SB2199

SECTION 1. The legislature finds that a sovereign wealth fund is a state-owned investment fund that holds and invests the state's assets to generate financial returns for the long-term benefit of the state's citizens. The legislature further finds that sovereign wealth funds are typically established outside of the state budget and managed with a long-term investment horizon, allowing governments to strengthen fiscal stability, support economic development, and preserve wealth for future generations.

The legislature additionally finds that sovereign wealth funds are used globally as tools for economic development and intergenerational equity that are at times used to support domestic infrastructure and invest in strategic sectors while ensuring that revenues from limited or extraordinary sources such as natural resources, budget surpluses, or legal settlements are saved and invested prudently. Globally, more than ninety countries and certain regional governments, including U.S. states, operate sovereign wealth funds as instruments for long-term economic stability and public benefit. For example, Alaska's Permanent Fund invests a portion of the state's oil revenues and distributes the earnings as annual dividends to Alaska residents, providing them with a direct benefit from the state's natural resource wealth while preserving principal for future generations.

The legislature further finds that establishing a sovereign wealth fund for the State would provide a mechanism to invest a portion of revenues from tourism, budget surpluses, legal settlements, and other sources for the long-term benefit of residents of the State. The legislature also finds that distributing a portion of investment earnings to qualified residents as cash dividends may help families experience a direct economic benefit from the tourism industry and assist with the cost of essential household needs. Direct payments to qualified residents from investment earnings could assist with the high cost of living in the State while ensuring that future generations share in the benefits of prudent fiscal management.

Accordingly, the purpose of this Act is to establish a state-owned sovereign wealth fund that is similar to the Alaska Permanent Fund by allocating a portion of the State's revenues from the transient accommodations tax, a percentage of state budget surpluses, a percentage of moneys received from certain settlements or judgments in which the State is a party, and a portion of the proceeds from the sale or other disposition of public lands, to a state-owned sovereign wealth fund; investing the moneys in the sovereign wealth fund to generate earnings; and distributing the earnings as cash dividends directly to qualifying residents of the State each year, beginning with calendar year 2030.

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

"Chapter

POMAIKAI HAWAII FUND

Part I. General Provisions

§ -1 Definitions. As used in this chapter:

"Board" means the board of directors of the pomaikai Hawaii fund established and appointed pursuant to section -21.

"Fund" means the pomaikai Hawaii fund established pursuant to section -11.

"Fund dividend" means earnings from the investment of moneys in the pomaikai Hawaii fund that is distributed to qualifying residents of the State.

Part iI. Sovereign wealth Fund

§ -11 Pomaikai Hawaii fund; establishment. (a) There is established outside of the state treasury, a sovereign wealth fund to be known as the pomaikai Hawaii fund for the purposes of investing the moneys in the fund and distributing the earnings as dividends to qualifying residents of the State each year. The fund shall be under the control of the board and placed under the department of budget and finance for administrative purposes.

(b) The following shall be deposited into the fund:

(1) Revenues from the transient accommodations tax allocated to the fund pursuant to section 237D-6.5;

(2) per cent of the state general fund balance at the close of the fiscal year whenever state general fund revenues for each of the two successive fiscal years exceeds revenues for each of the preceding fiscal years by per cent;

(3) Notwithstanding any other law to the contrary, per cent of all moneys received as a settlement or judgment through any civil action in which the State is a party; except for those actions involving departments able to procure their own legal services as provided for by section 28-8.3 and where no court order specifically provides for the deposit of moneys received through the action;

(4) Notwithstanding any other law to the contrary, a portion of the proceeds from the sale or other disposition of public lands, authorized out of the special land and development fund for deposit into the fund by the legislature pursuant to section 171‑19(a)(12);

(5) Any other moneys as authorized or appropriated by the legislature into the fund;

(6) Any other moneys received by the fund from any other source; and

(7) All interests, dividends, or other income derived from the investment of moneys in the fund.

Part iII. Board of Directors

§ -21 Board of directors; established. (a) There is established the board of directors of the pomaikai Hawaii fund to manage and invest the moneys in the fund and distribute the earnings to qualified residents of the State.

(b) The board shall consist of members, which shall include:

(1) Two ex officio members consisting of the following, or their designees:

(A) The director of finance; and

(B) The director of business, economic development, and tourism; and

(2) members of the public to be appointed by the governor as provided in section 26-34; provided that public members shall include at least one member from each of the counties of Honolulu, Hawaii, Maui, and Kauai; provided further that at least of the public members shall have knowledge and expertise in finance, investments, or other business management‑related fields.

