environment.  The protection and restoration of forests, coral reefs, and coastal ecosystems safeguard the foundation of Native Hawaiian practices and knowledge systems.  Investing in environmental conservation ensures that these traditions can continue to thrive, enriching community well-being and cultural tourism.

     The legislature further finds that a failure to act now will result in increased costs in the future.  The economic burden of climate inaction will far exceed the cost of proactive investment in mitigation and adaptation strategies.  Infrastructure damage, loss of biodiversity, increased health issues due to heat and pollution, and disruptions to tourism and agriculture will place a heavy financial strain on the State if environmental action is delayed.

     The legislature further finds that a strong commitment to environmental sustainability enhances Hawaii's reputation as a world-class destination for ecotourism.  Travelers are increasingly seeking destinations that prioritize sustainability, and by investing in conservation efforts, renewable energy, and sustainable tourism practices, Hawaii can maintain its competitive edge in the global tourism market while ensuring the long-term viability of its natural resources.

     The legislature therefore declares that investment in climate resilience and environmental sustainability is a fundamental component of Hawaii's economic development strategy.  By prioritizing policies and funding mechanisms that support climate action, conservation, and sustainable industries, Hawaii can build a more resilient, prosperous, and environmentally secure future for all residents and visitors.

     Accordingly, the purpose of this Act is to increase the transient accommodations tax to create a source of revenue for environmental stewardship, to be implemented through additional funding to the department of land and natural resources.

     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[, and thereafter;] to December 31, 2026; and

     (6)       per cent for the period beginning on January 1, 2027, 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] subsections (a)[,] and (f), 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, [and thereafter.] to December 31, 2026; and

     (4)       per cent on the fair market rental value for the period beginning on January 1, 2027, 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)(6) and [(c)(3),] (c)(4), the tax rates levied, assessed, and collected pursuant to subsections (a) and (c) shall be [10.25]      per cent for the period beginning on January 1, 2018, to December 31, 2030; provided that:

     (1)  [The]      per cent of the tax revenues levied, assessed, and collected pursuant to this [subsection that are in excess of the revenues realized from the levy, assessment, and collection of tax at the 9.25 per cent rate] section 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.

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

     (f)  Beginning on January 1, 2027, there is levied and shall be assessed and collected each month a tax of $20 per night on each furnishing of a transient accommodation in exchange for points, miles, or other amounts provided through a membership, loyalty, or rewards program.  In addition to amounts owed under this subsection, any additional gross rental or gross rental proceeds derived from furnishing or arranging a transient accommodation in exchange for points, miles, or other amounts provided through a membership, loyalty, or rewards program shall remain subject to levy, assessment, and collection pursuant to subsection (a)."

     SECTION 3.  There is appropriated out of the general revenues of the State of Hawaii the sum of $           or so much thereof as may be necessary for fiscal year 2025-2026 and the same sum or so much thereof as may be necessary for fiscal year 2026-2027 to protect, manage, and restore the State's natural resources, including native forests; native plants and animals; aquatic resources; coastal lands; and freshwater resources.

     The sums appropriated shall be expended by the department of land and natural resources for the purposes of this Act.

     SECTION 4.  Statutory material to be repealed is bracketed and stricken.  New statutory material is underscored.

     SECTION 5.  This Act shall take effect on July 1, 3000.

Report Title:

Transient Accommodations Tax; Membership, Loyalty, or Rewards Programs; Increase; DLNR; Natural Resources; Appropriation

Description:

Amends the transient accommodations tax rate beginning on 1/1/2027.  Beginning 1/1/2027, requires a $20 transient accommodation tax to be levied per night for each furnishing of transient accommodations in exchange for points, miles, or other amounts provided through a membership, loyalty, or rewards program.  Appropriates funds to DLNR for protection, management, and restoration of the State's natural resources.  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.

SENATE FLOOR AMENDMENT

FLOOR AMENDMENT NO.                                            Date                                                                                     

TO:    Senate Bill No. 1396, S.D. 2

          SECTION 1.  Senate Bill No. 1396, S.D. 2, is amended by amending section 1, page 2, line 18 through page 3, line 9, to read as follows:

     "Accordingly, the purpose of this Act is to address the impacts of climate change and support tourism marketing and destination management in the State and mitigate further impacts by authorizing the funding of resiliency projects by:

     (1)  Increasing the transient accommodations tax; and

     (2)  Requiring the governor to request in the budget or supplemental budget submitted to the legislature pursuant to section 37-71 or 37-72, Hawaii Revised Statutes, that an amount of general funds equal to     per cent of the moneys collected pursuant to chapter 237D, Hawaii Revised Statutes, be expended to advance specific projects that address climate change and support tourism marketing and destination management."

          SECTION 2.  Senate Bill No. 1396, S.D. 2, is amended by amending section 2, page 3, lines 10 through 20, to read as follows:

     "SECTION 2.  Chapter 37, Hawaii Revised Statutes, is amended by adding a new section to part IV to be appropriately designated and to read as follows:

     "§37-     Climate change and tourism marketing and destination management; projects; budget request.  The governor shall request, in the budget or supplemental budget submitted to the legislature pursuant to section 37-71 or 37-72, that an amount of general funds equal to     per cent of the moneys collected pursuant to chapter 237D be expended to advance specific projects that address climate change and support tourism marketing and destination management, including projects that mitigate, adapt to, or increase resiliency to climate change and tourism.""

