The language of SB1396 is unambiguous: Hawaii is facing a climate emergency. Rising temperatures, prolonged drought, destructive storms, and deadly wildfires, including the catastrophic 2023 Lahaina fire, are immediate realities. The legislation frames these conditions not as cyclical anomalies but as escalating crises directly tied to global climate change. In response, Hawaii is realigning its economic development strategy with climate resilience as a guiding principle.
At the center of the initiative is a 0.75 percent increase in the state’s transient accommodations tax (TAT), raising it from 10.25 percent to 11 percent starting January 1, 2026. The fee also applies to cruise ship passengers on a per-night basis. While the increase amounts to a few additional dollars per stay for individual travelers, it’s projected to generate roughly $100 million annually.
Critics have claimed the increase is a flat 11 percent tax or that it would deter tourism, but both SB1396 and reporting from HEATED clarify that the adjustment is consistent with environmental fees in other high-volume tourist destinations. The fee’s symbolic weight signaling that tourism must support conservation is perhaps greater than its financial burden.
To ensure transparency and purpose-driven spending, SB1396 establishes two new special funds:
- Climate Mitigation and Resiliency Special Fund: Administered by the Department of Defense, will fund projects such as coral reef restoration, invasive species removal, hurricane preparation, and beach nourishment.
- Economic Development and Revitalization Special Fund: Under the Department of Business, Economic Development, and Tourism, will support infrastructure improvements in tourism districts, climate resilience initiatives, and tourism marketing efforts.
Each fund will receive 7.3 percent of the total TAT revenue annually. Proposed appropriations for FY 2025–2026 and FY 2026–2027 include $90 million per year per fund — allocating a total of $360 million over two years.
Despite the projected $100 million in annual green fee revenue, experts estimate that Hawaii needs at least $560 million per year to fully offset tourism’s environmental toll and build adequate climate resilience infrastructure. This underscores the importance of further policy innovation and diversified funding sources. 