(c) The public members of the board shall serve four-year staggered terms; provided that a public member may be reappointed for one additional consecutive four-year term. If by the end of a public member's term, the public member is not reappointed or the public member's successor is not appointed, the public member shall serve until the public member's successor is appointed.

(d) The board shall elect from among its members, a chairperson, vice chairperson, and a secretary-treasurer.

(e) A simple majority of members of the board shall constitute quorum to do business. Any action taken by the board shall be approved by a simple majority of the members present. All decisions of the board shall be reduced to writing and shall state separately the board's findings of fact and conclusions.

(f) A vacancy on the board shall be filled for the remainder of the unexpired term in the same manner as the original appointment. Any vacancy on the board shall not impair the authority of the remaining members to establish quorum by a simple majority of the remaining members and to exercise all the powers of the board.

(g) The members of the board shall serve without compensation but shall be reimbursed for their actual and necessary expenses, including travel expenses, incurred in carrying out their duties.

§ -22 Board of directors; powers and duties. In addition to any other powers and duties authorized by law, the board shall:

(1) Adopt, amend, and repeal rules in accordance with chapter 91 to carry out the purposes of this chapter;

(2) Collect, receive, deposit, and withdraw moneys on behalf of the fund;

(3) Invest moneys in fund in the same manner specified in section 88-119;

(4) Assist residents of the State, particularly in rural areas, who, because of language, disability, or inaccessibility to public transportation, need assistance to establish eligibility and to apply for fund dividends;

(5) Beginning with calendar year 2030, annually pay fund dividends to qualifying residents of the State;

(6) Make payments of periodic charges and pay for reasonable expenses incurred in carrying out the purposes of the fund;

(7) Contract for the performance of financial audits of the fund;

(8) Retain auditors, investment firms and managers, or other professional advisors to carry out the purposes of this chapter;

(9) Maintain accurate records and accounts of all financial transactions of the fund that shall be audited annually and summarized in an annual report to the governor and legislature;

(10) Maintain suitable and adequate records and provide information upon request by State and county employers as necessary to carry out the purposes of the fund;

(11) Procure fiduciary liability insurance and error and omissions coverage for all directors; and

(12) Procure a fidelity bond of a reasonable amount for the chairperson and any other person authorized to handle fund moneys.

§ -23 Administration; staff; legal advisor. (a) The board shall appoint an administrator and staff as may be necessary to carry out the functions of the board.

(b) The administrator and staff shall serve at the pleasure of the board and shall be hired without regard to chapter 76 but shall be eligible for participation in state employee benefit plans. Notwithstanding section 76-16(b)(17), this exemption from chapter 76 shall not expire.

Part IV. Dividends Distribution

§ -32 Eligibility; qualified resident; criteria. (a) A qualified resident of the State is eligible to receive one fund dividend each year in an amount to be determined by the board; provided that the individual submits an application to the board in compliance with the procedures and requirements established by the board by rule. The board shall prescribe and furnish an application form for claiming a fund dividend.

(b) To be deemed a qualified resident of the State, the individual shall:

(1) Be a bona fide resident of the State on the date of application;

(2) Have been a bona fide resident of the State during the entire calendar year preceding the current dividend year; and

(3) Meet all other requirements the board deems to be just and reasonable.

(1) Eligibility criteria for fund dividends, including:

(A) Exceptions to the residency criteria in subsection (b); and

(B) Categories of individuals who shall be excluded from eligibility;

(2) Standards applied by the board to determine an applicant's eligibility, which may include a requirement that an applicant provide proof of eligibility;

(3) Procedures and time limits for claiming a fund dividend; provided that the board shall determine the number of eligible applicants by October 1 of the year for which the dividend is declared and pay the dividends by December 31 of that year; and

(4) Procedures and time limits for an applicant to appeal the board's determination on the eligibility of the applicant.

(d) The board shall consider all relevant information and circumstances in determining the eligibility of an individual, including information available from other state agencies.

§ -33 Amount of fund dividends; public notice. (a) Beginning October 1, 2030, and by October 1 of each year thereafter, the board shall determine the amount of fund dividends to be paid to each qualified resident of the State that year and issue a public notice of the amount. The board shall also post the notice on its website."

