Legislative session ends with hotel, cruise ship room tax increase to aid Hawaii’s climate fight

Tourists — and local residents — who book hotel rooms and cruise ship cabins will begin providing $90 million to $100 million annually in new funding for Hawaii to adapt to climate change and prevent future wildfires, under legislation that Gov. Josh Green plans to sign into law.

The proposed increase in Hawaii’s so-called hotel room tax would begin on Jan. 1 after it passed out of the Legislature on Friday, the final day of the 2025 legislative session.

It follows the Aug. 8, 2023, Maui wildfires that killed 102 people. But Green has been pushing legislators to come up with a new source of funding to combat climate change since his first legislative session as governor three years ago.

It was just one of 259 bills that the House and Senate sent to Green in the final days of the legislative session that addresses new and sometimes long-standing issues.

Sometimes it can take the Legislature several sessions to pass bills that come up each session, said political analyst Neal Milner.

But in many instances, he said, action only results following major events.

On some issues this year, Milner said, legislators “made an attempt to satisfy public opinion and show they’re serious.”

For instance, millions of dollars in new state funding for fireworks enforcement follows years of complaints from neighbors about illegal explosions and aerial fireworks.

This year, legislators funded new efforts to crack down on illegal fireworks after the deaths of six people during a New Year’s Eve party in Aliamanu that also injured dozens of others, followed by arrests.

The state budget approved by the Legislature last week includes over $5.2 million and eight positions for an Explosive Enforcement Section “to disrupt the illegal fireworks trade in Hawaii by coordinating operations, seizures and sharing resources,” Rep. Shirley Ann Templo (D, Kalihi-­Kalihi Kai-Hickam Village) said on the House floor. “Its focus is on reducing the availability and use of illegal fireworks, as well as combating related crime.”

The budget also includes $2.4 million for an “Illegal Fireworks Task Force to provide extra resources and support to help reduce the use of illegal fireworks, improving public safety and minimizing related hazards,” Templo said. “With these investments, we reaffirm our commitment to keeping Hawaii safe.”

House Bill 806 also would provide $500,000 to the state Department of Law Enforcement to conduct sting operations on Oahu to catch fireworks violators.

The bill also would lead to an explosives and firearms laboratory on Oahu.

HB 550 would allow law enforcement to use drone images to establish probable cause for arrests under the Fireworks Control Law to help in investigations and prosecutions.

And HB 1483 would update definitions and penalties for fireworks offenses, including tougher penalties if anyone “suffers substantial bodily injury, serious bodily injury, or death as a result of the fireworks offenses.”

The larger push on fireworks enforcement likely will have little effect on the upcoming July 4 celebrations, Milner said.

“The real test,” he said, will come this New Year’s Eve.

If DLE gets approval for a new undercover fireworks sting unit, Milner said, “They’ll need some time to gear up.”

Tourism impacts

Hawaii’s tourism industry has been pushing back on the last three years of efforts to primarily charge tourists to generate new revenue for Hawaii to adapt to climate change.

Whenever the cost to visit rises, “everybody cringes,” said Jerry Gibson, president of the Hawai‘i Hotel Alliance. “As you add taxation, as we have through the years, you always have to look at how it affects occupancies.”

If Green approves increasing Hawaii’s Transient Accommodation Tax, it would rise to 11% from 10.25% on top of the 3% tax that each county already charges, resulting in an overall 14% TAT.

But Gibson said, “I definitely trust the governor because he has a keen sense of tourism, and I believe this money will help. Gov. Green, I believe, values tourism and he understands that we need help, environmental help, to prevent fires. He has said he will help tourism on all islands.”

The $90 million to $100 million estimated to be generated annually would have to be equally divided into three buckets: “natural resource management, climate-related disaster mitigation and mitigating tourism impacts on the natural environment.”

Green has told the Honolulu Star-Advertiser that Hawaii needs $500 million to $600 million annually to prevent future wildfires, offset the environmental effects of tourism and adapt to climate change, which has caused beach erosion and seen oceanfront homes crash onto beaches.

