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Senate adopts SD1 to create climate/resiliency fund funded by temporary TAT increase; debate centers on allocation and transparency
Summary
The committee passed SB 1396 with an SD1 that establishes a Climate Mitigation and Resiliency Special Fund and an Economic Revitalization Special Fund funded by an increase in the transient accommodations tax (TAT); DBEDT and HTA supported the concept while some senators asked for clearer allocation and bookkeeping.
The Senate passed SB 1396 with an SD1 to create two new special funds—one for climate mitigation and resiliency and one for economic development and revitalization—financed by a phased increase in the transient accommodations tax (TAT).
Nut graf: The measure would use a portion of a proposed temporary TAT increase to generate roughly $180 million annually (estimate provided in committee) and then allocate approximately 7.3% of total revenue to each special fund, which proponents said would create a dedicated revenue stream for wildfire mitigation, shoreline restoration and resilience projects while also allowing targeted economic revitalization in tourism districts. The Attorney General and the Tax Foundation submitted technical comments about special-fund mechanics and sustainability.
What was argued: Proponents including the Office of the Governor, DBEDT, HTA and conservation organizations said the state needs a stable revenue source for climate adaptation after the Maui wildfires and other disasters. Luke Myers (Governor’s recovery and resiliency unit) and DBEDT witnesses said the fund would support recommendations from the Climate Advisory Team and other vulnerability assessments.
Legal and technical questions: Deputy Attorney General John Cole noted Section 2 of the bill establishes the Climate Mitigation and Resiliency Special Fund and refers to fees being deposited, but “there’s no authorization in the chapter to collect fees.” He recommended either deleting fee language or authorizing fee collection and offered suggested amended language. The Tax Foundation submitted comments questioning whether the fund would be financially self-sustaining and raised questions about the nexus between new revenue sources and the fund’s eligible uses.
Revenue math discussed in committee: Will Cain (Governor’s Office) told senators the proposed 1.75 percentage-point increase in TAT was expected to generate about $180 million a year once fully phased in; committee staff estimated roughly $90 million per fund if 7.3% of total collected is set aside for each special fund. Senators asked for a clear allocation schedule and a list of eligible projects; DBEDT agreed to provide the Climate Advisory Team report and a bucketed list of projects for committee review.
Committee action: The committee passed the bill with an SD1, incorporated the Attorney General’s suggested technical amendment regarding fee language, and deferred the effective date to 07/01/2050 for later technical drafting and alignment.
Ending: Senators expressed concern about tourism-price sensitivity, special-fund transparency and long-term sustainability; several members voted with reservations but supported advancing the bill to the next stage to obtain additional project and allocation detail.