SECTION 3. Section 171-19, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

"(a) There is created in the department a special fund to be designated as the "special land and development fund". Subject to the Hawaiian Homes Commission Act of 1920, as amended, and section 5(f) of the Admission Act of 1959, all proceeds of sale of public lands, including interest on deferred payments; all moneys collected under section 171-58 for mineral and water rights; all rents from leases, licenses, and permits derived from public lands; all moneys collected from lessees of public lands within industrial parks; all fees, fines, and other administrative charges collected under this chapter and chapter 183C; a portion of the highway fuel tax collected under chapter 243; a portion of the transient accommodations tax under chapter 237D; all moneys collected by the department for the commercial use of public trails and trail accesses under the jurisdiction of the department; and private contributions for the management, maintenance, and development of trails and accesses shall be set apart in the fund and shall be used only as authorized by the legislature for the following purposes:

(1) To reimburse the general fund of the State for advances made that are required to be reimbursed from the proceeds derived from sales, leases, licenses, or permits of public lands;

(2) For the planning, development, management, operations, or maintenance of all lands and improvements under the control and management of the board pursuant to title 12, including but not limited to permanent or temporary staff positions who may be appointed without regard to chapter 76;

(3) To repurchase any land, including improvements, in the exercise by the board of any right of repurchase specifically reserved in any patent, deed, lease, or other documents or as provided by law;

(4) For the payment of all appraisal fees; provided that all fees reimbursed to the board shall be deposited in the fund;

(5) For the payment of publication notices as required under this chapter; provided that all or a portion of the expenditures may be charged to the purchaser or lessee of public lands or any interest therein under rules adopted by the board;

(6) For the management, maintenance, and development of trails and trail accesses under the jurisdiction of the department;

(7) For the payment to private land developers who have contracted with the board for development of public lands under section 171-60;

(8) For the payment of debt service on revenue bonds issued by the department, including revenue bonds issued for the purposes of section 237D-6.5(b)(4), and the establishment of debt service and other reserves deemed necessary by the board;

(9) To reimburse the general fund for debt service on general obligation bonds issued to finance departmental projects, including projects under section 237D-6.5(b)(4), where the bonds are designated to be reimbursed from the special land and development fund;

(10) For the protection, planning, management, and regulation of water resources under chapter 174C;

(11) For the purposes of section 237D-6.5(b)(4); [~~and~~]

(12) For deposit into the pomaikai Hawaii fund established pursuant to section -11; provided that this paragraph shall only apply to proceeds from the sale or other disposition of public lands; and

[~~(12)~~] (13) For other purposes of this chapter."

SECTION 4. Chapter 235, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"§235- Pomaikai Hawaii fund dividends exemption. This chapter shall not apply to amounts received as a fund dividend pursuant to chapter ."

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), 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 for:

(A) The protection, preservation, maintenance, and enhancement of natural resources, including beaches;

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

(D) Any related debt service and financing agreement costs[.]; and

(5) $ shall be allocated to the pomaikai Hawaii fund established under section -11.

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. The director of finance shall provide guidance to the board of directors of the pomaikai Hawaii fund on the establishment and administration of the pomaikai Hawaii fund, including but not limited to:

(1) The structure of dividend distributions to qualified residents of the State, including but not limited to:

(A) Eligibility criteria to receive fund dividends;

(B) Calculation method for determining the amount of fund dividends to be distributed each year; and

(C) Management of earnings from the investment of moneys in the fund, including whether a separate account should be created within the fund.

(2) Investment criteria for the pomaikai Hawaii fund; and

(3) Any other policies or procedures necessary to ensure transparency, accountability, and fiscal responsibility in the administration of the pomaikai Hawaii fund.

SECTION 7. The board of directors of the pomaikai Hawaii fund shall submit a report on the status and progress of the pomaikai Hawaii fund, including any findings, recommendations, and proposed legislation, to the legislature no later than twenty days prior to the convening of the regular sessions of 2027, 2028, and 2029.

SECTION 8. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 9. This Act shall take effect upon its approval; provided that section 4 shall apply to taxable years beginning after December 31, 2029.

INTRODUCED BY:	_____________________________

THE SENATE	S.B. NO.	2199
THIRTY-THIRD LEGISLATURE, 2026
STATE OF HAWAII