A BILL FOR AN ACT

RELATING TO ECONOMIC DEVELOPMENT.

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

     SECTION 1.  The legislature finds that Hawaii is experiencing a climate emergency.  The effects of climate change, such as rising temperatures, prolonged droughts, and increasingly destructive and deadly weather events, are felt across the island chain.  These impacts threaten not only the State's vibrant ecosystems but, as actors within these ecosystems, the people of Hawaii as well.  To ensure the health, safety, and well-being of Hawaii's lands, waters, and people, successful mitigation of and adaptation to climate change is imperative.

     The legislature further finds that given the scale and impact of the climate emergency, the State must invest in bold actions to prepare for, mitigate, and adapt to climate change, including resiliency to intensifying natural disasters.  A coordinated approach is necessary, and the department of defense, charged with protecting the safety and welfare of the people of Hawaii and the State's lead for hazard mitigation and disaster readiness, is prepared to assume this responsibility, in coordination with the departments of business, economic development, and tourism; land and natural resources; and transportation, as well as the community, to provide for the safety, security, and well-being of Hawaii's places and people.

     The legislature additionally finds that economic development, in particular, must consider climate change.  Tourism, infrastructure, and community development are all predicated upon Hawaii's land and natural resources.  Resiliency to and mitigation of climate change must remain at the forefront of any economic development or revitalization project.

     The legislature also finds that Hawaii needs to invest in efforts to reduce climate change impacts now to limit current and future costs of climate change.  The anticipated extent of the impact of climate change is such that state government needs to take comprehensive and coordinated mitigation efforts as soon as possible.

     Accordingly, the purpose of this Act is to address the impacts of climate change and support tourism marketing and destination management in the State and mitigate further impacts by authorizing the funding of resiliency projects by:

     (1)  Increasing the transient accommodations tax; and

     (2)  Requiring the governor to request in the budget or supplemental budget submitted to the legislature pursuant to section 37-71 or 37-72, Hawaii Revised Statutes, that an amount of general funds equal to     per cent of the moneys collected pursuant to chapter 237D, Hawaii Revised Statutes, be expended to advance specific projects that address climate change and support tourism marketing and destination management.

     SECTION 2.  Chapter 37, Hawaii Revised Statutes, is amended by adding a new section to part IV to be appropriately designated and to read as follows:

     "§37-     Climate change and tourism marketing and destination management; projects; budget request.  The governor shall request, in the budget or supplemental budget submitted to the legislature pursuant to section 37-71 or 37-72, that an amount of general funds equal to     per cent of the moneys collected pursuant to chapter 237D be expended to advance specific projects that address climate change and support tourism marketing and destination management, including projects that mitigate, adapt to, or increase resiliency to climate change and tourism."

     SECTION 3.  Section 237D-2, Hawaii Revised Statutes, is amended as follows:

     1.  By amending subsection (a) to read:

     "(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, [and thereafter;] to December 31, 2025; and

     (6)         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."

     2.  By amending subsection (c) to read:

     "(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, [and thereafter.] to December 31, 2025; and

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

     3.  By amending subsection (e) to read:

     "(e)  Notwithstanding the tax rates established in subsections (a)(5) and (6) and (c)(3)[,] and (4), the tax rates levied, assessed, and collected pursuant to subsections (a) and (c) shall be 10.25 per cent for the period beginning on January 1, 2018, to December 31, 2025, and        per cent for the period beginning on January 1, 2026, to December 31, 2030; provided that:

     (1)  The tax revenues levied, assessed, and collected pursuant to this subsection that are in excess of the revenues realized from the levy, assessment, and collection of tax at the [9.25 per cent rate] rates established in subsections (a)(5) and (6) and (c)(3) and (4) 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.

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

     SECTION 4.  Statutory material to be repealed is bracketed and stricken.  New statutory material is underscored.

     SECTION 5.  This Act shall take effect on July 1, 2050.

Report Title:

Governor; Transient Accommodations Tax; Budget; Supplemental Budget; Climate Change; Tourism Marketing; Destination Management; Projects

Description:

Beginning 1/1/2026, increases the Transient Accommodation Tax by an unspecified amount.  Requires the Governor to request in the budget or supplemental budget submitted to the Legislature for an amount of general funds equal to an unspecified percentage of the transient accommodations tax revenue be expended to advance specific projects that address climate change and support tourism marketing and destination management.  Effective 7/1/2050.  (SD3)

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 ECONOMIC DEVELOPMENT.

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

     SECTION 1.  The legislature finds that Hawaii is experiencing a climate emergency.  The effects of climate change, such as rising temperatures, prolonged droughts, and increasingly destructive and deadly weather events, are felt across the island chain.  These impacts threaten not only the State's vibrant ecosystems but, as actors within these ecosystems, the people of Hawaii as well.  To ensure the health, safety, and well-being of Hawaii's lands, waters, and people, successful mitigation of and adaptation to climate change is imperative.

