Of the nearly 3,000 bills that were introduced at the Legislature, about 270 have made it to the final step of the legislative process. Most of the measures will be voted on a final time by the House and Senate on Wednesday, and the legislative session will end on Friday. That’s a lot to digest. So here at HPR, we’re breaking down what you need to know as the Legislature heads into its final week.
1. Hawaiʻi could lead the way in eliminating corporate influence in elections
State and federal lawmakers across the country have been unable to ban companies from donating to campaigns because of the 2010 U.S. Supreme Court decision Citizens United. It said regulating the right of corporations to spend independently in elections was unconstitutional.
A state bill now heading for a final vote this week hinges on the right that states have to define what a corporation is. The argument involves the part of Hawaiʻi law granting corporations, nonprofits and other businesses the same powers as individuals. Senate Bill 2471 would change the definition of those groups.
“ The state of Hawaiʻi has the right to determine how it charters its corporations, what powers it grants to them,” said Senate Commerce and Consumer Protection Committee Chair Jarrett Keohokalole. “Right now, they receive tremendous tax advantages and liability protections. And in exchange for that, they get to operate and do business in Hawaiʻi. And so we are limiting the scope of these organizations in a way that we have the right to as a state.”
Minutes before the legislative deadline Friday night, House Consumer Protection and Commerce Chair Scot Matayoshi continued to express his concern that the measure would not apply to out-of-state corporations.
“If we cannot regulate those foreign corporations spending like we do Hawaiʻi corporations, then I don't want Hawaiʻi corporations to be put into a disadvantage,” he said.
So a provision was added that would nullify the measure if it could not be applied to out-of-state corporations.
It is one of the few campaign spending measures, besides a measure to extend the statute of limitations for bribery charges and another that increases the limits for partially publicly funded elections, that survived this legislative process.
Common Cause Hawaii Director Camron Hurt explained it’s a sign to keep pushing for reform.
“I think what this shows though, is that if they can come together to iron out, hash out, and execute a big issue like how to stand up to Citizens United, then I think we know that we can be pushing for more things in our state and that they are capable of getting it done,” he said.
A bill that would ban lawmakers from accepting donations from government contractors and their immediate family members, also known as the contractor loophole, was never given a final conference committee hearing.
2. A compromise on income taxes, phasing out popular tax credits
Lawmakers will vote on a measure that would impact the historic income tax cut that went into effect last year and several popular tax credits — including one for rooftop solar. Under the current income tax plan, the state is expected to be in a $400 million financial hole by 2032 due to cuts in federal funding.
The historic tax cut that started last year for all Hawaiʻi residents, including its highest income earners, is expected to cost the state over $1 billion when it’s in full effect.
The new proposal continues income tax cuts for most tax brackets. But it pauses the future cuts for the top four income levels — individuals who make more than $175,000 a year and married couples making more than $350,000 dollars a year.
It also creates a new bracket for millionaire households. It would tax any income over $1 million for joint-filers and $500,000 for single-filers at 13%.
The measure also continues to increase the standard deduction. By the time it is fully implemented in 2031, it will be nearly six times higher from what it was before the law went into effect in 2024.
The measure also phases out tax credits over the next several years. Notably, the proposal will sunset the Capital Goods Tax Credit that businesses can claim when they buy things like machinery or equipment in 2028.
It also includes the phase out of the Renewable Energy Tax Credit, which is largely used for rooftop solar. The proposal caps the amount that the state can spend on the credit at $40 million for four years and ends the tax credit completely in 2031.
3. Bills to safeguard immigrant rights
Immigrant rights advocates are cheering a package of bills that passed out of its final legislative committee late Friday.
The three bills aim to improve due process protections following the spike in federal immigration enforcement, explained Liza Ryan Gill, co-coordinator of the Hawaiʻi Coalition for Immigrant Rights.
“These particular bills really have to do with what we've been talking about, which is due process, that we can't stop the federal government from doing its job, but we can maintain and set very clear boundaries on what is in the Constitution,” she said. “If they are going to do their job, they have to do it in the right way.”
One measure would require state and county law enforcement to inform people of their rights before they speak with immigration enforcement authorities. Law enforcement must also record and retain records of what language was used, if the person consented to the interview and when the interview happened.
“Yes you can interview somebody who is held in local custody, but you need to make sure that they know what their rights are in a language that they can understand. That is a simple due process protection,” Ryan Gill said.
Another measure would require immigration officers to have a judicial warrant to enter protected community areas like schools, hospitals and churches. It reverts enforcement actions closer to a previous policy that the U.S. Department of Homeland Security operated under before President Donald Trump took office.
