House Standing Committee on Tourism

Thank you. Convening this morning's hearing for the House Committee on Tourism and the Committee on Economic Development and Technology.

Today is February 19th, 2026, Thursday, 9:30 AM, here in Conference Room 423 at the Hawaii State Capitol, for the purposes of hearing the following bills and a decision making to follow on a bill that we previously heard in the past. First up, we have House Bill 2195, HD 1, relating to transportation.

It requires the Department of Transportation to assess a per passenger head infrastructure fee against cruise ships docked in the state's commercial harbors and establishes the Cruise Ship Special Fund. It repeals existing laws imposing the transient accommodations tax onto cruise ships, effective retroactive to January 1st, 2026, and effective July 1st, 3000, which is their effective date.

First up to testify we have the Department of Taxation with comments. Thank you. Next up we have the Attorney General with comments.

Good morning, Chair, Vice Chair, Members of the Committee. I'm Yvonne Shinmara, Deputy Attorney General. We've submitted written comments and I'm available for questions. Thank you.

Next up, we have the Department of Transportation, in support. Next up, we have the Maritime Group, in support.

Not present.

Next up, we have Hawaii Transportation Association, in support.

Not present.

I mean with comments.

Not present.

Next up, we have Norwegian Cruise Lines Holdings, in support.

On Zoom.

Good morning. Aloha, Chair Tam, Vice Chair Templo, and Committee Members. I'm Sandy Weir with Norwegian Cruise Line Holdings and I stand in support and on my testimony as submitted and am available for any questions. Thank you.

Thank you. Next up, we have Tax Foundation of Hawaii with comments.

Chairs, Vice Chairs, Members of the Committee, it's Tom Yamachika from Tax Foundation. What we wanted to suggest is that a fine line needs to be drawn here. It seems to be constitutionally permissible to impose a user fee that would be wholly used at the, at the harbor. We need to guard against scope creep.

If this fund is going to be used to fund other statewide projects like the Green Fee does, then we may have a problem going back to whether this is a violation of the tonnage clause. Happy to answer any questions. Thank you very much.

Thank you. That is all that we have signed up to testify on House Bill 2195. Is there anyone wishing to testify on this Bill in person? Is there anyone else on Zoom wishing to testify on this Bill for us? Seeing none.

Chair wants to note that we've received a number of testimony in support from Hawaii Harbors User Groups, Hawaii Pilots Association, Maui Ocean Center, and a number of individuals who've also submitted comments. Members, any questions to the testifiers that we have here? Seeing none. Chair does have a question for the Attorney General's Office.

So, last year, the Attorney General said that this is—that the Green Fee and that we put us putting the TAT onto cruise ships was defensible. It seems like we're reversing course. Can you give us some background on why we are now pushing this bill or why this bill isn't coming for us?

We—I'm not familiar with the origin—origination—of this Bill and unfortunately, I'm not the one who is handling the litigation that I'm sure you folks are aware of concerning the TAT. So, I'm unable to answer that question, unfortunately.

Okay. For the Department of Taxation. In previous drafts or previous conversations, there's talks about it costing about $10 per passenger. Under this Bill, how would we be able to collect that tax if it's a foreign ship? Because usually, I think NCL is the only American flagship that we have sailing in our waters.

The Department of Tax is not going to be collecting the tax. It's going to be the Department of Transportation.

How much would it generate if it's $10 per head?

I don't know. We didn't do the revenue estimate on that. But I think I saw in testimony that Department of Transportation came out with a number for that.

They're not here.

Yeah, I know, we always get that question. Is that 6.3 estimate, this fee, 6.3 million based on the cruise ship passenger count. So, they current—I mean, I can't speak for them, but they, they currently collect a fee. I think it's per head. So, I think they have.

Well, Head Chair, Vice Chair, I apologize. I just joined from DOT. If this is a question for DOT.

Yeah. I wanted to know how you got to your number if it was costing $10 a head to—how much that would generate.

So, in fiscal year 2025, we saw about 917,000 passengers come through our ports. And so, we took the $6.50, we multiplied it simply across all of the passenger counts that we had. And so, that's how we arrived at the 6.3 million.

