STAND. COM. REP. NO. 1531-26

Honolulu, Hawaii

, 2026

RE: S.B. No. 2698

S.D. 2

H.D. 1

Honorable Nadine K. Nakamura

Speaker, House of Representatives

Thirty-Third State Legislature

Regular Session of 2026

State of Hawaii

Madame:

Your Committee on Tourism, to which was referred S.B. No. 2698, S.D. 2, H.D. 1, entitled:

"A BILL FOR AN ACT RELATING TO TRANSPORTATION,"

begs leave to report as follows:

The purpose of this measure is to:

(1) Require the Department of Transportation to assess a per-passenger head fee against cruise ships docking in the State's commercial harbors;

(2) Establish the Cruise Ship Special Fund to be used for port facility and capital improvement projects to support cruise ship operations;

(3) Repeal existing law imposing the Transient Accommodations Tax on cruise ships, effective retroactive to January 1, 2026; and

(4) Appropriate funds.

Your Committee received testimony in support of this measure from the Department of Transportation; Hawaii Harbors Users Group; Matson Navigation Company, Inc.; Polynesian Adventure Tours; Honolulu Ship Supply; The Maritime Group; Norwegian Cruise Line Holding Ltd; Kilohana Plantation; Hawaii Stevedores, Inc.; and two individuals. Your Committee received comments on this measure from the Department of Taxation; Hawaii Tourism Authority; Care for ʻĀina Now Coalition; Maui Chamber of Commerce; and Hawaii Transportation Association.

Your Committee finds that cruise ship operations create significant demands on the State's commercial harbor and port facilities, and that a stable and transparent revenue mechanism is necessary to support port facility and harbor capital improvement projects that benefit cruise ship operations. Your Committee further finds that the framework enacted in Act 96, Session Laws of Hawaii 2025, to apply the transient accommodations tax to prorated cruise fares has presented enforcement and compliance challenges, in part because cruise purchases are typically sold as bundled packages that include more than onboard lodging. Your Committee believes that a flat, per-passenger fee assessed when cruise ships dock at commercial harbors is a fairer and more practical way to assess a charge comparable to the Transient Accommodations Tax that will ensure cruise passengers contribute meaningfully to the upkeep and maintenance of the State's harbor and port facilities.

As affirmed by the record of votes of the members of your Committee on Tourism that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 2698, S.D. 2, H.D. 1, and recommends that it be referred to your Committee on Finance.

Respectfully submitted on behalf of the members of the Committee on Tourism,

____________________________

ADRIAN K. TAM, Chair