     The legislature further finds that given the scale and impact of the climate emergency, the State must invest in bold actions to prepare for, mitigate, and adapt to climate change, including resiliency to intensifying natural disasters.  A coordinated approach is necessary, and the department of defense, charged with protecting the safety and welfare of the people of Hawaii and the State's lead for hazard mitigation and disaster readiness, is prepared to assume this responsibility, in coordination with the departments of business, economic development, and tourism; land and natural resources; and transportation, as well as the community, to provide for the safety, security, and well-being of Hawaii's places and people.

     The legislature additionally finds that economic development, in particular, must consider climate change.  Tourism, infrastructure, and community development are all predicated upon Hawaii's land and natural resources.  Resiliency to and mitigation of climate change must remain at the forefront of any economic development or revitalization project.

     The legislature also finds that Hawaii needs to invest in efforts to reduce climate change impacts now to limit current and future costs of climate change.  The anticipated extent of the impact of climate change is such that state government needs to take comprehensive and coordinated mitigation efforts as soon as possible.

     Accordingly, the purpose of this Act is to address the impacts of climate change and tourism on the State and mitigate further impacts by authorizing the funding of resiliency projects by:

     (1)  Increasing the transient accommodations tax; and

     (2)  Requiring the governor to request in the budget or supplemental budget submitted to the legislature pursuant to section 37-71 or 37-72, Hawaii Revised Statutes, that an amount of general funds equal to     per cent of the moneys collected pursuant to chapter 237D, Hawaii Revised Statutes, be expended to advance specific projects that address climate change and tourism impacts.

     SECTION 2.  Chapter 37, Hawaii Revised Statutes, is amended by adding a new section to part IV to be appropriately designated and to read as follows:

     "§37-     Climate change and tourism impacts; projects; budget request.  The governor shall request, in the budget or supplemental budget submitted to the legislature pursuant to section 37-71 or 37-72, that an amount of general funds equal to     per cent of the moneys collected pursuant to chapter 237D be expended to advance specific projects that address climate change and tourism impacts, including projects that mitigate, adapt to, or increase resiliency to climate change and tourism."

     SECTION 3.  Section 237D-2, Hawaii Revised Statutes, is amended as follows:

     1.  By amending subsection (a) to read:

     "(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, [and thereafter;] to December 31, 2025; and

     (6)         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."

     2.  By amending subsection (c) to read:

     "(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, [and thereafter.] to December 31, 2025; and

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

     3.  By amending subsection (e) to read:

     "(e)  Notwithstanding the tax rates established in subsections (a)(5) and (6) and (c)(3)[,] and (4), the tax rates levied, assessed, and collected pursuant to subsections (a) and (c) shall be 10.25 per cent for the period beginning on January 1, 2018, to December 31, 2025, and        per cent for the period beginning on January 1, 2026, to December 31, 2030; provided that:

     (1)  The tax revenues levied, assessed, and collected pursuant to this subsection that are in excess of the revenues realized from the levy, assessment, and collection of tax at the [9.25 per cent rate] rates established in subsections (a)(5) and (6) and (c)(3) and (4) 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.

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

     SECTION 4.  Statutory material to be repealed is bracketed and stricken.  New statutory material is underscored.

     SECTION 5.  This Act shall take effect on July 1, 2050.

Report Title:

Governor; Transient Accommodations Tax; Budget; Supplemental Budget; Climate Change and Tourism Impacts; Projects

Description:

Beginning 1/1/2026, increases the Transient Accommodation Tax by an unspecified amount.  Requires the Governor to request in the budget or supplemental budget submitted to the legislature for an amount of general funds equal to an unspecified percentage of the transient accommodations tax revenue be expended to advance specific projects that address climate change and tourism impacts.  Effective 7/1/2050.  (SD2)

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 ECONOMIC DEVELOPMENT.

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

     SECTION 1.  The legislature finds that Hawaii is experiencing a climate emergency.  The effects of climate change, such as rising temperatures, prolonged droughts, and increasingly destructive and deadly weather events, are felt across the island chain.  These impacts threaten not only the State's vibrant ecosystems but, as actors within these ecosystems, the people of Hawaii as well.  To ensure the health, safety, and well-being of Hawaii's lands, waters, and people, successful mitigation of and adaptation to climate change is imperative.

     The legislature further finds that given the scale and impact of the climate emergency, the State must invest in bold actions to prepare for, mitigate, and adapt to climate change, including resiliency to intensifying natural disasters.  A coordinated approach is necessary, and the department of defense, charged with protecting the safety and welfare of the people of Hawaii and the State's lead for hazard mitigation and disaster readiness, is prepared to assume this responsibility, in coordination with the departments of business, economic development, and tourism; land and natural resources; and transportation, as well as the community, to provide for the safety, security, and well-being of Hawaii's places and people.

     The legislature additionally finds that economic development, in particular, must consider climate change.  Tourism, infrastructure, and community development are all predicated upon Hawaii's land and natural resources.  Resiliency to and mitigation of climate change must remain at the forefront of any economic development or revitalization project.

     The legislature also finds that Hawaii needs to invest in efforts to reduce climate change impacts now to limit current and future costs of climate change.  The anticipated extent of the impact of climate change is such that state government needs to take comprehensive and coordinated mitigation efforts as soon as possible.

