RELATING TO STATE FINANCES.

SB241

THE SENATE

S.B. NO.

241

THIRTY-THIRD LEGISLATURE, 2025

STATE OF HAWAII

A BILL FOR AN ACT

RELATING
TO STATE FINANCES
.

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

����
SECTION 1.
�
The legislature finds that Hawaii's natural
environment faces significant pressure from climate change and the heavy use of
the State's natural resources.
�
Climate
change and overuse are placing the State's natural and cultural resources in
increasing peril, creating greater risk of fire, flood, coastal erosion, loss
of reefs, and air and water pollution, and threatening lives, homes, visitor
accommodations, fisheries, the stability of other natural systems, and irreplaceable
Hawaiian cultural landscapes enjoyed by Hawaii residents and visitors.
�
The current underinvestment in natural and
cultural resources significantly limits the ability of the State and its
communities to improve management of its lands, waters, and cultural sites to
reduce these risks and to respond to climate crises when they occur.
�
Climate change will intensify and
increase t
he threat of these emergencies unless the State takes significantly
greater action now to prevent them.

����
The recent tragedy on Maui
due to the Lahaina wildfires resulted in unbearable loss of lives, homes,
infrastructure, and businesses, and will have severe ongoing economic costs for
residents and public agencies to pay for the response, remediation, and
rebuilding, as well as ongoing revenue losses for Hawaii's tourism industry and
state and local governments.
�
This tragic
event is a wake-up call for all Hawaii residents, businesses, and public
agencies to significantly increase efforts to prevent climate crises and limit
the damage when crises do occur.

����
Non-native grasses and other non-native
plants, mismanaged lands, and reduced water availability present continuing
wildfire risks to the lives and homes of Hawaii residents, hotels and other
visitor accommodations, native ecosystems and cultural landscapes, and Hawaii's
tourism-dependent economy.
�
In addition
to wildfires, climate crises also result from the loss and degradation of coral
reefs that protect homes, beaches, businesses, and infrastructure from coastal
erosion.
�
Coastal erosion often exposes and
damages historic Hawaiian burials, as sand dunes were a traditional burial
location across Hawaii.
�
Furthermore, the
degradation of coral reefs threatens fisheries and other ocean life that are
important to the State's tourism industry, provide food for residents, and
contribute significantly to Hawaii's quality of life.
�
Hawaii's forests and other watershed lands are
critical to the quality and the quantity of water that sustains families,
visitors, businesses, and native fish and wildlife.
�
Hawaii's water supplies will be impaired
unless greater action is taken to protect and restore forest and watershed
lands in the State.

����
The legislature also finds that climate
change will cause more frequent and severe droughts that threaten the water
supplies that sustain homes, visitor accommodations, and sensitive natural and
cultural resources.
�
Climate change will
also cause
more intense storms leading to
more floods causing water
contamination; damage to homes, businesses, and infrastructure; and risk of
life and health.

����
The legislature further finds that the number
of floods per year has already sharply increased since the 1960s and is
expected to keep rising.
�
Significant
pollution events and chronic release of contaminants
weaken the resiliency of
Hawaii's
natural environment

and
pollutes

the
air, land,
fresh water
supplies, and nearshore
waters threatening the health of Hawaii residents, visitors, and fish and
wildlife.

����
Climate crises can cost taxpayers billions
of dollars in response and recovery costs and repairs to infrastructure, while
reducing revenues, especially if the crises adversely impact tourism and other
industries.
�
The costs borne by the
public
to respond to and recover from
climate crises exceeds the
costs of preventing them
by bil
l
ions of dollars
.

����
Climate change is impacting health in a
myriad of ways, including by leading to death and illness from increasingly
frequent extreme weather events such as heatwaves, storms, and floods; disrupted
food systems; and increased zoonoses and food‑, water-, and vector-borne
diseases and mental health issues.
�
Climate change can disrupt food availability, reduce access to food, and
affect food quality.

�
Projected increases in temperatures, changes
in precipitation patterns, changes in extreme weather events, and reductions in
water availability may all result in reduced agricultural productivity and
disrupt the food chain supply
,
which could be detrimental to the Hawaiian
i
slands.