And so, 6.3 million a year isn't going to get us very far in terms of constructing new improvements to support cruise ship industry operations. And so, we're asking for a fee of $10.

Okay. I understand that this bill will create the Cruise Ship Special Fund. Would it—why would we create a special fund when you already have the Harbor's Fund—Special Fund? Why can't the money go directly to the Harbor Special Fund?

So, I can't speak to the author's intent of the of the bill. However, you're absolutely correct. We have a Harbor Special Fund. We have the capacity to also build into the special fund a special account for cruise.

So, if there is a need to specifically account for revenues generated from this specific fee and making sure that we're expending out of that account for cruise related improvements, we, we have the ability to do that.

Okay. So, because originally, this was for the Green Fee and climate mitigation and disasters, all of that, environmental stewardship and whatnot, is there any functions within the Harbor Special Fund that could address some of these issues that the Green Feed is trying to address right now?

Certainly. So, we are currently planning for sea level rise projections that we are seeing. There are cruise facilities, there are piers where cruise ships berth that are going to need pure heights to be raised. And so, I think that is very much in line with ensuring that our infrastructure is resilient to changes in the environment.

So, that's just one example. There, there—you can see in the Bill, there is a recommendation that some of the revenue is used for shore power and that would enable cruise ships, while they are at berth, to turn off their engines and plug into the grid, eliminating emissions.

So, there are a lot of opportunities for us to use this revenue to align with the Green Fee objectives and also support cruise industry.

Member, any questions? Rep. Ilagan, Chair Ilagan.

DOT. What's—please state your name.

Aloha. I'm Dre Kalili, Deputy Director of Transportation for Harbors.

Director, could you explain the purpose of assessing the fee on passengers for cruise ship? But what's the money going to be used for?

So, we are open to expending the revenue exactly how the Bill outlines. We generally will spend all of our Harbor Special Fund revenue to support port facilities and that work includes, which also benefits crews currently, our substructure pier repair.

So, we get under the pier, we have to demo, reset the rebar, repave, and then, we've got to install bollards, fenders, and everything a ship would need to safely pull into the berth. We need to do some dredging at birth. That comes with some expense.

And then, for cruise ship terminals in Honolulu, we have two facilities that we need to do plumbing repairs, HVAC replacement. Currently at Pier 2 in Honolulu, we're installing a secondary elevator to improve passenger experience. We are also replacing the flooring and replacing the HVAC.

So, there's a lot of work that needs to be done, both on the water side improvements, as well as the land side terminal improvements.

So, it sounds like there's not going to be a conflict with the Harbor Special Fund and this purpose for this fund. They overlap each other. That's what it sounds like.

Yes, they do overlap. We are currently using Harbor Special Fund revenue to fund the improvements that I describe.

What I have testified to the House Committee on Transportation previously is that if you look at the operations and the criticality of cargo operations compared to cruise operations, facility improvement requirements and demands for our revenues for cargo are always going to take precedent and priority over crews.

By having a dedicated revenue stream for these type of improvements for crews will allow us to reprioritize cruise-related improvements as we plan the other improvements for all port facilities.

So, it sounds like having its own special fund will reprioritize cruise ship infrastructure.

I don't know that necessarily it's having its own special fund, but having a dedicated revenue stream is what will do that, and this Bill accomplishes that.

I see. Sounds good. Thank you.

I want to follow on that question. How much does the Harbor Special Fund spend on the cruise industry annually?

That is—I'm going to need to get back to you. And the reason that we don't just have a segregated answer is because as I described, when we have to replace a bollard, sometimes it's a cargo ship that uses the bollard, especially at the neighbor islands and then, the next day, it's a cruise ship coming in.

So, if we had to allocate the cost of that bollard replacement project over each type of ship, it would take us some time to get you that. So, if, if you give me a few days, I can figure out the best way to apportion our expenditures to cruise versus cargo.

Okay. So, my concern about creating another special fund is that it's just another special fund and that we're going to deposit too much more than what we spend and rather prioritize the need, we will prioritize more wants on this.

So, if we were to just transfer all this money to—transfer the dedicated stream to the Harbor Special Fund and create the separate cruise industry account under that special fund, would it still accomplish what its intended goal is if we have a special fund there?