     Accordingly, the purpose of this Act is to:

     (1)  Address the impacts of climate change on the State and mitigate further impacts by authorizing the funding of resiliency projects;

     (2)  Establish the climate mitigation and resiliency special fund and the economic development and revitalization special fund;

     (3)  Increase the transient accommodations tax and allocate a portion of the tax to the climate mitigation and resiliency special funds; and

     (4)  Appropriate funds.

     SECTION 2.  The Hawaii Revised Statutes is amended by adding a new chapter to be appropriately designated and to read as follows:

"CHAPTER

RESILIENCY

     §   -1  Resiliency projects.  The department of defense may fund projects that strengthen the State's resiliency, including projects that mitigate, adapt to, or increase resiliency against climate change.

     §   -2  Resiliency projects; selection committee.  The department of defense shall convene a selection committee to review and recommend projects for climate mitigation and resiliency special fund allocation.  The following members shall comprise the committee:

     (1)  The adjutant general;

     (2)  The director of business, economic development, and tourism;

     (3)  The director of finance;

     (4)  The chairperson of the board of land and natural resources;

     (5)  The director of transportation;

     (6)  An at-large member nominated by the president of the senate; and

     (7)  An at-large member nominated by the speaker of the house or representatives;

provided that the two at-large members shall each be invited to serve and appointed by the governor, without the advice and consent of the senate, from a list of three nominees submitted for each position by the nominating authority specified in this section.

     §   -3  Climate mitigation and resiliency special fund; established.  (a)  There is established in the state treasury the climate mitigation and resiliency special fund, to be administered by the department of defense, into which shall be deposited:

     (1)  Appropriations made by the legislature to the fund;

     (2)  Fees collected under this chapter or any rule adopted thereunder;

     (3)  Grants provided by governmental agencies or any other source;

     (4)  Donations made by private individuals or organizations for deposit into the fund;

     (5)  Interest earned from moneys in the emergency and budget reserve fund established in section 328L-3;

     (6)  A portion of the revenues from the transient accommodations tax established by chapter 237D, as provided by section 237D-6.5; and

     (7)  Interest earned from moneys in the fund.

     (b)  Moneys in the climate mitigation and resiliency special fund shall be used to advance projects addressing climate change impacts, including projects that mitigate, adapt to, or increase resiliency against climate change.  Moneys may also be used for consultant, personnel, and administrative costs required to develop and implement the aforementioned projects.

     §   -4  Rules.  The adjutant general shall adopt rules pursuant to chapter 91 necessary for the purposes of this chapter, including for the imposition and collection of fees."

     SECTION 3.  Chapter 201, Hawaii Revised Statutes, is amended by adding to part I a new section to be appropriately designated and to read as follows:

     "§201-    Economic development and revitalization special fund.  (a)  There is established in the state treasury the economic development and revitalization special fund, to be administered by the department, into which shall be deposited:

     (1)  Appropriations made by the legislature to the fund;

     (2)  Fees collected under this chapter or any rule adopted thereunder;

     (3)  Grants provided by governmental agencies or any other source;

     (4)  Donations made by private individuals or organizations for deposit into the fund; and

     (5)  Interest earned from moneys in the fund.

     (b)  Moneys in the economic development and revitalization special fund shall be used for projects advancing:

     (1)  Economic development or revitalization;

     (2)  Infrastructure within tourism districts or resort areas;

     (3)  Climate change mitigation, adaptation, or resiliency; and

     (4)  Tourism marketing.

     (c)  The department shall establish procedures for receiving and evaluating project proposals for economic development and revitalization special fund allocation; provided that:

     (1)  The Hawaii tourism authority, office of planning and sustainable development, and department of land and natural resources shall each review any project proposal submitted for funding allocation and submit a recommendation for funding allocation to the department;

     (2)  The department shall review any project proposal submitted for funding allocation as well as the corresponding recommendations for funding allocation submitted to the department pursuant to paragraph (1) and make a recommendation for funding allocation to the governor; and

     (3)  All funding allocations shall be subject to the governor's final approval.

     (d)  The department shall submit an annual report to the legislature no later than twenty days prior to the convening of each regular session on the sources of moneys deposited into the economic development and revitalization special fund and expenditures of moneys from the special fund."

     SECTION 4.  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, [and thereafter;] to December 31, 2025; and

     (6)  Eleven 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, [and thereafter.] to December 31, 2025; and

     (4)  Eleven 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) and (6) and (c)(3)[,] and (4), the tax rates levied, assessed, and collected pursuant to subsections (a) and (c) shall be 10.25 per cent for the period beginning on January 1, 2018, to December 31, 2025, and twelve per cent for the period beginning on January 1, 2026, to December 31, 2030; provided that:

     (1)  The tax revenues levied, assessed, and collected pursuant to this subsection that are in excess of the revenues realized from the levy, assessment, and collection of tax at the [9.25 per cent rate] rates established in subsections (a)(5) and (6) and (c)(3) and (4) 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.

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

     SECTION 5.  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), 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[.]; and

     (5)  7.3 per cent of the total revenue collected pursuant to section 237D-2 shall be allocated to the climate mitigation and resiliency special fund, established under section    -1.

