Hawaii committee advances bills to fund climate resilience with TAT hike and interest allocation; AG flags fee language

The House Committee on Energy & Environmental Protection advanced legislation Feb. 4 that would raise the transient accommodations tax (TAT) and create a climate mitigation and resiliency special fund, and a companion bill to direct all interest earned by the Emergency and Budget Reserve Fund (EBRF) into that special fund.

Proponents said the bills respond to recommendations from Hawaii's climate advisory team after the Maui wildfires and aim to create a steady revenue stream for mitigation and resilience projects statewide. "We have our testimony submitted in strong support," said Will Kane of the Office of the Governor, describing the measures as the governor's administration bills. Kane summarized the bills' intent to stand up a climate mitigation and resiliency special fund and an economic development and revitalization special fund for tourism and resort districts.

Why it matters: supporters told the committee the state needs a dedicated, multi-year revenue stream to fund hundreds of millions of dollars of resilience work identified after major disasters. Care-for-`Aina and conservation coalitions said the funds could close a large funding gap for natural-resource protection; Resources Legacy Fund program officer Maka Gibson testified the state faces a roughly $560 million annual stewardship shortfall.

Key concerns and provisions: the Department of the Attorney General flagged statutory detail in one bill. "The new chapter does not authorize the collection of fees," said John Cole of the Attorney General's Office, noting a provision that would deposit "fees collected under this chapter" into the special fund without first authorizing fee collection. Cole advised deleting that clause or amending the bill to expressly authorize fee imposition and collection.

Tourism industry groups and the Tax Foundation raised economic concerns about using TAT for resilience. Tom Yamachika of the Tax Foundation of Hawaii said the bill's proposed special fund does not meet the statutory criteria for special funds under section 37-52.3, Hawaii Revised Statutes, and warned of potential effects on visitor behavior if TAT increases. Stephanie Donahoe of the Kohala Coast Resort Association said short-term rentals appear undercollected and urged enforcement before expanding the TAT.

Several witnesses and the climate advisory team asked that the governance and eligibility rules for the resilience fund explicitly include community-led projects and add the Department of Hawaiian Home Lands to the decisionmaking body. Kavika Riley of the climate advisory team recommended requiring at-large appointees to have qualifications related to climate science, resilience, conservation or built-infrastructure expertise.

Committee action: the committee "passed with amendments" the bill establishing the TAT-derived special funds and the separate bill allocating EBRF interest, with the chair noting appropriations and defective dates would be blanked pending follow-up work. The chair said the bills need additional drafting to narrow the broad definition of "climate mitigation and resiliency" and to resolve governance questions. The roll-call reflected the committee's recommendation to pass with amendments (Chair and Vice Chair aye; Representatives Kahaloha, Kush and Quinlan aye; Representative Ward excused).

What's next: the committee deferred specific appropriation figures to the committee report and invited the administration and stakeholders to negotiate language clarifying eligible projects, fund governance, and statutory authority for any fees before the bills move further.