At the start of the legislative session that just ended, Green hoped to generate $200 million in new revenue by increasing the TAT and by using all of the $60 million or so in interest on the state’s $1.5 billion “rainy day fund.”

But legislators reduced Green’s original TAT increase and killed his idea to dedicate all of the rainy day fund interest to offset climate change, likely to give themselves an added financial cushion to help cover additional cuts in federal funding that already include reductions for Hawaii nonprofit organizations, Milner said.

But Gibson has faith that Green can use the new $90 million to $100 million in increased TAT to leverage it through funding mechanisms to come close to his $200 million annual goal.

“There’s a lot of different ways,” Gibson said. “It’s a good place to start.”

Failed bills

Notably, Milner said, legislators killed all efforts this year aimed at “clean government,” including several that would affect them directly.

Bills that died included: creating a task force to study the possibility of creating a year-round Legislature like the City Council; impose term limits on the Legislature, the only elected body where members can run for reelection indefinitely; and increasing the amount of public funds available to political candidates, which proponents argue would make it easier for people to run for county and state offices.

On Friday, House Speaker Nadine Nakamura did not dismiss the idea of reconsidering bills that died, saying that some proposals can take six to seven years to reach consensus.

Clean government reform efforts followed the 2022 federal guilty pleas of former Senate Majority Leader J. Kalani English and then-Rep. Ty T.J. Cullen.

English and Cullen, both Democrats, admitted to accepting cash, casino chips, Las Vegas hotel rooms and dinners in exchange for influencing legislation to benefit a company involved in publicly financed cesspool conversion projects.

In response, then-House Speaker Scott Saiki created the Commission to Improve Standards of Conduct, led by retired Intermediate Court of Appeals Chief Judge Dan Foley, which made 28 recommendations that resulted in 20 bills becoming law in 2023.

But progress has largely stalled since.

In particular this year, legislators killed a bill that would make it illegal for state and county contractors — and their immediate family members — from making campaign contributions while their companies are under contract for county or state projects.

It also would require the names of any officers or their immediate family members to be disclosed in certain circumstances.

Common Cause Hawaii represented one of the loudest advocates for further “clean government” reforms this year.

When the session ended on Friday, Common Cause Hawaii State Director Camron Hurt said in a statement:

“At a time when Hawaiians are demanding their lawmakers fight back against attacks on our democracy, our Legislature failed to act. It’s embarrassing that the Legislature didn’t pass anything to improve access to voting or keep foreign corporations out of our home politics. While some legislators voiced support for these bills, words of support aren’t enough — we the people demand real, meaningful action. Common Cause Hawaii will continue our efforts to hold our elected officials accountable and return power back to the people.”

But Common Cause noted that the new state budget includes money for the Campaign Spending Commission to expand for the first time since statehood.

“This funding will ensure the Commission can maintain the integrity and transparency of the campaign finance process,” Common Cause said.

Milner believes that future efforts aimed at political and campaign reform will continue to fail, along with the perennial attempts to legalize adult use of recreational marijuana.

He was surprised that a bill to collect state tax revenue from online sports gambling made it to the final days of the legislative session, which would break Hawaii’s ban on any form of legalized gambling.

Unlike supporters of legalized marijuana, Milner said gambling lobbyists are much more sophisticated and better funded.

This year, Milner said, “Gambling rallied.”

In the end, though, Milner said, “Gambling was thrown out in a rundown between third and home.”

But the fact that at least one of the perennial gambling bills came down to the wire means there will be a renewed push to legalize some form of gambling next year, Milner said.

A new era for Hawaii will come if Green signs a bill allowing naming rights on the Hawai‘i Convention Center and a new Aloha Stadium in a state that bans outdoor advertising.

“That is a big change for Hawaii,” Milner said.

But Milner doubts that Oahu will soon see billboards hanging over the H-1 Freeway following decades of successful lobbying by the Outdoor Circle.

For legislators, Milner said, “Not having billboards in this state is like believing in God. They don’t want to have to deal with the Outdoor Circle. I haven’t seen much pressure for billboards.”