RELATING TO PUBLIC TRANSIT.

SB2699

THE SENATE

S.B. NO.

2699

THIRTY-THIRD LEGISLATURE, 2026

STATE OF HAWAII

A BILL FOR AN ACT

RELATING
TO PUBLIC TRANSIT
.

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 public transit is vital for Hawaii's children and
families and provides access to schools, jobs, sports and extracurriculars,
health services, and community activities.
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Public transit is especially critical for disadvantaged communities where
many are unable to afford personal vehicles, and disabled individuals who are unable
to drive, or to walk or bike long distances.
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Existing state and county programs, including the department of
education's express county bus pass program and county-specific fare
reductions, support youth transit access but have limitations that may make access
inequitable.
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For example, the express
county bus pass program is limited to intermediate, middle, and high school
students attending their home school and residing 1.5 miles or more from
school, which excludes students who live within shorter distances.
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County bus systems provide some financial
relief for youth.
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For example, Oahu's
bus system provides free rides for children ages five and younger when they
ride with a paying adult and offers reduced fares for youth aged six to
nineteen.
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Maui's bus system offers
fare-free transit for children and youth aged twenty-four and younger with a
valid student identification card, with a requirement that children five and
under are accompanied by a paying adult.
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Hawaii island's hele-on transit service is
currently fare-free for all riders.
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Kauai's bus provides free rides for children aged
six and younger when they ride with a paying adult and offers discounted fares
for youth aged seven to eighteen.
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However, county transit options are not necessarily available every year.

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The legislature further finds that other
states, including Washington, have successfully implemented state-supported
fare-free youth transit programs, which have resulted in millions of fare-free
trips, greater independence for youth, measurable progress toward state
emissions reduction goals, and financial relief for families.
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In Hawaii, however, varying eligibility
requirements and administrative processes create burdens for families and limit
program effectiveness.

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The legislature believes that a universal
fare-free transit program for all children through high school age would
eliminate these barriers and reduce family transportation costs.

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The legislature further believes that increasing
transit ridership will support the State's goals to reduce emissions by fifty
per cent by 2030 and to achieve net negative greenhouse gas emissions by 2045, pursuant
to section 225P-5 Hawaii Revised Statutes.
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Increased public transit use will also move the
State closer to realizing zero emissions from transportation, the goal
established in section 225P-8, Hawaii Revised Statutes.

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The legislature recognizes that in October
2025, the department of transportation published its "Energy Security and
Waste Reduction Plan", which fulfills a requirement of the landmark
settlement agreement in Navahine F. v. Department of Transportation.
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The plan identifies actions the State can
take to meet its legal mandates to decarbonize the statewide transportation
system.
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These actions include providing
increased transit access as an equitable transportation option, especially for
disadvantaged and rural communities.

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The legislature finds that providing
state-supported fare-free youth transit, which will offer broad public benefits
through increased affordability, equity, safety, health and carbon emissions
reduction, is directly relevant to the State's environmental goals and an appropriate
use of funds from the environmental response, energy, and food security tax
under section 243-3.5, Hawaii Revised Statutes.

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The legislature also finds that allocating
a portion of these tax revenues to fund the fare-free youth transit program
directly fulfills the purpose for establishing the tax and aligns the
allocation of the revenues with the need to increase transit ridership in
furtherance of the State's emissions reduction targets.
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Establishing a fare-free youth transit program
special fund, and allocating 38 cents out of the existing $1.05 per barrel tax
on petroleum products, and 7 cents or 36.8 per cent out of the existing 19
cents per each million British thermal units tax on non-petroleum fossil fuels,
will provide an estimated total of $9,870,000 annually to fund the free youth
transit program.

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The legislature concludes that the expected
benefits from increasing youth access to equitable and affordable
transportation through fare-free youth transit are:

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(1)
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A
reduction in overall household financial burdens on families, especially
low-income families who depend on public transportation;

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(2)
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A
reduction in the State's dependence on fossil fuel, imported oil, and other
imported energy resources thereby moving Hawaii toward energy and
transportation self-sufficiency and helping to reach the State's emissions
reduction targets;

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(3)
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Improved
youth access to schools, jobs, extra-curricular activities, and health and
community services;

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(4)
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A
reduction in the number of motor vehicles on the roads, and corresponding
reductions in traffic, improved road safety, and a better quality of life for
everyone.

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Accordingly, the purpose of this Act is to:

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(1)
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Establish
within the department of transportation a fare-free youth transit program, to
be coordinated with the counties;

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(2)
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Establish
a fare-free youth transit program special fund;

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(3)
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Require
biannual evaluations of the new program and special fund;

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(4)
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Allocate
moneys from the environmental response, energy, and food security tax to the fare-free
youth transit program special fund; and

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(5)
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Appropriate
moneys into and out of the fare-free youth transit program special fund.

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SECTION 2.
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The Hawaii Revised Statutes is amended by adding a new chapter to title
15 to be appropriately designated and to read as follows:

"
Chapter

FARE-FREE
YOUTH TRANSIT PROGRAM

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-1
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Definitions.
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As used in this chapter, unless the context
otherwise requires:

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"Child"
or "children" means an individual or individuals less than eighteen
years of age.

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"County
transit service" means a public bus or rail service, operated by or on
behalf of a county in the State.

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"Department"
means the department of transportation.

