RELATING TO TRANSPORTATION.

HB2451

HOUSE OF REPRESENTATIVES

H.B. NO.

2451

THIRTY-THIRD LEGISLATURE, 2026

STATE OF HAWAII

A BILL FOR AN ACT

Relating
to Transportation
.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

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SECTION 1.
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The legislature finds that the State
committed to a achieving a zero emissions clean economy by 2045 by passing Act
15, Session Laws of Hawaii 2018.
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To
achieve this goal, the State must take ambitious steps to reduce greenhouse gas
emissions and promote sustainability.

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The
legislature further finds that providing free public transportation and increasing
taxes on petroleum products to fund fare-free transit are effective,
economically sound measures to reduce emissions.
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Transitioning to fare-free public
transportation systems would increase ridership and access for low-income
residents while reducing traffic congestion and greenhouse gas emissions.
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This policy also reflects the 2020 to 2022
tax review commission's top recommendation to utilize taxes to incentivize a
clean energy transition.

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Accordingly,
the purpose of this Act is to:

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(1)
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Require each county to implement
fare-free access to its public transportation systems; and

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(2)
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Increase the tax on petroleum products to
reimburse the counties for providing fare-free transit
.

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SECTION
2.
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Chapter 46, Hawaii Revised Statutes,
is amended by adding a new section to be appropriately designated and to read
as follows:

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"
�46-
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County public transportation systems; fare-free
access.
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(a)

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Beginning January 1, 2027, each county shall implement fare-free access
to its public transportation systems.

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(b)
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Costs incurred by the counties in
implementing fare-free access pursuant to this section shall be eligible for
reimbursement from the State, subject to the availability of funds and approval
of the department of taxation; provided that each county shall be eligible to
be reimbursed in the following amounts
per fiscal year:

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(1)
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$2,500,000 for the county of Kauai;

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(2)
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$5,000,000 for the county of Hawaii;

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(3)
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$45,000,000 for the city and county
of Honolulu; and

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(4)
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$5,000,000 for the county of Maui;

provided further that the amounts shall be
adjusted annually for inflation.

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(c)
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For the purposes of this
section, "fare-free access" means providing public transportation
services at no cost to all riders.
"

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SECTION
3.
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Chapter 231, Hawaii Revised Statutes,
is amended by adding a new section to be appropriately designated and to read
as follows:

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"
�231-
�
Fare-free public transportation tax and
dividend special fund; established.
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(a)
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There is established the fare-free public transportation
tax and dividend special fund, into which shall be deposited:

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(1)
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The amount specified by section
243-3.5;

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(2)
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Moneys appropriated to the fund by
the legislature; and

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(3)
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Any interest earned or accrued on
moneys in the fund.

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(b)
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Moneys in the fare-free public
transportation tax and dividend special fund shall be administered by the
department of taxation to reimburse the counties for providing the public with fare-free
access to public transportation systems pursuant to section 46- .
"

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SECTION

4
.
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Section
243-3.5, Hawaii Revised Statutes, is amended by amending subsection (a) to read
as follows:

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"
(a)
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In addition to any other taxes provided by
law, subject to the exemptions set forth in section 243-7, there is hereby
imposed a state environmental response, energy, and food security tax on each
barrel or fractional part of a barrel of petroleum product sold by a
distributor to any retail dealer or end user of petroleum product, other than a
refiner.
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The tax shall be [
$1.05
]

$3.35
on each barrel or fractional part of a barrel of petroleum product
that is not aviation fuel; provided that
, beginning in 2028, the tax shall
be increased by $ on each
barrel or fractional part of a barrel of petroleum on January 1 of each year;
provided further that
of the tax collected pursuant to this subsection:

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(1)
�
5
cents of the tax on each barrel shall be deposited into the environmental
response revolving fund established under section 128D-2;

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(2)
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4 cents of the tax on each barrel shall be deposited into the
energy security special fund established under section 201-12.8;

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(3)
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5 cents of the tax on each barrel shall be deposited into the
energy systems development special fund established under section 304A-2169.1;

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(4)
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3
cents of the tax on each barrel shall be deposited into the electric vehicle
charging system subaccount established pursuant to section 269-33(e); [
and
]

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(5)
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3
cents of the tax on each barrel shall be deposited into the hydrogen fueling
system subaccount established pursuant to section 269-33(f)[
.
]
; and

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(6)
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$2.30
of the tax on each barrel shall be deposited into the fare-free public
transportation tax and dividend special fund established pursuant to section
231- ; provided that the amount of the tax on each barrel deposited
into the special fund shall increase by
$ each year.

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The
tax imposed by this subsection shall be paid by the distributor of the
petroleum product."

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SECTION

5
.
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Statutory
material to be repealed is bracketed and stricken.
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New statutory material is underscored.

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SECTION
6
.
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This Act shall take effect upon its approval;
provided that section 4 shall take effect on January 1, 2027, and shall apply
to taxable years beginning after December 31, 2026.

INTRODUCED BY:

_____________________________

Report Title:

DOTAX;
Counties; Public Transportation Systems; Fare-Free Access; Fare-Free Public
Transportation Tax and Dividend Special Fund; Environmental Response, Energy,
and Food Security Tax

Description:

Beginning
1/1/2027, requires each county to implement fare-free access to its public
transportation systems.
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Establishes the
Fare-Free Public Transportation Tax and Dividend Special Fund.
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Increases the Environmental Response, Energy,
and Food Security Tax on petroleum products to fund fare-free public
transportation.
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The summary description
of legislation appearing on this page is for informational purposes only and is
not legislation or evidence of legislative intent.