SB3168

SECTION 1. The legislature finds that the Hawaii technology development corporation (HTDC) established in 1983 under chapter 206M, Hawaii Revised Statutes, serves as the State's lead agency for supporting the growth and diversification of the State's technology, innovation, and manufacturing sectors. Over the past four decades, HTDC has advanced statewide initiatives that have helped small businesses and entrepreneurs expand into global markets, supported the development of clean and renewable energy technologies, and strengthened the State's manufacturing and innovation ecosystem through programs such as the Hawaii small business innovation research program, the manufacturing assistance program, and the accelerator program.

The legislature further finds that HTDC has played a critical role in positioning innovation and technology as key pillars of the State's economic development strategy. Through partnerships with federal agencies, universities, and local businesses, HTDC has helped attract federal investment, foster workforce development, and cultivate high-growth industries that contribute to long-term job creation and the State's economic resilience.

The legislature, however, finds that many federal grants require state matching funds, often ranging from one-to-one to one-to-five ratios between state and federal contributions. The current process securing these matching funds is not aligned with federal grant timelines, forcing state agencies to seek emergency or ad hoc appropriations after federal awards are announced. This misalignment reduces the State's competitiveness and risks forfeiting millions in potential federal dollars that could support the State's economic diversification goals.

The legislature further finds that consistent and predictable state support is essential for HTDC to continue fulfilling its mission as an economic driver. By providing access to timely matching funds, the legislature can ensure that the State remains competitive in securing federal awards that amplify local investment, support small businesses, and advance the goals of a diversified and innovation-based economy.

The legislature also finds that the establishment of a revolving fund will ensure that HTDC has timely access to matching funds when applying for and administering eligible federal grants. The fund shall only be allocated if HTDC successfully secures a federal award that requires a state match, thereby safeguarding state resources while enhancing the State's ability to leverage federal investment.

Accordingly, the purpose of this Act is to provide a dedicated source of funds to be used by the Hawaii technology development corporation to finance the State's matching contributions required by federal grants supporting innovation, technology, research, and manufacturing initiatives by establishing the Hawaii technology development corporation revolving fund, which shall be administered by the Hawaii technology development corporation.

SECTION 2. Chapter 206M, Hawaii Revised Statutes, is amended by adding a new section to part I to be appropriately designated and to read as follows:

"§206M- Hawaii technology development corporation revolving fund. (a) There is established within the state treasury the Hawaii technology development corporation revolving fund to be administered by the Hawaii technology development corporation.

(b) The purpose of the revolving fund shall be to provide state matching funds required for federal grants awarded to the Hawaii technology development corporation that support innovation, technology, research, manufacturing, or other economic development initiatives consistent with the corporation’s mission and statutory authority.

(1) To provide state matching funds for federal grants awarded to the corporation that require a state contribution as a condition of the award;

(2) To cover administrative costs directly associated with the management of the grants or the revolving fund; and

(3) To support related activities approved by the board of directors that are necessary to fulfill federal grant obligations.

(d) The revolving fund shall consist of:

(1) Legislative appropriations;

(2) Transfers from other funds as authorized by law;

(3) Federal funds received by the corporation as part of grant awards;

(4) Repayments or reimbursements associated with prior grant activities; and

(5) Any interest earned on the revolving fund balance.

(e) Moneys in the revolving fund shall not lapse at the end of any fiscal year and shall remain available for expenditure until the conclusion of the application federal grant contract or until otherwise terminated in accordance with federal and state law."

SECTION 3. Notwithstanding any other law to the contrary, the moneys appropriated by this Act shall not be allocated or expended unless the Hawaii technology development corporation has been formally awarded a federal grant requiring a state match. Upon notice of a federal grant award to the corporation requiring a state match, the director of finance shall transfer from the general fund to the Hawaii technology development corporation revolving fund an amount not to exceed the matching requirement, up to the available balance authorized by this Act.

If the corporation does not receive a qualifying federal award during the fiscal period, no allocation shall be made.

SECTION 4. The Hawaii technology development corporation

shall submit an annual report to the legislature no later than twenty days prior to the convening of each regular session. The annual report shall include:

(1) The balance of the Hawaii technology development corporation revolving fund;

(2) A list of federal grant applications and awards requiring matching funds;

(3) The amount of state funds used as matching funds; and

(4) The outcomes and economic impact of each federally matched project.

SECTION 5. There is appropriated out of the general revenues of the State of Hawaii the sum of $10,000,000 or so much thereof as may be necessary for fiscal year 2026-2027 to be deposited into the Hawaii technology development corporation revolving fund.

The sum appropriated shall be expended by the Hawaii technology development corporation for the purposes of this Act.

SECTION 6. New statutory material is underscored.

SECTION 7. This Act shall take effect on July 1, 2026.

INTRODUCED BY:	_____________________________

THE SENATE	S.B. NO.	3168
THIRTY-THIRD LEGISLATURE, 2026
STATE OF HAWAII