STAND. COM. REP. NO. 2954

Honolulu, Hawaii

RE: S.B. No. 2698

S.D. 2

Honorable Ronald D. Kouchi

President of the Senate

Thirty-Third State Legislature

Regular Session of 2026

State of Hawaii

Sir:

Your Committees on Ways and Means and Judiciary, to which was referred S.B. No. 2698, S.D. 1, entitled:

"A BILL FOR AN ACT RELATING TO TRANSPORTATION,"

beg leave to report as follows:

The purpose and intent of this measure is to generate revenues to fund port facility and capital improvements for the State's harbors.

More specifically, the measure retroactively repeals, effective January 1, 2026, the current imposition of the transient accommodations tax on cruise ships and instead assesses a per-head fee on cruise ships docking in the State's commercial harbors to be deposited into a cruise ship special fund.

Your Committees received written comments in support of this measure from the Department of Transportation; Hawaii Stevedores, Inc.; Matson Navigation Company, Inc.; McCabe Hamilton & Renny Co., Ltd.; Norwegian Cruise Line Holdings Ltd.; Hawaii Harbors Users Group; Polynesian Adventure Tours; The Maritime Group; Hawaii Pilots Association; Kilohana Plantation; Show You Hawaii LLC; Hawaii Tour Consultants; and Hike Maui.

Your Committees received written comments in opposition to this measure from one individual.

Your Committees received written comments on this measure from the Department of Taxation, Department of the Attorney General, Hawaii Tourism Authority, Care for Aina Now Coalition Leadership Committee, and Hawaii Transportation Association.

Your Committees find that there is an ongoing need for funding to maintain and upgrade the State's critical maritime infrastructure. Based on cruise ship counts from fiscal year 2025, the Department of Transportation estimates that the State could receive up to $9,700,000 in annual revenue from the fee proposed by this measure. Accordingly, your Committees find that this measure will help provide funding for the State to maintain and manage its current maritime infrastructure and to take actions to mitigate the impacts of coastal erosion, changing sea conditions, and pollution.

Your Committees have amended this measure by changing the effective date to July 1, 2050, to facilitate further discussion on the measure.

As affirmed by the records of votes of the members of your Committees on Ways and Means and Judiciary that are attached to this report, your Committees are in accord with the intent and purpose of S.B. No. 2698, S.D. 1, as amended herein, and recommend that it pass Third Reading in the form attached hereto as S.B. No. 2698, S.D. 2.

Respectfully submitted on behalf of the members of the Committees on Ways and Means and Judiciary,

________________________________ KARL RHOADS, Chair

________________________________ DONOVAN M. DELA CRUZ, Chair