Gov. Josh Green to sign “green fee” into law

Gov. Josh Green stated his plans to pass a bill that will create the climate impact fee, or “green fee,” to help the islands mitigate the impacts of climate change and the state’s 10 million annual visitors.

SB1396 will raise the taxes on transient accommodations at hotels and other lodging options and will increase the state’s collection of the taxes from 10.25% to 11%.

The net result with this 0.75% increase is a transient accommodations tax of 14% statewide and it is estimated the fee will raise $100 million annually for disaster mitigation, renewable energy projects, conservation efforts and environmental tourism initiatives.

“Given the devastation we saw on Maui in August of 2023, this measure is crucial because it will help us to deal with wildfire risk resulting from the climate change crisis,” Green said. “It is a small increase in taxes travelers pay, and therefore, the impact from travel to Hawaiʻi will cover our needs for climate change.”

“It is foundational to our ability to provide a safe and secure Hawai‘i for our children, our residents, our visitors and the environment.”

In the bill, the legislature also stated that the transient accommodations tax is intended to be applied fully and equitably whenever a transient accommodation is furnished within the state. While hotels and other lodging have complied, tax collections on short-term rental operators have fallen short.  

There also has not been a transient accommodations tax levied on cruise ships, which in 2024, accounted for 972,820 passenger port calls at port facilities under the jurisdiction of the Department of Transportation.

If Green passes the bill, the subsequent act will enact these changes by Jan. 1, 2026:

• Increase the transient accommodations tax;   
• Amend the allowable uses of the special land and development fund and the portion of transient accommodations tax collections that are allocated to the special land and development fund;
• Assess the transient accommodations tax on cruise ship cabins based on the total time the cruise ship is docked at any port in the State.

“This legislation, which I intend to sign, is the first of its kind in the nation and represents a generational commitment to protect our ‘āina,” Green said. “Hawai‘i is truly setting a new standard to address the climate crisis, and I want to thank lawmakers for their unrelenting work these past two years in bringing this to fruition.”
 
Green has until July 9 to sign the bill into law, and he has repeatedly indicated his intention to do so, as it has been a priority piece of legislation for his administration.