HB504 HD2

PART I

SECTION 1. The legislature finds that Hawaii's natural resources, including reefs, oceans, forests, streams, estuaries, shorelines, and beaches, provide irreplaceable and invaluable benefits to visitors, residents, and the global community. The Hawaii State Constitution establishes that the State's natural and cultural resources are subject to the public trust and therefore must be managed and protected for the benefit of present and future generations. The Hawaii State Constitution further requires the State and its agencies to protect and enforce native Hawaiian rights, including traditional and customary practices associated with, and dependent upon, carefully managed and abundant natural resources.

The legislature further finds that Hawaii's natural environment faces significant environmental pressure from climate change and the heavy use it receives from persons traveling to enjoy the State's natural resources. The current underinvestment in the State's natural resources poses a significant liability to the visitor industry and to Hawaii's residents; the stability of the State's natural systems, including food systems and water quality; and the ecosystems, services, fisheries, economic resilience, and health and safety of the State. The escalating impacts from climate change and visitor use create an increasing threat to Hawaii's island ecosystem and communities. Additional funding is needed to restore the State's natural resources to help prevent climate crises from occurring, including wildfires, floods, coastal erosion, and degradation of coral reefs. Additional funds are also needed to respond to climate crises when they occur.

The legislature believes that a modest increase in the transient accommodations tax can generate greatly needed funding to support the restoration of the State's valuable natural resources, help prevent and respond to the climate crisis, and leave a strengthened environmental legacy for future generations. The increased tax is a reasonable and appropriate way to generate these needed revenues.

Accordingly, the purpose of this part 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. The department of land and natural resources shall submit a report to the legislature no later than twenty days prior to the convening of the regular sessions of 2026 and 2027 on each project funded through section 4 of this Act. The report shall contain the following information:

(1) Progress and outcomes of each project;

(2) The total project cost;

(3) Benefits to visitors; and

(4) How the project protected, restored, or enhanced Hawaii's natural resources and its unique and vulnerable ecosystem during the previous fiscal year.

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 for projects that:

(1) Protect, restore, or enhance the State's natural resources, including native forests, native plants and animals, aquatic resources, coastal lands, and freshwater resources, and promote economic development relating to the tourism industry;

(2) Address climate change impacts, including projects that mitigate, adapt to, or increase resiliency against climate change; these projects may include vegetation management to reduce wildfire risk, coastal environmental management and restoration, or watershed restoration to reduce flooding and enhance water management;

(3) Promote sustainable tourism models and destination management to reduce visitor impacts on the natural environment; or

(4) Ensure that the State's natural resources are maintained for future visitors;

provided that the department of land and natural resources may utilize these funds for consultants, personnel, contracts, and administrative costs required to develop and implement these projects; provided further that the department of land and natural resources shall consult with the Hawaii tourism authority and the respective county on tourism-related projects.

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

PART II

SECTION 5. Chapter 39, Hawaii Revised Statutes, is amended by adding a new section to part I to be appropriately designated and to read as follows:

"§39- Reimbursable general obligation bond debt service special fund; established; distribution of funds. (a) There is established a reimbursable general obligation bond debt service special fund to be administered by the department of budget and finance.

(b) Moneys allocated to the reimbursable general obligation bond debt service special fund shall be used to fund debt service payments on general obligation bond funds issued. All interest earned on the moneys in the special fund shall be credited to the special fund. The special fund shall be exempt from the central service expenses deduction under section 36-27 and departmental administrative expenses deduction under section 36-30.

(c) Any amounts allocated and disbursed pursuant to this section shall be subject to the availability of funds deposited and on balance in the special fund. The director of finance shall not allocate or disburse any amounts from the special fund that are in excess of any amounts deposited and on balance in the special fund.

(d) The department of budget and finance shall submit an annual report to the legislature no later than twenty days prior to the convening of each regular session on the total amount of funds allocated pursuant to this section.

(e) The director of finance may establish rules, exempt from chapter 91, for the purposes of this section."

PART III

SECTION 6. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 7. This Act shall take effect on July 1, 3000.

HOUSE OF REPRESENTATIVES	H.B. NO.	504
THIRTY-THIRD LEGISLATURE, 2025		H.D. 2
STATE OF HAWAII