SB1480

SECTION 1. The legislature finds that, as a means of addressing declining fuel tax revenues, the department of transportation supports the adoption of a per-mile road usage charge to provide fair and sustainable funding for the State's road infrastructure. The legislature further finds that, with the existing vehicle inspection program, the State and counties are well-positioned to transition to a per-mile road usage charge with low administrative costs. In 2023, the legislature enacted a small-scale per-mile road usage charge program for electric vehicles. Beginning on July 1, 2025, drivers of electric vehicles will be provided a choice of paying a state road usage charge at a rate of 0.8 cents per mile traveled or paying a flat fee of no more than $50 per year. This choice will be permitted until June 30, 2028, at which time all electric vehicles will pay a state road usage charge. The number of miles will be calculated based on an odometer reading recorded during the motor vehicle safety inspection. Finally, the legislature required the department of transportation to develop a plan to transition all vehicles in Hawaii to a per-mile road usage charge by 2033. The legislature further finds that, in addition to the state fuel tax, counties rely on their own motor fuel tax to fund the maintenance and repair of county roads and bridges. Like the state fuel tax, the county fuel tax is also declining, leaving counties with less revenue to maintain their roads and bridges. The legislature now finds that counties may wish to begin transitioning to a mileage-based road usage charge as a fair and sustainable replacement for the county motor fuel tax. The legislature finds that permitting counties to do this will result in lower administrative costs for the state and county agencies tasked with implementing the road usage charge and create more efficiency and simplicity for the traveling public as the State begins transitioning to a fair and sustainable source of transportation funding.

The purposes of this Act are to:

(1) Establish a state mileage-based road usage charge subaccount within the state highway fund;

(2) Authorize counties to establish a county mileage-based road usage charge for electric vehicles beginning July 1, 2028;

(3) Establish a process for the counties to adopt a per-mile rate by ordinance;

(4) Clarify the use of moneys collected under the state and county road usage charges; and

(5) Clarify certain procedures when calculating the state and county road usage charge is not possible due to incomplete information.

SECTION 2. Chapter 249, Hawaii Revised Statutes, is amended by adding three new sections to be appropriately designated and to read as follows:

"§249-A County mileage-based road usage charge; established. (a) Beginning July 1, 2028, in addition to all other fees and taxes levied by this chapter, a county may impose a county mileage-based road usage charge on electric vehicles.

(b) The county mileage-based road usage charge shall be calculated by the director of finance at the rate established under section 249-B, multiplied by the number of miles traveled, less the estimated amount of paid county motor fuel taxes that correspond with the number of miles traveled, as shall be determined by rule. The number of miles traveled shall be calculated as the difference between the electric vehicle's two most recent odometer readings, as noted on the electric vehicle's certificate of inspection issued pursuant to section 286-26(e).

(c) If a county establishes a mileage-based road usage charge pursuant to section 249-B, for the first registration renewal of new electric vehicles for which no certificate of inspection is required, the county mileage-based road usage charge assessed shall be $50, which shall be subtracted from the calculation of the county mileage-based road usage charge upon that electric vehicle's second registration renewal.

(d) The county mileage-based road usage charge shall be paid each year following the electric vehicle's most recent inspection together with all other taxes and fees levied by this chapter on a staggered basis as established by each county as authorized by section 286-51 to ensure that the county mileage-based road usage charge is due and payable at the same time and shall be collected together with the county registration fee. The county mileage-based road usage charge shall be deemed delinquent if not paid with the county registration fee.

(e) Notwithstanding subsection (a), all electric vehicles registered in the State that qualify for an exemption under sections 249-4, 249-5.5, 249-6, and 249-6.5 shall be exempt from this section.

(f) Each county may adopt rules pursuant to chapter 91 for establishing and administering the county mileage-based road usage charge.

(g) For the purposes of this section, "electric vehicle" has the same meaning as defined in section 249-36.

§249-B County mileage-based road usage charge; rate; establishment. (a) Each county shall establish the rate to be used to calculate the amount of that county's mileage-based road usage charge in the manner provided for ordinances involving the expenditure of public funds; provided that until such rate is established, the county mileage-based road usage charge for each county shall be zero.

(b) No ordinance establishing the rate for a county mileage-based road usage charge shall be adopted until a public hearing on the proposed rate for the county mileage-based road usage charge has been held. Public notice of the hearing shall be given at least twice within the thirty-day period immediately preceding the date of the hearing. The rate for the county mileage-based road usage charge shall take effect on the first day of the second month following the adoption of an ordinance establishing a county mileage-based road usage charge.

