RELATING TO TRADE-ORIENTED PRODUCTION CAPACITY GRANT PROGRAM.

HB2601

HOUSE OF REPRESENTATIVES

H.B. NO.

2601

THIRTY-THIRD LEGISLATURE, 2026

STATE OF HAWAII

A BILL FOR AN ACT

RELATING
TO TRADE-oriented production CAPACITY GRANT PROGRAM
.

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's
economy is experiencing a period of softening growth, as reflected in the university
of Hawai
ʻ
i economic research organization's most
recent economic forecast, which identifies a downturn in visitor arrivals and
visitor spending as a key near-term headwind to the State's economic recovery.
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Because the State's economy remains heavily
reliant on travel and tourism, reductions in visitor demand have
disproportionate impacts on local businesses, employment, and state tax
revenues.

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The legislature
further finds that expanding the State's trade and export activity represents a
near-term, low-hanging opportunity to diversify the State's economy, stabilize
local businesses affected by fluctuations in tourism, and generate new sources
of revenue and job growth.
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Many
manufacturers, producers, and value-added businesses in the State have the
potential to access interstate and international markets but are constrained by
limited production capacity, outdated equipment, and insufficient capital for
modernization.

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However, the
legislature further finds that timely intervention is necessary to mitigate
near-term economic impacts resulting from reduced visitor activity and to
prevent additional strain on local businesses during the current economic
slowdown.
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Because trade-oriented
production capacity investments are capital-based, employer-driven, and capable
of generating returns more quickly than large-scale structural reforms, the State
is well-positioned to act now.
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The department
of business, economic development, and tourism already administers economic
development, manufacturing, and trade-related programs and maintains
established relationships with industry partners, allowing the department to
efficiently design and implement this measure's proposed grant program, deploy
funds with appropriate oversight, and accelerate the ability of businesses in
the State to access interstate and international markets.

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Accordingly, t
he
purpose of this Act is to establish a trade-oriented production capacity grant
program within the department of business, economic development, and tourism to
support one-time capital investments that expand the State's manufacturing and
production capacity for trade, enable local businesses to reach export markets,
and deliver measurable economic returns in the near term.
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By prioritizing traded-sector businesses and
requiring private-sector matching funds, this Act ensures that state
investments are leveraged, fiscally responsible, and strengthens the State's
long-term economic resilience.

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SECTION
2.
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Chapter 201, Hawaii Revised Statutes,
is amended by adding a new section to be appropriately designated and to read
as follows:

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"
�201-
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Trade-oriented production capacity grant
program; establishment.
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(a)
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There is established within the department of business, economic development,
and tourism the trade-oriented production capacity grant program to support
one-time capital investments that expand the State's manufacturing and
production capacity for trade.

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(b)
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The program shall provide
grants for equipment, automation, and facility upgrades that directly increase
output, efficiency, and competitiveness for eligible businesses.

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(c)
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Grant awards shall:

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(1)
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Require private-sector matching
funds, as determined by the department;

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(2)
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Prioritize traded-sector businesses
with demonstrated interstate or international market potential; and

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(3)
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Be structured to support projects
capable of delivering measurable trade, export, and economic returns in the
near term.

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(d)
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Eligible uses of grant awards may include but
not be limited to:

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(1)
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Manufacturing or processing
equipment;

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(2)
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Automation technologies;

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(3)
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Facility improvements directly tied
to increased production capacity; and

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(4)
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Other capital investments approved
by the department that directly support expanded trade or export activity.

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(e)
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In awarding grants, the department shall
consider, at a minimum:

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(1)
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The extent to which the proposed
project increases production capacity for trade or export;

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(2)
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The applicant's ability to access
interstate or international markets;

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(3)
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The amount and source of
private-sector matching funds;

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(4)
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Anticipated economic impacts,
including job creation or retention, increased output, and export revenue; and

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(5)
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The likelihood that the project will
produce measurable economic returns within a defined timeframe.

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(f)
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The department may require grant recipients
to report on performance outcomes, including production increases, trade
activity, and other economic metrics, to ensure accountability and
transparency.

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(g)
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The department of business, economic development,
and tourism shall administer the program and may adopt rules pursuant to
chapter 91 necessary for the purposes of this section.
"

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SECTION
3.
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There is appropriated out of the
general revenues of the State of Hawaii the sum of $
or so much thereof as may be necessary for fiscal year 2026-2027 for the trade-oriented
production capacity grant program established by this Act.

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The
sum appropriated shall be expended by the department of business, economic
development, and tourism for the purposes of this Act.

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SECTION
4.
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New statutory material is
underscored.

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SECTION
5.
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This Act shall take effect on July 1,
2026.

INTRODUCED BY:

_____________________________

Report Title:

DBEDT; Economic
Development; Trade-Oriented Production Capacity Grant Program; Establishment; Manufacturing;
Grants; Appropriation

Description:

Establishes
the Trade-Oriented Production Capacity Grant Program within the Department of
Business, Economic Development, and Tourism to support one-time capital
investments that expand the State's manufacturing and production capacity for
trade.
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Provides grants for equipment,
automation, and facility improvements that directly increase output,
efficiency, and competitiveness for eligible businesses, with required
private-sector matching funds.
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Prioritizes
traded-sector businesses with interstate or international market potential to
help generate measurable near-term trade and economic returns.
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Appropriates funds.

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not legislation or evidence of legislative intent.