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 6.  There is appropriated out of the general revenues of the State of Hawaii the sum of $50,000,000 or so much thereof as may be necessary for fiscal year 2025-2026 to be deposited into the climate mitigation and resiliency special fund.

     SECTION 7.  There is appropriated out of the climate mitigation and resiliency special fund the sum of $50,000,000 or so much thereof as may be necessary for fiscal year 2025-2026 to advance projects addressing climate change impacts.

     The sum appropriated shall be expended by the department of defense for the purposes of this Act.

     SECTION 8.  There is appropriated out of the climate mitigation and resiliency special fund $90,000,000 or so much thereof as may be necessary for fiscal year 2025-2026 and the same sum or so much thereof as may be necessary for fiscal year 2026-2027 to advance projects addressing climate change impacts.

     The sums appropriated shall be expended by the department of defense for the purposes of this Act.

     SECTION 9.  There is appropriated out of the economic development and revitalization special fund $90,000,000 or so much thereof as may be necessary for fiscal year 2025-2026 and the same sum or so much thereof as may be necessary for fiscal year 2026-2027 to advance resilient economic development and revitalization projects.

     The sums appropriated shall be expended by the department of business, economic development, and tourism for the purposes of this Act.

     SECTION 10.  The appropriations made by this Act shall not lapse at the end of the fiscal year for which the appropriation is made; provided that all moneys from the appropriation unencumbered as of June 30, 2028, shall lapse into the fund from which appropriated as of that date.  Any unissued balance of any authorization made by this Act as of the close of business on June 30, 2028, shall lapse.

     SECTION 11.  Statutory material to be repealed is bracketed and stricken.  New statutory material is underscored.

     SECTION 12.  This Act shall take effect on July 1, 2050.

Report Title:

DOD; DBEDT; Climate Mitigation and Resiliency Special Fund; Economic Development and Revitalization Special Fund; Rules; Transient Accommodations Tax; Report; Appropriations

Description:

Establishes the Climate Mitigation and Resiliency Special Fund to be administered by the Department of Defense to advance projects addressing climate change impacts.  Requires the DOD to convene a selection committee to review and recommend projects for Climate Mitigation and Resiliency Special Fund allocation.  Requires the Adjutant General to adopt rules.  Establishes the Economic Development and Revitalization Special Fund to be administered by the Department of Business, Economic Development, and Tourism for projects advancing economic development or revitalization; infrastructure within tourism districts or resort areas; climate change mitigation, adaptation, or resiliency; and tourism marketing.  Requires DBEDT to establish procedures for receiving and evaluating project proposals for Economic Development and Revitalization Special Fund allocation.  Requires DBEDT to submit annual reports to the Legislature.  Beginning 1/1/2026, increases the Transient Accommodation Tax and allocates a portion thereof to the Climate Mitigation and Resiliency Special Fund.  Appropriates funds.  Effective 7/1/2050.  (SD1)

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 ECONOMIC DEVELOPMENT.

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

     SECTION 1.  The legislature finds that Hawaii is experiencing a climate emergency.  The effects of climate change, such as rising temperatures, prolonged droughts, and increasingly destructive and deadly weather events, are felt across the island chain.  These impacts threaten not only our vibrant ecosystems but, as actors within these ecosystems, the people of Hawaii as well.  To ensure the health, safety, and wellbeing of Hawaii's lands, waters, and people, successful mitigation of and adaptation to climate change is imperative.

     The legislature further finds that given the scale and impact of the climate emergency, the State must invest in bold actions to prepare for, mitigate, and adapt to climate change, including resiliency to intensifying natural disasters.  A coordinated approach is necessary, and the department of defense, charged with protecting the safety and welfare of the people of Hawaii and the State's lead for hazard mitigation and disaster readiness, is prepared to assume this responsibility, in coordination with the departments of business, economic development, and tourism; land and natural resources; and transportation, as well as the community, to provide for the safety, security, and wellbeing of Hawaii's places and people.

     The legislature further finds that economic development, in particular, must consider climate change.  Tourism, infrastructure, and community development are all predicated upon Hawaii's land and natural resources.  Resiliency to and mitigation of climate change must remain at the forefront of any economic development or revitalization project.

     The legislature further finds that Hawaii needs to invest in efforts to reduce climate change impacts now to limit current and future costs of climate change.  The anticipated extent of the impact of climate change is such that state government needs to take comprehensive and coordinated mitigation efforts as soon as possible.

     The purposes of this Act are to:

     (1)  Address the impacts of climate change on the State and mitigate further impacts by authorizing the funding of resiliency projects and establishing the climate mitigation and resiliency special fund;

     (2)  Support resilient economic development and revitalization throughout the state by establishing the economic development and revitalization special fund;

     (3)  Increase the transient accommodations tax and allocate a portion of the tax to the two newly established special funds; and

     (4)  Appropriate funds into and out of the special funds.

     SECTION 2.  The Hawaii Revised Statutes is amended by adding a new chapter to be appropriately designated and to read as follows:

"CHAPTER

RESILIENCY

     §   -1  Resiliency projects.  The department of defense may fund projects that strengthen the State's resiliency, including projects that mitigate, adapt to, or increase resiliency against climate change.