(1) One or more cents, a fraction of a cent, or both; or

(2) Zero.

(d) If a county mileage-based road usage charge cannot be calculated because of missing, incomplete, or incorrect odometer reading information, a vehicle subject to the county mileage-based road usage charge is subject to a default county mileage-based road usage charge as established by the county.

§249-C County mileage-based road usage charge; dispositions. The county mileage-based road usage charge for each county shall be collected by the respective county and deposited into the respective county highway fund established pursuant to section 249-18; provided that amounts collected in the county of Maui on vehicle miles traveled on the island of Lanai shall be used solely for expenditures on the island of Lanai; provided further that the amounts collected in the county of Maui on vehicle miles traveled on the island of Molokai shall be used solely for expenditures on the island of Molokai."

SECTION 3. Section 248-9, Hawaii Revised Statutes, is amended to read as follows:

"§248-9 State highway fund. (a) Moneys in the state highway fund may be expended for the following purposes:

(1) To pay the costs of operation, maintenance, and repair of the state highway system, including without limitation, the cost of equipment and general administrative overhead;

(2) To pay the costs of acquisition, including real property and interests therein; planning; designing; construction; and reconstruction of the state highway system and bikeways, including without limitation, the cost of equipment and general administrative overhead;

(3) To reimburse the general fund for interest on and principal of general obligation bonds issued to finance highway projects where the bonds are designated to be reimbursable out of the state highway fund;

(4) To pay the costs of construction, maintenance, and repair of county roads; provided that none of the funds expended on a county road or program shall be federal funds when expenditure would cause a violation of federal law or a federal grant agreement; [~~and~~]

(5) To pay the costs of establishing and maintaining a drug and alcohol toxicology testing laboratory that is intended to support the prosecution of offenses relating to operation of a motor vehicle while under the influence of an intoxicant.

(b) At any time, the director of transportation may transfer from the state highway fund all or any portion of available moneys determined by the director of transportation to exceed one hundred thirty-five per cent of the requirements for the ensuing twelve months for the state highway fund as permitted by and in accordance with section 37-53. For purposes of the determination, the director of transportation shall take into consideration:

(1) The amount of federal funds and bond funds on deposit in, and budgeted to be expended from, the state highway fund during the period;

(2) Amounts on deposit in the state highway fund that are encumbered or otherwise obligated;

(3) Budgeted amounts payable from the state highway fund during the period;

(4) Revenues anticipated to be received by and expenditures to be made from the state highway fund during the period based on existing agreements and other information for the ensuing twelve months; and

(5) Any other factors as the director of transportation shall deem appropriate.

[(c) The department of transportation shall establish county subaccounts within the state highway fund. Notwithstanding subsections (a) and (b), funds in each county subaccount shall be expended for state highway road capacity projects in the respective county.

~~For purposes of this subsection, "state highway road capacity project" means construction:~~

~~(1) Of a new road;~~

~~(2)~~ ~~To widen or add additional lanes to an existing road; or~~

~~(3)~~ ~~That increases the number of vehicles that may be driven on an island and alleviates the level of traffic congestion on existing roads of that island,~~

~~and any planning, design or right-of-way acquisition related to the construction.~~]

(c) The department of transportation shall establish a state mileage-based road usage charge subaccount within the state highway fund."

SECTION 4. Section 249-18, Hawaii Revised Statutes, is amended to read as follows:

"§249-18 Highway fund. All taxes, fees, or charges collected under this chapter, except those collected pursuant to sections 249-14 and 249-14.5[,] and the state mileage-based road usage charge established under 249-36, shall be deposited in a county fund to be known as the "highway fund" and shall be expended in the county in which the taxes, fees, or charges are collected for the following purposes:

(1) For acquisition, designing, construction, improvement, repair, and maintenance of public roads and highways, including without restriction of the foregoing purposes, costs of new land therefor, of permanent storm drains or new bridges, as well as repairs or additions to storm drains or bridges;

(2) For installation, maintenance, and repair of street lights and power, and other charges for street lighting purposes, including replacement of old street lights, on county maintained public roads and highways;

(3) For purposes and functions connected with traffic control and preservation of safety upon the public highways and streets;

(4) For payment of interest on and redemption of bonds issued to finance highway and street construction and improvements;

(5) In the case of the city and county of Honolulu, for appropriation for the police department up to the sum of $500,000. No expenditures shall be made out of this fund [~~which~~] that will jeopardize federal aid for highway construction;

(6) For purposes and functions connected with mass transit; and

(7) For the acquisition, design, construction, improvement, repair, and maintenance of bikeways."