Lawmakers also finalized a bill that would bar local law enforcement from entering into agreements with ICE to act as immigration enforcement officers. Hawaiʻi is one of 11 states in the country that does not currently participate in the program.
“ I think Hawaiʻi's Legislature clearly said that Hawaiʻi cares about its communities,” said ACLU Hawaiʻi Policy Director Mandy Fernandes. “We care about our civil rights. We care about our constitutional rights, and we're going to make sure that our communities here in Hawaiʻi are protected regardless of what's happening at the federal level.”
4. Department budget cuts and new projects receive Green Fee funding
At the start of the legislative session, lawmakers faced a significant budget hole over the next six years, largely due to lost federal funding. As a result, the state’s $20.3 billion budget includes cuts to most departments, mainly through eliminating vacant positions. The reductions were identified by the departments and are not expected to impact operations.
The state Department of Budget and Finance saw the largest funding cut at $33 million. But overall, the cuts to departments were significantly lower than the Senate’s original budget proposal.
The state budget also includes the $130 million allocation of the state’s new Green Fee on hotels and cruise ships as an example of the state’s commitment to environmental stewardship, as the new revenue is intended for sustainable tourism, conservation efforts and climate resiliency.
The allocations were a mix of what was originally proposed by the Green Fee Advisory Council, which vetted projects before the legislative session, and add-ons largely by the Senate. The projects range from millions for community stewardship for coral and ahupuaʻa restoration to wildfire risk reduction. Some of the newly added projects are seemingly outside of the Green Fee’s intended purpose, such as $800,000 for Waipahu High School ADA Compliance and $7 million for a food and product innovation network.
“What we've seen in this near final list of Green Fee projects that the Legislature is advancing, is a healthy mix that includes a lot of the recommendations from the Green Fee Advisory Council,” said Jeff Mikulina, who chaired the council.
“ In large measure it does accomplish those original goals," Mikulina said. "Of course it doesn't have everything the council was asking for. There are some other projects in there, some interesting things that I think we believe are aligned with that original intent and then some other projects that you could have some healthy debate about whether or not that fits, but by-and-large, it is in line with what I think folks were expecting these dollars to go toward.”
5. Significant bills that … died
A bill to reform Hawaiʻi’s conveyance tax failed in the final minutes of the legislative session, leaving potentially tens of millions of dollars in revenue on the table that would have been dedicated to housing efforts.
On Friday, lawmakers were hurriedly trying to agree on the language for a measure that would have restructured the tax on residential property sales, imposed higher rates on more valuable homes, and fixed rates on apartment buildings.
The bill would have provided up to $60 million in annual funding to the state Department of Hawaiian Home Lands, and up to $40 million for transit-oriented development, or housing near rail stations.
To raise those funds, it proposed raising the conveyance tax on about 5% of the most expensive homes in Hawaiʻi — owner-occupied homes valued over $4.3 million and non-owner-occupied homes over $2.1 million.
There was a disagreement over the allocation of the measure’s funds that the House and Senate could not resolve, which led to its demise.
Rep. Luke Evslin, a conferee on the committee that decided on the measure, said that conveyance tax reform in Hawaiʻi is likely coming.
“It just feels inevitable once you realize that you can eliminate conveyance taxes on low-end properties, decrease conveyance taxes for 94% of properties in Hawaiʻi, and still raise substantial revenue for the Department of Hawaiian Home Lands and infrastructure … through a restructuring of the conveyance tax in a way that's gonna be more fair, less punitive towards multi-family housing,” he said.
Another measure, which had aimed to allow insurance companies to sue gas companies for damages and losses in Hawaiʻi related to climate change, also died on the final day of the legislative session.
The bill was touted as a historic new legal tool to hold oil companies financially accountable for their contributions to climate change.
“Since the Maui wildfires, obtaining or getting access to insurance is getting more challenging in Hawaiʻi, and Kona low events that we just experienced in March are an example of the challenges we’re seeing across the state with the increasing frequency and intensity of weather events and the hardship its placing on communities,” said Sen. Jarrett Keohokalole in a statement provided by the Polluters Pay Hawaiʻi. “We’ll continue to push for Big Oil accountability in the working group.”
During Friday’s Conference committee hearings, there was discussion about removing private insurers from the bill and leaving only the Hawaiʻi Property Insurance Association and the Hawaiʻi Hurricane Relief Fund.
The measure, which had support at the Capitol, is likely to return next year.
“Both chambers of the state Legislature have passed it and clearly endorsed the underlying principle: hard-working Hawai‘i residents shouldn’t be forced to pay more for home insurance due to climate change, while Big Oil corporations most responsible for the problem pay nothing,” said Kayla Economou, organizer for the Polluters Pay Hawai’i coalition, in a statement.
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