     §   -2  Resiliency projects; selection committee.  The department of defense shall convene a selection committee to review and recommend projects for climate mitigation and resiliency special fund allocation.  The following members shall comprise the committee:

     (1)  The adjutant general;

     (2)  The director of business, economic development, and tourism;

     (3)  The director of finance;

     (4)  The chairperson of the board of land and natural resources;

     (5)  The director of transportation;

     (6)  An at-large member nominated by the president of the senate; and

     (7)  An at-large member nominated by the speaker of the house or representatives;

provided that the two at-large members shall each be invited to serve and appointed by the governor, without the advice and consent of the senate, from a list of three nominees submitted for each position by the nominating authority specified in this section.

     §   -3  Climate mitigation and resiliency special fund; established.  (a)  There is established in the state treasury the climate mitigation and resiliency special fund, to be administered by the department of defense, into which shall be deposited:

     (1)  Appropriations made by the legislature to the fund;

     (2)  Fees collected under this chapter or any rule adopted thereunder;

     (3)  Grants provided by governmental agencies or any other source;

     (4)  Donations made by private individuals or organizations for deposit into the fund;

     (5)  Interest earned from moneys in the emergency and budget reserve fund established in section 328L-3;

     (6)  A portion of the revenues from the transient accommodations tax established by chapter 237D, as provided by section 237D-6.5; and

     (7)  Interest earned from moneys in the fund.

     (b)  Moneys in the climate mitigation and resiliency special fund shall be used to advance projects addressing climate change impacts, including projects that mitigate, adapt to, or increase resiliency against climate change.  Moneys may also be used for consultant, personnel, and administrative costs required to develop and implement the aforementioned projects.

     §   -4  Rules.  The adjutant general shall adopt rules pursuant to chapter 91 necessary for the purposes of this chapter."

     SECTION 3.  Chapter 201, Hawaii Revised Statutes, is amended by adding to part I a new section to be appropriately designated and to read as follows:

     "§201-     Economic development and revitalization special fund.  (a)  There is established in the state treasury the economic development and revitalization special fund, to be administered by the department, into which shall be deposited:

     (1)  Appropriations made by the legislature to the fund;

     (2)  Fees collected under this chapter or any rule adopted thereunder;

     (3)  Grants provided by governmental agencies or any other source;

     (4)  Donations made by private individuals or organizations for deposit into the fund;

     (5)  A portion of the revenues from the transient accommodations tax, as provided by section 237D-6.5; and

     (6)  Interest earned from moneys in the fund.

     (b)  Moneys in the economic development and revitalization special fund shall be used for projects advancing:

     (1)  Economic development or revitalization;

     (2)  Infrastructure within tourism districts or resort areas;

     (3)  Climate change mitigation, adaptation, or resiliency; and

     (4)  Tourism marketing.

     (c)  The department shall establish procedures for receiving and evaluating project proposals for economic development and revitalization special fund allocation; provided that

     (1)  The Hawaii tourism authority, office of planning and sustainable development, and department of land and natural resources shall each review any project proposal submitted for funding allocation and submit a recommendation for funding allocation to the department;

     (2)  The department shall review any project proposal submitted for funding allocation as well as the corresponding recommendations for funding allocation submitted to the department pursuant to paragraph (1) and make a recommendation for funding allocation to the governor; and

     (3)  All funding allocations are subject to the governor's final approval.

     (d)  The department shall submit an annual report to the legislature no later than twenty days prior to the convening of each regular session on the sources of moneys deposited into the economic development and revitalization special fund and expenditures of moneys in the special fund."

     SECTION 4.  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, [and thereafter;] to December 31, 2025; and

     (6)  11 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, [and thereafter.] to December 31, 2025; and

     (4)  11 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) and (6) and (c)(3)[,] and (4), the tax rates levied, assessed, and collected pursuant to subsections (a) and (c) shall be 10.25 per cent for the period beginning on January 1, 2018, to December 31, 2025, and 12 per cent for the period beginning on January 1, 2026, to December 31, 2030; provided that:

     (1)  The tax revenues levied, assessed, and collected pursuant to this subsection that are in excess of the revenues realized from the levy, assessment, and collection of tax at the [9.25 per cent rate] rates established in subsections (a)(5) and (6) and (c)(3) and (4) 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.

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

     SECTION 5.  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), 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[.];

     (5)  7.3 per cent of the total revenue collected pursuant to section 237D-2 shall be allocated to the climate mitigation and resiliency special fund, established under section    -1;

     (6)  7.3 per cent of the total revenue collected pursuant to section 237D-2 shall be allocated to the economic development and revitalization special fund, established under section 201-   .

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 6.  There is appropriated out of the general revenues of the State of Hawaii the sum of $50,000,000 or so much thereof as may be necessary for fiscal year 2025-2026 to be deposited into the climate mitigation and resiliency special fund.

     SECTION 7.  There is appropriated out of the climate mitigation and resiliency special fund the sum of $50,000,000 or so much thereof as may be necessary for fiscal year 2025-2026 to advance projects addressing climate change impacts.

     The sum appropriated shall be expended by the department of defense for the purposes of this Act.

