Since 2022, the state Legislature has failed to enact bills for a “green fee,” aimed at visitors to the islands and designed to narrow the gap between the state’s environmental protection needs and available funding. The upcoming legislative session is an opportunity to right that wrong.
Innumerable challenges such as the threat of wildfires, water shortages and dwindling populations of endemic species face our island state, and the plain fact is that we need more money to address them. Maintenance and protection are not keeping pace with the burdens people place on our islands’ public places, and the problems are not going to lessen with wishful thinking. A “green fee,” or “impact fee” as Gov. Josh Green has variously called it, can make a difference.
Legislators must recognize the depth of need and participate in crafting and enacting a fee, surcharge or tax that addresses the growing concerns. This may be especially important over the next four years, when federal aid for environmental remediation and/or conservation by states is unlikely to be among the new federal administration’s priorities.
An impact fee was first proposed by Green as a gubernatorial candidate in 2022. He estimated that a $50 impact fee, paid by visitors, could generate “up to $350 million” in revenue each year for “protecting our environment, addressing climate change and building affordable housing.”
This early proposal suggested a green fee collected at airports or by airlines, but it was discarded due to legal pitfalls. Several nations collect a surcharge on visitors in this way, but Hawaii, as a state, has limited powers here.
The next collection method to be considered — a separate fee or addition to the statewide transient accommodations tax (TAT) on stays in hotels and short-term-rentals — would cast a wide net and reach a high proportion of nonresident visitors. This is likely the most efficient mechanism for collecting needed revenue. A clear advantage is that the system for collecting and tracking the fees and transferring receipts to the state is already in place.
In the early days of 2024, with the state still reeling over costs of responding to the devastating Lahaina fire of August 2023, the governor floated the idea of raising the TAT by 1% or setting a $25 “check-in fee,” with funds dedicated to mitigating the effects of climate change, including the reduction of fire danger.
At $25 rather than $50, the estimates for revenue dropped to about $100 million a year, at minimum. Green said that money could pay for adding firefighters, building fire breaks and setting up fire alert systems.
Influential advocates for the tourism sector, however, have loudly protested every proposal to increase room charges. It’s argued that increased fees will turn visitors away, risking robust recovery post-pandemic and post-Lahaina. But this argument falters in view of the fact that the accommodations industry itself rushed to charge high room — and parking, and mini-fridge — prices in the weeks following the end of the COVID-19 shutdown, and most profited by doing so, with revenues per hotel room, occupied or not, rising to new heights. Hotels have leeway to adjust their own rates, fees and supplemental charges to spur visitor interest, as well as additional rooms that can be filled to bring in more bucks.
Legislators who are moved by lobbyists’ cries that “Hawaii already has the highest hotel room tax in the country” should examine that argument with skepticism, because ranking by state is misleading. Hawaii’s TAT is 11%, and Hawaii also charges sales tax on room rentals, for a total of about 15% to 16%. However, a ranked list of hotel room tax rates compiled by the Grand Rapids Press in 2023 showed Macon, Ga., at 21.8%, and Birmingham, Ala., at 20.66%, as imposing the highest tax rates in the U.S. Hawaii cities aren’t even in the Top 10, even with our cachet as paradise.
Despite the solid arguments for a hotel surcharge, though, if a room tax or fee simply won’t fly with legislative gatekeepers, there’s still another option: Charging visitors a fee for access to state parks, beaches, forests, hiking trails or other natural areas.
Senate Bill 304, which came close to passage in 2023 and 2024, would have pursued this option, with a “visitor impact fee” of $50 to help address impacts, protect island environments, and, in the wake of the Lahaina fire, support firefighter readiness. SB 304 would have tasked the state Department of Land and Natural Resources with collecting the fee in exchange for a “license,” good for one year.
Some observers expect a similar bill to arise with the new session. If it does, this time, supporters must push it past the finish line. If a hotel tax proposal revives, all the better. What’s important now is to muster required support, so that a bill can finally be enacted to mitigate environmental damage and risks.