����
The work of the department
of land and natural resources and other departments, agencies, and community
partners directly improves the health and sustainability of Hawaii's lands,
waters, and cultural sites through actions such as fencing in native forests to
restrict ungulates and stop the spread of invasive species and diseases such as
rapid ohia death, stream surveys to monitor native stream species health and
water levels, and restoring coral reefs through propagation and release of sea
urchins.
�
Hawaii has many of the
solutions to prevent and mitigate climate crises by looking to indigenous
Hawaiian land, water, ocean, and cultural site stewardship practices.
�
Perpetuation of traditional Hawaiian
management practices, including fishponds, loi kalo, and mauka-makai ahupuaa
management, results in increased groundwater recharge, decreased sediment
reaching the ocean and reefs, increased community volunteerism, and increased
public education and changed behaviors about pono stewardship practices.

����
While the State has many of the solutions
for prevention, the State and the counties currently do not have the needed
resources to implement even the highest priority climate crises prevention
measures.
�
Furthermore, delays in federal
reimbursements, when available, make it difficult to sustain response efforts
when climate crises strike.
�
The State
has a compelling and urgent need to increase funding to prevent climate crises
and fully respond to crises when they occur.

����
Accordingly, the purpose of this Act is to establish
the climate health and environmental action special fund to prevent climate
crises and more effectively respond to climate crises when they occur.

����
SECTION 2.
�

The Hawaii Revised Statutes is amended by adding a new chapter to be
appropriately designated and to read as follows:

"
Chapter

CLIMATE
HEALTH AND ENVIRONMENTAL ACTION SPECIAL FUND

����
� -1
�
Definitions.
�

As used in this chapter, unless the context otherwise requires:

����
"Climate crisis"
includes wildfires;
sea level rise and
coastal erosion resulting
in loss of beaches, public infrastructure, and public facilities; exposure and
damage to coastal burials; loss or degradation of reefs;
extrem
e
heat;
droughts;
floods; and pollution that contaminates drinking water or
nearshore waters
.

����
"Chairperson" means the chairperson
of the board of land and natural resources.

����
"Department" means the department
of land and natural resources.

����
"Fund" means the climate health
and environmental action special fund.

����
"Nonprofit organization" means an
organization that has been granted tax exempt status by the Internal Revenue
Service pursuant to section 501(c)(3) of the Internal Revenue Code of 1986, as
amended, and that has among its charitable purposes preventing or responding to
climate crises; preservation, restoration, or management of natural or cultural
resources for cultural perpetuation, scientific, historic, educational,
recreational, scenic, wildlife, or open-space purposes; protection of the
natural environment or biological resources, or both; preservation,
enhancement, or both, of wildlife; and protection of native Hawaiian cultural
resources and practices related thereto.

����
"Climate
change resilience"

includes actions with the ability to
anticipate,

prevent,
prepare for, and respond to
climate crises
events, trends, or disturbances.

����
� -2
�
C
limate health and
environmental action special fund.
�
(a)
�
There is established in the state treasury
the climate health and environmental action special fund to be administered by
the chairperson to minimize the impacts of, and respond to, climate crises.

����
(b)
�

Moneys from the fund shall be expended only for the following purposes:

����
(1)
�
Wildfire prevention and response
strategies to protect communities, sites frequented by tourists and other
visitors, and sensitive environmental
and cultural
resources.
�
Highest priority shall be placed on
environmentally beneficial wildfire prevention strategies including removal of
non-native grasses and other non-native vegetation; propagation and planting of
native species; restoration of stream flows; restoration of forests and
watersheds; and restoration, or establishment and enhancement of traditional
Hawaiian land management and agricultural practices;

����
(2)
�
Flood
prevention;

����
(3)
�
Coral
reef protection and restoration and other environmentally beneficial strategies
that protect fisheries or help prevent shoreline erosion and coastal flooding;

����
(4)
�
Emergency
drinking water supplies when droughts or water pollution prevent the
traditional water supplies from meeting the drinking water needs of residents
and visitors.
�
Measures may include but
are not limited to conservation measures, temporary extension of pipelines, and
the use of trucks or other vehicles needed to deliver emergency water supplies;