     SECTION 8.  There is appropriated out of the climate mitigation and resiliency special fund $90,000,000 or so much thereof as may be necessary for fiscal year 2025-2026 and the same sum or so much thereof as may be necessary for fiscal year 2026-2027 to advance projects addressing climate change impacts.

     The sum appropriated shall be expended by the department of defense for the purposes of this Act.

     SECTION 9.  There is appropriated out of the economic development and revitalization special fund $90,000,000 or so much thereof as may be necessary for fiscal year 2025-2026 and the same sum or so much thereof as may be necessary for fiscal year 2026-2027 to advance resilient economic development and revitalization projects.

     The sum appropriated shall be expended by the department of business, economic development, and tourism for the purposes of this Act.

     SECTION 10.  The appropriations made by this Act shall not lapse at the end of the fiscal year for which the appropriation is made; provided that all moneys from the appropriation unencumbered as of June 30, 2028, shall lapse into the fund from which appropriated as of that date.  Any unissued balance of any authorization made by this Act as of the close of business on June 30, 2028, shall lapse.

     SECTION 11.  Statutory material to be repealed is bracketed and stricken.  New statutory material is underscored.

     SECTION 12.  This Act, upon its approval, shall take effect on July 1, 2025.

Report Title:

Climate Mitigation and Resiliency Special Fund; Economic Development and Revitalization Special Fund; Transient Accommodations Tax; Department of Defense; Department of Business, Economic Development, and Tourism; Appropriation

Description:

Establishes the Climate Mitigation and Resiliency Special Fund and the Economic Development and Revitalization Special Fund.  Beginning January 1, 2026, increases the Transient Accommodations Tax.  Allocates funds generated by the increase to the newly established funds.

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

CONFERENCE COMMITTEE REP. NO. 200

Honolulu, Hawaii

                 , 2025

RE:    S.B. No. 1396

       S.D. 3

       H.D. 3

       C.D. 1

Honorable Ronald D. Kouchi

President of the Senate

Thirty-Third State Legislature

Regular Session of 2025

State of Hawaii

Honorable Nadine K. Nakamura

Speaker, House of Representatives

Thirty-Third State Legislature

Regular Session of 2025

State of Hawaii

Sir and Madam:

     Your Committee on Conference on the disagreeing vote of the Senate to the amendments proposed by the House of Representatives in S.B. No. 1396, S.D. 3, H.D. 3, entitled:

"A BILL FOR AN ACT RELATING TO ECONOMIC DEVELOPMENT,"

having met, and after full and free discussion, has agreed to recommend and does recommend to the respective Houses the final passage of this bill in an amended form.

     The purpose of this measure is to:

     (1)  Amend the Transient Accommodations Tax rate beginning on January 1, 2027;

     (2)  Amend the allowable uses of the Special Land and Development Fund and the portion of Transient Accommodations Tax collections that are allocated to the Special Land and Development Fund;

     (3)  Assess the Transient Accommodations Tax on cruise ship cabins based on the total time the cruise ship is docked at any port in the State; and

     (4)  Appropriate funds to the Department of Land and Natural Resources for protection, management, and restoration of the State's natural resources as well as for environmental stewardship, climate and hazard mitigation, and sustainable tourism.

     Your Committee on Conference finds that as an island chain, the State is particularly vulnerable to the effects of climate change.  Your Committee on Conference further finds that climate change also threatens the State's resort and tourism areas, which are essential to the State's economy.  Your Committee on Conference therefore concludes that the State must invest in mitigation and adaptation to address its climate emergency.  Accordingly, this measure will ensure the long-term viability of the State's tourism industry and natural resources by increasing the Transient Accommodations Tax to fund climate change mitigation, adaptation, and resiliency initiatives.

     Your Committee on Conference has amended this measure by:

     (1)  Effective July 1, 2025, requiring the Governor to request in the executive budget or supplemental budget that an amount of general funds that approximates the additional Transient Accommodations Tax revenue generated by this measure be expended to advance certain climate change mitigation and tourism projects;

     (2)  Inserting language to define "cruise fare" as the total amount paid by a transient for a cruise ship cabin on a cruise ship, inclusive of any mandatory fees imposed by a cruise ship operator, owner, or representative thereof on a transient for the use of shipboard services, facilities, meals, and onboard entertainment, but not including optional charges for shipboard services, meals, excursions, and onboard entertainment beyond the mandatory fee amount;

     (3)  Deleting language that would have amended the definition of "lease", "let", or "rental" to include the leasing or renting of cruise ship cabins in cruise ships;

     (4)  Deleting language that would have amended the definition of "transient accommodations" to include the furnishing of cruise ship cabins in cruise ships;

     (5)  Inserting language that amends the definition of "gross rental" or "gross rental proceeds" to include the gross receipts derived from cruise fares;

     (6)  Sunsetting the existing 9.25 percent tax rate levied on the gross rental or gross rental proceeds derived from furnishing transient accommodations on December 31, 2025, rather than December 31, 2026;

     (7)  Inserting ten percent as the new tax rate levied on the gross rental or gross rental proceeds derived from furnishing transient accommodations beginning on January 1, 2026;

     (8)  Inserting eleven percent as the tax rate assessed on the operator of a cruise ship on gross rental proceeds derived from cruise fares;