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"Elementary-age
or younger child" means a child from birth through twelve years of age.

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"Guardian"
means a parent, legal guardian, or other adult responsible for accompanying an
elementary-age or younger child.

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"Youth"
means an individual from birth to young adulthood, and may include individuals
eighteen years of age or older.

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-2
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Program; established.
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(a)
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There
is established within the department a fare-free youth transit program.
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The program shall provide, in coordination
with the counties, fare-free county transit services to:

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(1)
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All
children through age seventeen;

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(2)
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Youth
who are high school students; and

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(3)
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Guardians
accompanying elementary-age or
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younger children; provided that no more than one guardian may receive a
free fare for each elementary-age or
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younger child for any ride.

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(b)
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The department shall coordinate with the counties and evaluate at least
biannually the program's:

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(1)
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Impact
on ridership; costs and savings to families; costs and other impacts to
counties; transportation equity; including disadvantaged and rural communities;
safety; and

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(2)
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Alignment
with state environmental goals.

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-3
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Fare-free youth transit program special fund.
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(a)
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There is established within
the state treasury a fare-free youth transit program special fund.

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(b)
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Deposits into the special fund may include:

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(1)
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The
portion of the environmental response, energy, and food security tax specified
under section 243-3.5(6);

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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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Investment
earnings, gifts, donations, or other income received by the department of
transportation.

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(c)
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The director of transportation shall administer the special fund.

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(d)
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All moneys deposited into the fare-free youth transit program special
fund shall be expended by the department to:

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(1)
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Award
moneys to county transit agencies to provide fare-free county transit services
to eligible riders, as specified under section
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-1; and

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(2)
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Cover
administrative and program evaluation costs associated with the implementation
and operation of the fare-free youth transit program.

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(e)
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No
later than twenty days prior to the convening of each regular session, the
director of transportation shall submit a report to the legislature, regarding:

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(1)
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The
status, progress, and impact of existing programs and activities and the status
and expected impact of new programs and activities funded by the fare-free
youth transit program special fund;

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(2)
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The
spending plan for the fare-free youth transit program special fund;

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(3)
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All
expenditures of fare-free youth transit program special fund moneys; and

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(4)
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The
targeted markets of the expenditures, including the reasons for selecting those
markets; the persons to be served; and the specific objectives of the
expenditures, including measurable outcomes."

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SECTION
3
.
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Section 243-3.5, Hawaii Revised Statutes, is
amended by amending subsections (a) and (b) 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 on each barrel or
fractional part of a barrel of petroleum product that is not aviation fuel;
provided that of the tax collected pursuant to this subsection:

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(1)
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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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38
cents of the tax on each barrel shall be deposited into the fare-free youth
transit program special fund established pursuant to section
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-3.

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

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(b)
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In addition to subsection (a), the tax shall also be imposed on each one
million British thermal units of fossil fuel sold by a distributor to any
retail dealer or end user, other than a refiner, of fossil fuel.
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The tax shall be 19 cents on each one million
British thermal units of fossil fuel; provided that of the tax collected
pursuant to this subsection:

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(1)
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4.8
per cent of the tax on each one million British thermal units shall be
deposited into the environmental response revolving fund established under
section 128D-2;

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(2)
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14.3
per cent of the tax on each one million British thermal units shall be
deposited into the energy security special fund established under section 201‑12.8;
[
and
]

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(3)
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9.5 per cent of the tax on each one million British thermal units
shall be deposited into the energy systems development special fund established
under section 304A-2169.1[
.
]
; and

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(4)
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36.8
per cent of the tax on each one million British thermal units shall be
deposited into the fare-free youth transit program special fund established
under section
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-3.
"

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The
tax imposed by this subsection shall be paid by the distributor of the fossil
fuel."

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SECTION 4.
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The department of transportation shall evaluate the fare-free youth
transit program at least biannually for the first two years of its existence
and submit a report to the legislature on the program's implementation no later
than twenty days prior to the convening of the regular session of 2029.
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The report shall include:

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(1)
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Data
on ridership, costs, and administrative challenges; and

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(2)
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Recommendations,
including proposed legislation, for any necessary modifications to the program.

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SECTION
5
.
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There is appropriated out of the
general revenues of the State the sum of
$ or so much
thereof as may be necessary for fiscal year 2026-2027 to be deposited into the fare-free
youth transit program special fund.

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SECTION
6
.
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There is appropriated out of the fare-free
youth transit program special fund the sum of
$ or so much
thereof as may be necessary for fiscal year 2026-2027 for the purposes of the
fund.

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The
sum appropriated shall be expended by the department of transportation for the
purposes of this Act.

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SECTION 7.
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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 8.
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This Act shall take effect upon its approval; provided that sections 5
and 6 shall take effect on July 1, 2026.

INTRODUCED BY:

_____________________________

Report Title:

DOT; Fare-Free
Youth Transit Program; Keiki Ride Free; Public Transit; Special Fund;
Appropriations

Description:

Establishes
within the Department of Transportation a fare-free youth transit program, to
be coordinated with the counties.
�

Establishes a fare-free youth transit program special fund.
�
Requires biannual evaluations of the new
program and special fund.
�
Allocates
moneys from the environmental response, energy, and food security tax to the
fare-free youth transit program special fund.
�

Appropriates moneys into and out of the fare-free youth transit program
special fund.
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Requires reports to the
Legislature.

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