����
(5)
�
Provision
of emergency sources of electricity from portable renewable energy sources, as
needed, for communities adversely impacted by a climate crisis;

����
(6)
�
H
eat management including green infrastructure
and
programs

that
plant trees and vegetation
that
can
cool
ecosystems, and
help keep buildings and their
surroundings cooler
;

����
(7)
�
Shoreline
restoration and coastal management to address and adapt to sea level rise and
coastal erosion;

����
(8)
�
Other
environmentally compatible strategies to prevent or reduce the potential harm
that climate crises can cause;

����
(9)
�
Protection
of lives, homes, businesses, sites popular with tourists and other visitors,
and infrastructure when climate crises occur;

���
(10)
�
Perpetuation
of indigenous Hawaiian land, water, ocean, and cultural site stewardship
practices;

���
(11)
�
Preparation
of climate crises prevention and response strategies and plans; and

���
(12)
�
Costs
to administer this chapter.

����
(c)
�
In allocating funding for prevention
projects, the department shall prioritize projects that include one or more of
the following features:

����
(1)
�
Projects that are cost-effective; or

����
(2)
�
Projects that provide significant benefits relative to their cost,
are equitable, protect homes, protect and improve native fish and wildlife
habitat, protect natural and cultural resources including but not limited to
those that are important to the tourism industry, and provide nature-based or
indigenous-led solutions to help prevent climate crises.
�
These priorities are not listed in priority
order.

The department
shall allocate at least twenty-five per cent of the funds each year for grants
to counties and nonprofit organizations to plan for and implement climate
crisis prevention projects consistent with this section.

����
(d)
�
Grants shall be made to counties and nonprofit
organizations to plan for and implement climate crisis prevention projects
consistent with subsection (c).
�
Applications
for grants shall be made to the department and contain such information as the
department shall require by rules adopted pursuant to chapter 91.
�
At a minimum, the applicant must show that:

����
(1)
�
The grant shall be used exclusively for
activities consistent with the purposes of this chapter;

����
(2)
�
The applicant shall have applied for or received all applicable
licenses and permits;

����
(3)
�
The
applicant shall comply with all applicable federal and state laws prohibiting
discrimination against any person on the basis of race, color, national origin,
religion, creed, sex, age, sexual orientation, disability, or any other
characteristic protected under applicable federal or state law;

����
(4)
�
The
applicant shall comply with other requirements as the department may prescribe;

����
(5)
�
All
activities and improvements undertaken with funds received shall comply with
all applicable federal, state, and county statutes and ordinances, including
applicable building codes and agency rules; and

����
(6)
�
The
applicant shall indemnify and save harmless the State of Hawaii and its
officers, agents, and employees from and against any and all claims arising out
of or resulting from activities carried out or projects undertaken with funds
provided hereunder, and procure sufficient insurance to provide this
indemnification if requested to do so by the department.

����
(e)
�
To receive a grant under this section, an
applicant shall:

����
(1)
�
Be either:

���������
(A)
�
A nonprofit organization determined to
be exempt from federal income taxation by the Internal Revenue Service;

���������
(B)
�
A cooperative association; or

���������
(C)
�
An
organization providing technical assistance;

����
(2)
�
In the case of a nonprofit
organization, have a governing board whose members have no material conflict of
interest and serve without compensation, have bylaws or policies that describe
the manner in which business is conducted and policies relating to nepotism and
management of potential conflict of interest situations, and employ or contract
with not more than two members of a family or kin of the first or second degree
unless specifically permitted by the department;

����
(3)
�
Agree to make available to the department all records the applicant
may have relating to the grant, to allow state agencies to monitor the
applicant's compliance with the purpose of this chapter; and

����
(4)
�
Establish,
to the satisfaction of the department, that sufficient funds are available for
the effective operation of the activity, business, enterprise, or technical
assistance for the purpose for which the grant is awarded.

����
(f)
�
The following shall be deposited into the
fund:

����
(1)
�
Revenues
raised pursuant to section 237D-2(f);

����
(2)
�
Revenues
directed to the fund by the chairperson from site-based and other fees
established by the department; and

����
(3)
�
Other
moneys appropriated to the fund by the legislature.