     (9)  Clarifying that the operator of a cruise ship shall be assessed and pay a tax on all gross rental proceeds derived from cruise fares prorated by the percentage of days docked at any port in the State in comparison to the total number of days of the voyage, rather than a tax on all gross rental proceeds derived from the furnishing of a cruise ship cabin for the duration of the cruise lease, prorated by the percentage of total time docked at any port in the State;

    (10)  Sunsetting the existing 9.25 percent tax rate levied on the occupant of a resort time share vacation unit on December 31, 2025, rather than December 31, 2026;

    (11)  Inserting ten percent as the new tax rate levied on the occupant of a resort time share vacation unit beginning on January 1, 2026;

    (12)  Inserting eleven percent as the new non-specified Transient Accommodations Tax rate for the period beginning on January 1, 2018, to December 31, 2030;

    (13)  Specifying that 0.98 percent of the tax revenues levied, assessed, and collected pursuant to section 237D-2, Hawaii Revised Statutes, shall be deposited quarterly into the Mass Transit Special Fund;

    (14)  Clarifying that the remaining tax revenues levied, assessed, and collected at the ten percent tax rate pursuant to subsections 237D-2 (a) and (c), Hawaii Revised Statutes, shall be deposited into the general fund;

    (15)  Deleting language that would have appropriated funds to the Department of Land and Natural Resources for the preservation of natural resources, environmental stewardship, climate and hazard mitigation, and sustainable tourism;

    (16)  Amending section 1 to reflect its amended purpose;

    (17)  Changing its effective date to January 1, 2026; and

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

     As affirmed by the record of votes of the managers of your Committee on Conference that is attached to this report, your Committee on Conference is in accord with the intent and purpose of S.B. No. 1396, S.D. 3, H.D. 3, as amended herein, and recommends that it pass Final Reading in the form attached hereto as S.B. No. 1396, S.D. 3, H.D. 3, C.D. 1.

Respectfully submitted on behalf of the managers:

STAND. COM. REP. NO.  2023

Honolulu, Hawaii

                , 2025

RE:   S.B. No. 1396

      S.D. 3

      H.D. 3

Honorable Nadine K. Nakamura

Speaker, House of Representatives

Thirty-Third State Legislature

Regular Session of 2025

State of Hawaii

Madame:

     Your Committee on Finance, to which was referred S.B. No. 1396, S.D. 3, H.D. 2, entitled:

"A BILL FOR AN ACT RELATING TO ECONOMIC DEVELOPMENT,"

begs leave to report as follows:

     The purpose of this measure is to:

     (1)  Amend the Transient Accommodations Tax rate beginning on January 1, 2027;

     (2)  Assess the Transient Accommodations Tax on cruise ship cabins, prorated by the percentage of total time the cruise ship is docked at any port in the State; and

     (3)  Appropriate funds to the Department of Land and Natural Resources for the protection, management, and restoration of the State's natural resources; environmental stewardship; climate and hazard mitigation; and sustainable tourism.

     Your Committee received testimony in support of this measure from the Department of Land and Natural Resources; Hawaiʻi Climate Advisory Team; Coalition Earth; Hawaii Reef and Ocean Coalition; Climate Protectors Hawaiʻi; Kupu; Council for Native Hawaiian Advancement; Hawaiʻi Alliance of Nonprofit Organizations; Hawaii Ocean Legislative Task Force; Hawaii Food+ Policy; Hawaiʻi Appleseed Center for Law & Economic Justice; Resources Legacy Fund; Hawaiʻi Workforce Funders Collaborative; The Nature Conservancy Hawaiʻi and Palmyra; Vibrant Hawaiʻi; Coral Reef Alliance; Wildfire Safety Advocates of Waikoloa; and numerous individuals.

     Your Committee received testimony in opposition to this measure from the Activities and Attractions Association of Hawaii; Hawaii Mid- and Short-Term Rental Alliance; Oʻahu Short-Term Rental Alliance; Kona Kai LLC; Serendipity Associates; Maui Hotel & Lodging Association; Norwegian Cruise Line Holding Ltd; Grassroot Institute of Hawaii; Maui Chamber of Commerce; Honu Hawaii Home, LLC; Maui Vacation Rental Association; ARDA Hawaii; Kohala Coast Resort Association; Ala Wai House LLC; and numerous individuals.

     Your Committee received comments on this measure from the Office of the Governor; Recovery and Resiliency Unit; Department of Hawaiian Home Lands; Department of Taxation; Hawaiʻi Tourism Authority; Department of Business, Economic Development, and Tourism; Hawaii Green Infrastructure Authority; Hawaiʻi Climate Change Mitigation and Adaptation Commission; Hawaiʻi State Energy Office; Hawaiʻi Emergency Management Agency; Kauai Climate Action Coalition; Kuaʻāina Ulu ʻAuamo; Mālama Learning Center; Cruise Lines International Association; Care for ʻĀina Now Coalition; Sustainable Coastlines Hawaiʻi; Hawaiʻi Green Growth Local2030 Hub; ʻĀina Aloha Economic Futures; Hawaiʻi Wildfire Management Organization; Tax Foundation of Hawaii; Hawaiʻi Lodging & Tourism Association; and six individuals.