THE SENATE S.B. NO. 1396 THIRTY-THIRD LEGISLATURE, 2025 S.D. 3 STATE OF HAWAII H.D. 1 A BILL FOR AN ACT RELATING TO ECONOMIC DEVELOPMENT. BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:
THE SENATE S.B. NO. 1396
THIRTY-THIRD LEGISLATURE, 2025 S.D. 3
STATE OF HAWAII H.D. 1
THE SENATE
S.B. NO.
1396
THIRTY-THIRD LEGISLATURE, 2025
S.D. 3
STATE OF HAWAII
H.D. 1
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.
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.
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.