SECTION 5. Section 249-36, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

"(a) Beginning July 1, 2025, in addition to all other fees and taxes levied by this chapter, electric vehicles shall be subject to a state mileage-based road usage charge. The state mileage-based road usage charge shall be calculated by the county director of finance at the rate of 0.8 cents per mile traveled, multiplied by the number of miles traveled, less the estimated amount of paid state fuel taxes that correspond with the number of miles traveled. The department shall adopt rules pursuant to chapter 91 to determine the method for calculating the estimated amount of paid state fuel taxes that correspond with the number of miles traveled. The number of miles traveled shall be calculated as the difference between the vehicle's two most recent odometer readings, as noted on the vehicle's certificate of inspection pursuant to section 286-26(e). The state mileage-based road usage charge shall be not less than $0, and, until June 30, 2028, the state mileage-based road usage charge shall be not more than $50 per year. For the first registration renewal of new motor vehicles for which no certificate of inspection is required, the state mileage-based road usage charge assessed shall be $50, and [~~such~~] the amount once paid shall be subtracted from the calculation of the state mileage-based road usage charge upon that vehicle's second registration renewal. If the state mileage-based road usage charge cannot be calculated because of missing, incomplete, or incorrect odometer reading information:

(1) Until June 30, 2028, a vehicle subject to the state mileage-based road usage charge is subject to a default state mileage-based road usage charge of $50; and

(2) Effective July 1, 2028, a vehicle subject to the state mileage-based road usage shall be subject to a default state mileage-based road usage charge of $80.

There is established within the state highway fund a state mileage-based road usage charge subaccount. All fees, taxes, and charges collected by this chapter shall be deposited into a state mileage-based road usage subaccount under the state highway fund to be administered by the department of transportation; provided that funds can be used to pay for any expenditures in collaboration with the state mileage-based road usage charge including disbursements or reimbursements back to the vehicle owners."

SECTION 6. Section 431:10C-103, Hawaii Revised Statutes, is amended by amending the definition of "motor vehicle" to read as follows:

""Motor vehicle" means any vehicle of a type required to be registered under chapter 286, including a trailer attached to [~~such~~] a vehicle, but not including motorcycles [~~and motor scooters~~]."

SECTION 7. Section 437D-3, Hawaii Revised Statutes, is amended by amending the definition of "vehicle license recovery fees" to read as follows:

""Vehicle license recovery fees" includes motor vehicle weight taxes under section 249-2; fees connected with the registration of specially constructed, reconstructed, or rebuilt vehicles, special interest vehicles, or imported vehicles as referenced in section 286-41(c); license plate and emblem fees under section 249-7(b); state and county mileage-based road usage charges under sections 249-36 and 249-A; inspection fees as referenced in section 286-26; highway beautification fees as referenced in section 286-51(b)(1); and any use tax under chapter 238."

SECTION 8. There is appropriated out of the state highway fund the sum of $1,700,000 or so much thereof as may be necessary for fiscal year 2024-2025 to be used with available federal funds, for the implementation of the state mileage-based road usage charge program; provided that the moneys appropriated for fiscal year 2024-2025 for the purposes of this Act shall not lapse at the end of the fiscal year; provided further that all moneys appropriated for fiscal year 2024-2025 that are unexpended or unemcumbered as of June 30, 2026, shall lapse into the state highway fund.

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

SECTION 9. There is appropriated out of the state highway fund the sum of $200,600 or so much thereof as may be necessary for fiscal year 2025-2026 to be used with $802,400 federal funds and the sum of $385,620 or so much thereof as may be necessary for fiscal year 2026-2027 to be used with $1,542,480 federal funds, for the continued implementation of the state mileage-based road user charge established pursuant to section 249-36, Hawaii Revised Statutes; provided that the moneys appropriated for fiscal year 2025-2026 and fiscal year 2026-2027 for the purposes of this Act shall not lapse at the end of their respective fiscal year; provided further that all moneys appropriated for fiscal year 2025-2026 and fiscal year 2026-2027 that are unexpended or unencumbered as of June 30, 2028, shall lapse into the state highway fund.

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

SECTION 10. In codifying the new sections added by section 2 of this Act, the revisor of statutes shall substitute appropriate section numbers for the letters used in designating and referring to the new sections in this Act.

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

SECTION 12. This Act shall take effect upon its approval.

INTRODUCED BY:

_____________________________

BY REQUEST

THE SENATE	S.B. NO.	1480
THIRTY-THIRD LEGISLATURE, 2025
STATE OF HAWAII