Hawaii Senate proposes impact fee on rental vehicles
By Dan Nakaso Feb. 24, 2022
A plan to charge tourists a special rental car fee to offset their effect on climate change has been met with technical and philosophical pushback, along with support to have visitors pay more to help the environment.
Senate Bill 2054 would create a new but unspecified “climate change mitigation impact fee” starting July 1, along with a new fund to handle the fees.
The fees would apply to rental mopeds and “any vehicle, including vans, minibuses, and buses used for the purpose of transporting persons or luggage for pleasure or sightseeing trips, or transporting persons to pleasure or sightseeing cruises or destinations.”
The fees are specifically aimed at tourists and would not apply to “any vehicle that is used solely for the purpose of transporting individuals to and from a place of work or a public or private school or of transporting persons with disabilities.”
The bills are moving as the University of Hawaii released a study this week that said U.S. tourists “felt a strong desire to engage in sustainable tourism when visiting the Hawaiian Islands; when choosing a vacation, they felt a high level of importance that the tourism industry supports environmentally sustainable tourism practices; and U.S. tourists are willing to pay more to support Hawai‘i’s sustainable tourism products.”
The study included a survey conducted in the fall of 454 U.S. residents who previously visited Hawaii.
SB 2054 is part of an overall desire by Senate and House leaders to have tourists pay fees to help offset their impacts across the state, especially at popular state parks.
Hawaii saw a record 10.4 million visitor arrivals in 2019 right before COVID-19 devastated the islands’ tourism-based economy. The following year, 2020, there were only 2.7 million visitor arrivals.
In 2021, that figure increased to nearly 6.8 million. This year, 8.86 million visitors are predicted, followed by 9.53 million in 2023 and then 10 million in 2024.
With only two years to go before Hawaii sees another 10 million visitors arrive in a single year,
state Sen. Mike Gabbard said now is the time for the state to put more emphasis on tourists paying to acknowledge their impacts.
“Everyone’s anticipating huge numbers,” he told the Honolulu Star-Advertiser on Wednesday. “It just makes sense.”
Gabbard (D, Kapolei-Makakilo) is chairman of the Senate Committee on Agriculture and Environment that unanimously passed SB 2054, which is now headed to the Senate Ways and Means Committee.
A similar bill — the latest version of SB 3192 — is scheduled for a hearing today before Ways and Means. It would create a state Department of Land and Natural Resources “visitor green fee program to collect a fee to allow visitors to visit a state park, beach, state-owned forest, hiking trail, or other state-owned natural area.”
A new Environmental Legacy Commission that would be established under the measure would “allocate the revenues from the visitor green fee to protect and manage Hawaii’s natural resources.”
“If we want to keep paradise, paradise, then our visitors should contribute their fair share,” Gabbard said.
In January, the Star-Advertiser’s Hawaii Poll found that voters were divided over whether to cap tourism arrivals but overwhelmingly wanted to charge visitor fees at certain state parks.
Only 48% of those polled support reducing or limiting the number of Hawaii tourists, and 46% are opposed.
At the same time, 70% support charging tourists fees to visit certain state parks, with 20% opposed.
SB 2054 has generated a wide range of technical and philosophical concerns, including from the state Department of the Attorney General; state Office of Planning and Sustainable Development; state Department of Budget and Finance; Tax Foundation of Hawaii; rental car companies Avis Budget Group and Enterprise Holdings, which includes Enterprise Rent-A-Car, Alamo Rent-A-Car, National Car Rental and Enterprise Commute Van Pool; and the Hawaii Lodging &Tourism Association and Maui Hotel &Lodging Association.
In written testimony, Avis Budget Group noted that the Legislature in 2019 increased the rental motor vehicle surcharge by $2 — to $5. Then last year the Legislature increased the tax an additional 50 cents annually from 2022 to 2027.
“In addition, Hawaii rental car customers pay a rental motor vehicle customer facility charge of $4.50 per day,” wrote Robert Muhs, Avis Budget Group’s vice president of government affairs. “… Avis Budget Group’s Hawaii operations suffered a significant revenue loss due to the pandemic and we are still recovering. An additional fee, which is unspecified in the bill, could lead to an overall decline of transaction days, adding to our financial hardship. We request that the industry be allowed to fully recover before a new additional fee be considered.”
Matthew Tsujimura, representing Enterprise, wrote, “While rental cars only comprise about 5% of the total vehicles in the State, the rental car surcharge tax represents approximately 26% of the total funds in the highway special fund. Enterprise understands the State’s concerns about climate change impacts, and already offers a voluntary contribution for research to offset carbon emissions on each contract. However, Enterprise is very concerned that creating a new fee as proposed in S.B. 2054 singles out an industry to solve the budget deficit and climate change, when the industry is already contributing more than its fair share to the State.”
The Office of Planning and Sustainable Development warned that climate change mitigation will require a statewide approach involving at least 10 state agencies.
Support also came from the Hawaii State Association of Counties, Maui County Council, Life of the Land and Ulupono Initiative.
Maui Council Chairwoman Alice Lee wrote in support of SB 2054 that “ground transportation contributes significantly to Hawaii’s share of greenhouse gas emissions. The fee to be established by this measure would incentivize more sustainable forms of transportation and mitigate the effects of climate change. … This measure is a form of tourism management that can help to ensure quality of life for residents, the health of the environment, and the continued value of the visitor experience.”
The UH study of U.S. tourists found that all answered that “sustainability is important,” according to study co-author Jerry Agrusa, a professor in the School of Travel Industry Management.
“There has also been a clear shift in what tourists want from a destination. The tourists want to be engaged now in the destination,” he said in a news release. “They do not want to just take any longer, but they want to give back as well.”