����
� -3
�
Revenue bonds.
�
To the extent necessary, with the
approval of the governor and with the required legislative authorization, the chairperson
and the director of finance may provide for the issuance of revenue bonds
pursuant to part III of chapter 39 to be paid for from revenues received
pursuant to section -4(d) and section 237D-2(f).

����
� -4
�
Reimbursements.
�
(a)
�

The department may seek reimbursement for fund expenditures related
to climate crises.

����
(b)
�
Damages
for which recipients of funds are liable under
this chapter include but are
not limited to:

����
(1)
�
All costs of response, containment,
removal, and treatment including but not limited to monitoring and
administration costs incurred as a result of responding to the climate crisis;

����
(2)
�
Provision of emergency drinking water supplies; and

����
(3)
�
Injury
to, destruction of or loss of, natural resources, including but not limited to
the reasonable costs of treating, restoring or replacing water supplies;
rehabilitating fish, wildlife, habitat, and other natural resources; and
reasonable costs of assessing those losses.

����
(c)
�
Any damages recovered under this section
shall be in addition to and shall not count against the recovery of any other
damages or other costs recovered pursuant to other laws.

����
(d)
�
Moneys recovered from responsible parties
under this section shall be deposited into the fund, except for costs necessary
to reimburse the department of the attorney general for any costs associated
with recovery of those damages.

����
� -
5
�
Technical advisory committee.
�
(a)
�

The chairperson shall appoint a technical advisory committee to
advise the department on strategies to prevent and respond to climate crises.

����
(b)
�
The
technical advisory committee shall include but not be limited to:

����
(1)
�
Experts
in wildfire prevention and response;

����
(2)
�
Experts in coral reef, forest, stream, and watershed protection and
restoration;

����
(3)
�
Experts
in the protection, restoration, and cultural stewardship of Native Hawaiian
cultural sites;

����
(4)
�
Experts
in providing emergency drinking water and other resources that can help
minimize the impact of climate crises on residents and visitors;

����
(5)
�
Experts
in climate change resilience, including indigenous land and water stewardship
practices;

����
(6)
�
At
least one representative from each county; and

����
(7)
�
Other
experts as identified by the chairperson.

����
(c)
�
The technical advisory committee shall meet
at least twice each year to advise the chairperson regarding the implementation
of this chapter.

����
(d)
�
The chairperson shall appoint one of the
members to serve as chair of the technical advisory committee.

����
� -6
�
Report to the legislature.
�
The department shall report to the legislature
on the uses of the fund, progress in implementing projects and other strategies
to reduce the likelihood and severity of climate crises, and other authorized
uses of the fund no later than twenty days prior to the convening of the
regular session of 2027 and every year thereafter.

����
Beginning January 1, 2029, and each three
years thereafter, the governor shall provide for an audit to ensure that funds
were expended only for purposes authorized in this chapter.
�
The audit shall be transmitted to the fiscal
committees of each house of the legislature no later than twenty days prior to
the convening of the regular session of 2030 and every three years thereafter.

����
SECTION
3
.
�
Section 237D-2, Hawaii Revised Statutes, is
amended to read as follows:

����
"
�237D-2
�
Imposition and rates
.
�
(a)
�
There
is levied and shall be assessed and collected each month a tax of:

����
(1)
�
Five per cent for the period beginning
on January 1, 1987, to June 30, 1994;

����
(2)
�
Six per cent for the period beginning
on July 1, 1994, to December 31, 1998;

����
(3)
�
7.25 per cent for the period beginning
on January 1, 1999, to June 30, 2009;

����
(4)
�
8.25 per cent for the period beginning
on July 1, 2009, to June 30, 2010; and

����
(5)
�
9.25 per cent for the period beginning
on July 1, 2010, and thereafter;

on the
gross rental or gross rental proceeds derived from furnishing transient
accommodations.