I believe so. I think the importance or what is required to accomplish the objective is to, one, have that dedicated revenue stream and then, two, have a separate accounting for how those revenues are collected and how they are expended.

And we can do both, as I described earlier, by having a separate account in the already existing Harbor Special Fund. So, I, I would offer that is maybe not necessary to establish a brand-new special fund. We'll just account for this revenue in the Harbor Special Fund, if that's the preference for the Committee.

Okay. I have a question for Attorney General again. I'm sorry. If we were to transfer this money into the Harbor Special Fund and create a cruise ship sub account, would that withstand a challenge in the court regarding the tonnage clause?

I'm unable to answer that question, but I can get back to you on that. I believe one of the reasons that it's being placed in the newly created special fund is when you're creating a special fund, you have to attribute a particular purpose for it, which is what is now clearly set out in the bill.

We had testified on that before the Transportation Committee and that change had been made, so.

Thank you. Back to DOT. You know, that was a good concern that we had, but does the Harbor Special Fund have anything in language that says that the money in the Harbor Special Fund will go towards the cruise ship industry or do we need to amend Special Fund to address that, to avoid another challenge from the?

Sure. So, I do want to clarify that when a cruise ship uses one of our facilities, they're already paying a port entry fee. They are paying dockage fee, which is the fee to tie up to our peer.

And then, they pay a per head passenger fee and we collect those revenues, we deposit them into the Special Fund, and then, we expend them for all those improvements that I previously described. If we need to dedicate a portion of the revenue into the Harbor Special Fund, I think legislative language would be very helpful.

And I would—not an attorney—but I would presume that the language, as written in this Bill, accomplishes that and you could work with your drafting staff to maybe strike the provisions to establish the special fund, and leaving everything else intact, it should accomplish what you are suggesting.

Okay, so, if we were—if we were to just turn this back and transfer the money into the Harbor Special Fund, would that withstand a challenge from the in courts versus on...?

Not an attorney, however, the funds that we already receive from cruise ships that we deposit into the special funds and then expend on port improvements, which then benefit cruise ship operations, have not been challenged.

Okay. DOT already answered the questions ahead.

Okay. Members, any other questions. Seeing none. We're gonna recess for quorum. Thank you so much.

Thank you, Members. Reconvening this morning's hearing for the Committee on Tourism and the Committee on Economic Development and Technology, for the purposes of decision making on three—two bills—that have been heard.

First up, the date is February 19th, 2026, Tuesday, 9:30 AM agenda, here in Conference Room 423 at the Hawaii State Capitol. First up, we have House Bill 2195 relating to transportation. Chair's recommendation is that we pass this as is.

I do want to continue the conversation on this and we're going to wait clarity from the Attorney General and possibly the Department of Transportation whether or not a new special fund is needed or should this fund go directly to harbor and we can amend it so that there is a special sub account for the cruise ship industry.

But for now, we're going to move this forward as is to continue this conversation and let it all work out. Members, any discussion, comments, or questions? Seeing none. Vice Chair for the vote.

[Roll Call]

Thank you. Next up, we have decision making on a bill that we heard back on February 11, 2025 at 10:30. House Bill 916 HD1 relating to the low income housing tax credit. For the purposes of this. I'll read it out.

It allows tax credits claimed under the state low income housing tax credit program to be used to offset taxes imposed by the state Transient accommodations tax law specifies that the tax credit amounts applied to state transient accommodation taxes be limited to state transient accommodation taxes imposed in the same county in which the qualified low income building is located.

Makes permanent Act 1 to 9 of 2016 effective 3000. Chair's recommendation is that we pass this out as is to the conversation Members, any comments or questions concerns. Okay. Tourism Vice Chair, please take the vote.

Voting on HB 1916 HD1 for the Committee on Tourism. The recommendation is to pass Unamended Chair and Vice Chair votes Aye.[Roll Call] Chair your recommendation is adopted.

On the Committee on Economic Development, we have the Same recommendations for HB916 Members. Any questions? No question. Vice Chair Templo, would you please call the vote?

Okay. For the Committee on Economic Development, Development and Technology voting On House Bill 916 HD one recommendation is to pass Unamended Chair votes Aye. [Roll Call] Chair your measure is adopted. Thank you.

This hearing is now adjourned.