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Committee advances conveyance tax overhaul amid revenue and allocation questions
Summary
Lawmakers advanced HB 2049, which would switch Hawaii's conveyance tax to a marginal-rate system and reallocate revenue shares; DLNR urged a higher share and cap for the Land Conservation Fund and DOTAX agreed to provide line-by-line revenue estimates for members.
Chair of the joint hearing advanced HB 2049, describing the bill as a restructuring of the conveyance tax to a marginal-rate system and a reallocation of revenues to housing funds, the Department of Hawaiian Home Lands and other purposes. Several state agencies and stakeholders testified; the Department of Land and Natural Resources asked for a larger protected share for land conservation and a higher cap.
David Penn, program specialist for Legacy Land Conservation at the Department of Land and Natural Resources, said the agency's written comments did not fully account for potential revenue increases under the new rate structure and recommended different terms. "We would be comfortable for now with a 10% share of revenue and a $10,000,000 cap," Penn said, adding that he found evidence in testimony of "an estimate of 68,500,000 additional revenue from this, new tax structure." Members asked DOTAX for a line-by-line comparison of the current structure and the proposed marginal rates; DOTAX agreed to provide that breakdown and a revenue estimate before decision-making.
Committee members also pressed on implementation details such as whether the bill's cost-of-living adjustment (COLA) applies to bracket thresholds or transaction values, and on how shifting percentages (for example, a lower percent to the rental housing revolving fund) would affect affordable housing finance. HHFDC staff explained that conveyance allocations are one funding source among legislative appropriations and noted recent biennial appropriations of substantial sums to rental housing programs. Members requested clearer revenue and allocation projections and asked staff to confirm that the bill's language would lift the bracket thresholds with inflation rather than impose a duplicative charge on buyers.
The committee moved the bill forward with amendments and asked DOTAX and affected agencies to provide the requested comparisons and clarifications prior to further committee consideration.