����
(b)
�

Every transient accommodations broker, travel agency, and tour packager
who arranges transient accommodations at noncommissioned negotiated contract
rates and every operator or other taxpayer who receives gross rental proceeds
shall pay to the State the tax imposed by [
subsection
]
subsections

(a)[
,
]
and (f),
as provided in this chapter.

����
(c)
�
There is levied and shall be assessed and
collected each month, on the occupant of a resort time share vacation unit, a
transient accommodations tax of:

����
(1)
�
7.25 per cent on the fair market rental
value until December 31, 2015;

����
(2)
�
8.25 per cent on the fair market rental
value for the period beginning on January 1, 2016, to December 31, 2016; and

����
(3)
�
9.25 per cent on the fair market rental
value for the period beginning on January 1, 2017, and thereafter.

����
(d)
�
Every plan manager shall be liable for and
pay to the State the transient accommodations tax imposed by subsection (c) as
provided in this chapter.
�
Every resort
time share vacation plan shall be represented by a plan manager who shall be
subject to this chapter.

����
(e)
�
Notwithstanding the tax rates established in
subsections (a)(5) and (c)(3), the tax rates levied, assessed, and collected
pursuant to subsections (a) and (c) shall be 10.25 per cent for the period
beginning on January 1, 2018, to December 31, 2030; provided that:

����
(1)
�
The tax revenues levied, assessed, and
collected pursuant to this subsection that are in excess of the revenues
realized from the levy, assessment, and collection of tax at the 9.25 per cent
rate shall be deposited quarterly into the mass transit special fund
established under section 248-2.7; and

����
(2)
�
If a court of competent jurisdiction
determines that the amount of county surcharge on state tax revenues deducted
and withheld by the State, pursuant to section 248-2.6, violates statutory or
constitutional law and, as a result, awards moneys to a county with a
population greater than five hundred thousand, then an amount equal to the
monetary award shall be deducted and withheld from the tax revenues deposited
under paragraph (1) into the mass transit special fund, and those funds shall
be a general fund realization of the State.

����
The
remaining tax revenues levied, assessed, and collected at the 9.25 per cent tax
rate pursuant to subsections (a) and (c) shall be deposited into the general
fund in accordance with section 237D-6.5(b).

����
(f)
�
In addition to the taxes imposed under
subsections (a), (c), and (e), there is levied and shall be assessed and
collected each month a tax of $25 on each furnishing of a transient
accommodation, including transient accommodations furnished for cash or charge,
at no charge, on a complimentary or gratuitous basis, for a nominal charge, or
in exchange for points, miles, or other amounts provided through a membership,
loyalty, or rewards program which shall be deposited into the
climate health and
environmental action special fund
established under chapter .
"

����
SECTION
4
.
�
Section 237D-3, Hawaii Revised Statutes, is
amended to read as follows:

����
"
�237D-3
�
Exemptions.
�
This chapter shall not apply to:

����
(1)
�
Health
care facilities including all such facilities enumerated in section 321-11(10);

����
(2)
�
School
dormitories of a public or private educational institution providing education
in grades kindergarten through twelve, or of any institution of higher
education;

����
(3)
�
Lodging
provided by nonprofit corporations or associations for religious, charitable,
or educational purposes; provided that this exemption shall apply only to the
activities of the religious, charitable, or educational corporation or
association as such and not to any rental or gross rental the primary purpose
of which is to produce income even if the income is used for or in furtherance
of the exempt activities of such religious, charitable, or educational
corporation or association;

����
(4)
�
Living
accommodations for persons in the military on permanent duty assignment to
Hawaii, including the furnishing of transient accommodations to those military
personnel who receive temporary lodging allowances while seeking accommodations
in Hawaii or while awaiting reassignment to new duty stations outside the
State;

����
(5)
�
Low-income
renters receiving rental subsistence from the state or federal governments and
whose rental periods are for durations shorter than sixty days;

����
(6)
�
Operators
of transient accommodations who furnish accommodations to full-time students
enrolled in an institution offering post-secondary education.
�
The director of taxation shall determine what
shall be deemed acceptable proof of full-time enrollment.
�
This exemption shall also apply to operators
who furnish transient accommodations to students during summer employment;

