THE SENATE S.B. NO. 1396 THIRTY-THIRD LEGISLATURE, 2025 S.D. 3 STATE OF HAWAII H.D. 2 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. 2
THE SENATE
S.B. NO.
1396
THIRTY-THIRD LEGISLATURE, 2025
S.D. 3
STATE OF HAWAII
H.D. 2
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.
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.
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.