Joint House committees advance HB1077, redirect proposed TAT increase to general fund with earmarks for climate and tourism

A joint hearing of the House Committee on Economic Development and Technology and the Committee on Tourism on Feb. 12, 2025, in Conference Room 423 advanced House Bill 1077 with amendments to eliminate two proposed special funds and direct revenue from a proposed 1.75% increase in the transient accommodations tax (TAT) to the state general fund, with earmarks for climate mitigation and tourism-related economic development.

The chair recommended amending HB1077 so the 1.75% TAT increase would not be deposited to two newly created special funds. Instead, the amendment would place the revenue in the general fund and earmark 7.3% of total revenue collected for a climate mitigation and resiliency purpose and 7.3% for economic development and revitalization, including infrastructure in tourism districts and tourism marketing. The committees then adopted the recommendation to pass with amendments.

Why it matters: The change alters the bill’s funding mechanism for a tax measure intended to support disaster resilience and tourism-related projects. That affects how revenue will be governed and which agencies will control disbursements if the bill advances.

Public testimony and agency comments at the hearing were largely supportive of revenue for resiliency but raised technical and legal concerns. John Cole, Department of the Attorney General, said section 2 of the bill “establishes the climate mitigation and resiliency special fund” and that the section refers to depositing “the fees collected under the chapter and any rule adopted under it.” Cole told members the underlying chapter does not currently authorize imposition or collection of fees and recommended deleting that language or explicitly authorizing fees through rulemaking. Gary Sugunuma, Director of Taxation, said the Department of Taxation stood on its written testimony offering comments.

Representatives of multiple state agencies and conservation organizations spoke in support or stood on written testimony, including the Hawaii Emergency Management Agency, Hawaii Green Infrastructure Authority, Hawaii State Energy Office, the governor’s Recovery and Resiliency Unit, the Department of Land and Natural Resources, the Climate Change Mitigation Adaptation Commission, the Office of Planning and Sustainable Development, the Nature Conservancy, and the Hawaii Climate Advisory Team. Gwen Yamamoto Lau, representing the Hawaii Climate Advisory Team, said, “it’s not a matter of if another disaster will happen, but when another disaster will happen,” and cited polling the group did showing strong public support for resiliency funding.

Several witnesses urged adoption of funding for natural-resource protection and resiliency projects. Melissa Pavlicek of the Care for ina Now Coalition said a recent study her group completed found a “$560,000,000 gap in the resources needed to do natural resource protection and restoration,” and asked the committees to advance the bill. The Ocean Legislative Task Force’s Hannah Liziak urged support to “build a safety net for our environment.”

The Kohala Coast Resort Association testified in opposition (remote) and argued that the state is not fully collecting existing TAT revenue from all accommodation types. An unnamed Kohala Coast witness said, by the group’s calculation, Hawaii County collected $24,000,000 in transient accommodation taxes and that the Kohala Coast accounted for $17,000,000 of that total; the witness warned the state should improve collection before increasing the TAT. Daniel Naho, OPE interim CEO at the Hawaii Tourism Authority, submitted late testimony in support with comments asking for a “clear nexus with tourism resiliency.”

Will Kane of the Office of the Governor's recovery and resiliency unit addressed a separate question about why the bill proposes the Department of Defense as an implementing agency. Kane said the governor’s office views the Department of Defense as a coordinating entity to align resources across state and county agencies and stakeholders, noting the proposal would pull expertise from multiple departments.

Committee action and votes: In the House Committee on Economic Development and Technology, the recommendation to pass HB1077 with amendments was adopted. The transcript records the chair and vice chair voting aye; Representative Corinne Ching Holt was recorded as excused; Representative Tim (given name not provided in transcript) voted aye; Representative Adrian Tam (referred to earlier as chair of tourism) asked questions; Representative Tempo voted aye; the measure was adopted. In the Committee on Tourism, the same recommendation was adopted, with the chair and vice chair recorded as voting aye; Representative Hussey voted aye; Representative Milligan voted aye; Representatives Holt, Todd and Matsumoto were recorded as excused. The committees then adjourned.

Legal and drafting issues raised at the hearing remain unresolved in the transcript record. The Department of the Attorney General recommended either removing language that relies on unspecified fee authority or amending the bill to authorize the collection of fees under the referenced chapter. The Department of Taxation and other agencies offered written comments but did not state changes on the record beyond those points.

The hearing record shows substantial agency and stakeholder support for funding resiliency and restoration projects, along with calls for clearer statutory authority for fees and for better tax collection enforcement before increasing rates. The transcript does not record final floor action or enactment; it records only the committees’ adoption of a recommendation to pass HB1077 with amendments at the conclusion of the joint hearing.