����
(7)
�
Accommodations [
furnished without
charge such as, but not limited to, complimentary accommodations,
accommodations
] furnished to contract personnel such as physicians, golf or
tennis professionals, swimming and dancing instructors, and other personnel to
whom no salary is paid or to employees who receive room and board as part of
their salary or compensation; [
and
]

����
(8)
�
Accommodations furnished to foreign
diplomats and consular officials who are holding cards issued or authorized by
the United States Department of State granting them an exemption from state
taxes[
.
]
; and

����
(9)
�
Accommodations furnished at no
charge, including accommodations furnished on a complimentary or gratuitous
basis, for the purpose of providing emergency housing to persons displaced as a
result of a state disaster, as declared by the governor pursuant to sections
127A-14 or 209-2.
"

����
SECTION
5
.
�
Section 237D-6.5, Hawaii Revised Statutes, is
amended by amending subsection (b) to read as follows:

����
"(b)
�

Except for the revenues collected pursuant to section 237D-2(e)[
,
]

and (f),
revenues collected under this chapter shall be distributed in
the following priority, with the excess revenues to be deposited into the
general fund:

����
(1)
�
$1,500,000 shall be allocated to the Turtle
Bay conservation easement special fund beginning July 1, 2015, for the
reimbursement to the state general fund of debt service on
reimbursable
general obligation bonds
, including ongoing expenses related
to the issuance of the bonds, the proceeds of which were used to acquire the
conservation easement and other real property interests in Turtle Bay, Oahu,
for the protection, preservation, and enhancement of natural resources
important to the State, until the bonds are fully amortized;

����
(2)
�
$11,000,000 shall be allocated to the
convention center enterprise special fund established under section 201B-8;

����
(3)
�
An allocation shall be deposited into
the tourism emergency special fund, established in section 201B‑10, in a
manner sufficient to maintain a fund balance of $5,000,000 in the tourism
emergency special fund; and

����
(4)
�
$3,000,000 shall be allocated to the
special land and development fund established under section 171-19; provided
that the allocation shall be expended in accordance with the Hawaii tourism
authority strategic plan for:

���������
(A)
�
The protection, preservation,
maintenance, and enhancement of natural resources, including beaches, important
to the visitor industry;

���������
(B)
�
Planning
, construction, and repair of
facilities; and

���������
(C)
�
Operation
and maintenance costs of
public lands, including beaches,
connected
with enhancing the
visitor experience.

����
All
transient accommodations taxes shall be paid into the state treasury each month
within ten days after collection and shall be kept by the state director of
finance in special accounts for distribution as provided in this subsection."

����
SECTION
6
.
�
There is appropriated out of the
general revenues of the State of Hawaii the sum of $500,000 or so much thereof
as may be necessary for fiscal year 2025-2026 and the same sum or so much
thereof as may be necessary for fiscal year 2026-2027 to be deposited into the
climate health and environmental action special fund.

����
SECTION
7
.
�
There is appropriated out of the
climate health and environmental action special fund the sum of $500,000 or so
much thereof as may be necessary for fiscal year 2025-2026 and the same sum or
so much thereof as may be necessary for fiscal year 2026-2027 for the
establishment of two full-time equivalent (2.0 FTE) positions in the department
of land and natural resources to administer the climate health and
environmental action special fund.

����
The
sums appropriated shall be expended by the department of land and natural
resources for the purposes of this Act.

����
SECTION 8.
�

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

����
SECTION 9.
�

This Act shall take effect on July 1, 2025; provided that sections 3, 4,
and 5 shall take effect on January 1, 2026.

INTRODUCED BY:

_____________________________

Report Title:

DLNR;
Climate Health
a
nd
Environmental Action Special Fund; Appropriations

Description:

Establishes
the Climate Health
a
nd
Environmental Action Special Fund in the Department of Land and Natural
Resources to minimize the impacts of, and respond to, climate crises, which,
beginning 1/1/2026, will be funded by a $25 tax on transient
accommodations.
�
Exempts certain housing
used for emergencies during a state disaster from the Transient Accommodations
Tax.
�
Appropriates funds.

The summary description
of legislation appearing on this page is for informational purposes only and is
not legislation or evidence of legislative intent.