A new proposal in Hawaii could quietly change what your hotel taxes pay for. In Honolulu, lawmakers want to reroute visitor-generated revenue to fund billions in sewer upgrades. You won’t see a new charge, but this shift could redefine how Hawaii pays for core infrastructure using your travel dollars.
What this new bill means for travelers.
If passed, Bill 43 would redirect a large share of Oahu’s hotel tax to help fund the city’s sewer upgrades. Specifically, it targets the city’s 3 percent transient accommodations tax, which is added to every hotel, vacation rental, and short-term stay on the island. That’s assessed to visitors (and residents) on top of the state’s 10.25 percent hotel tax, and in addition to the state’s version of a sales tax.
Right now, most of that city tax goes to help fund Honolulu’s troubled rail project. Under Bill 43, the money would be divided three ways starting in 2027: the rail would still get a share, but a significant portion would be sent to the city’s sewer fund, and a smaller amount would support efforts to mitigate the impacts of tourism on public spaces and natural areas. The change would remain in effect for ten years.
In other words, if this bill passes, a significant slice of the money generated by visitor stays would go toward a part of Hawaii most travelers never think about—yet depend on every day.
How this connects to rising hotel rates.
This isn’t just a debate about where tax dollars go. It’s also about how the cost of visiting Hawaii continues to climb—and how travelers can soon expect to pay for infrastructure that was once covered by the city’s general fund or resident fees.
Honolulu is under federal pressure to overhaul its wastewater systems. The city’s largest treatment facility, which serves much of urban Honolulu, including visitor-heavy areas like Waikiki, is part of a massive $10.1 billion sewer upgrade. The cost of these upgrades is currently set to be passed along through a 115 percent increase in residential sewer fees over the next decade.
But here’s where sewers intersect with tourism.
Hotels already pay sewer fees and typically pass those costs along to guests through higher rates. If sewer rates rise even further, and the city has no alternative revenue source, hotels could face even steeper infrastructure-related costs, which would almost certainly be passed on to travelers through higher room rates.
Bill 43 may offer a way to ease that pressure. But it also reinforces a growing trend: using visitor tax dollars to backfill essential public services.
Hawaii travelers already pay more than ever.
This proposal follows a string of similar moves in Hawaii that have gradually expanded the price visitors are expected to pay.
Earlier this month, the state legislature approved an increase to the statewide hotel tax to support climate adaptation projects. That new 0.75 percent surcharge is expected to bring in $100 million annually to fund beach restoration, wildfire prevention, and other environmental initiatives. Other recent changes include expanded parking fees, higher entry charges for state parks, and special-use permit systems in places like Kauai’s north shore.
After a recent trip, one visitor from Sacramento told us, “I understand the need to protect Hawaii’s environment, but it’s starting to feel like every step I take comes with a price tag.”
The deeper shift in how Hawaii sees visitors.
Supporters of the bill, including Council Chair Tommy Waters, argue that tourists should help pay for the infrastructure they use. As he said during a recent council session, “We now have the second-highest rent in the country. Food is expensive. Electricity is expensive. Now our sewer bill is going to go up by 115 percent? We’ve got to do something.”
But not everyone agrees with this approach. Some city officials have warned that diverting hotel tax revenue away from its original purpose—especially to fund something like sewers—could raise red flags not only with visitors but also with credit rating agencies. That could make it more expensive for Honolulu to borrow money for future infrastructure needs. Others note that hotels already pay sewer fees, and passing those costs onto visitors again through redirected tax revenue could amount to a double charge.
Still, Waters says the bill is a more responsible alternative. He framed the plan as “Pay it up front and save on interest.”
Will your Hawaii hotel stay cost more?
That depends on how the bill plays out and how the hotel industry responds. Even if hotel taxes don’t rise on paper, the effects of redirected funding can show up in higher nightly rates, increased resort fees, or reduced services. These are already among the most common complaints we hear from Beat of Hawaii readers.
One guest from Portland wrote after their last trip, “At some point, it just won’t feel worth it. We love Hawaii, but the costs and the attitude are getting to be too much.”
We’ve also seen evidence that certain hotel charges are being added quietly, without much explanation, especially on Oahu.
Bill 43 may help stabilize long-term sewer funding, which could slow down these kinds of unexpected add-on fees. But it’s just as possible that hotels will view the tax shift as an opportunity to raise rates further, especially if they expect future infrastructure bills to come their way.
What happens next.
Bill 43 passed its first reading in the Honolulu City Council on May 14, 2025. It now heads to committee, followed by two more full council votes. If approved, it would go into effect on July 1, 2027, and sunset in 2037.
While this bill may seem like just a local policy debate, its impact is anything but local. It reflects how Hawaii is repositioning the visitor–resident equation. Instead of simply welcoming tourists, the state increasingly asks them to help carry the load for aging infrastructure, environmental threats, and long-deferred maintenance.
For travelers, that means more of your vacation dollars are being rerouted toward things you’ll never see—but would notice if they failed.
Is this the new normal?
The sewer tax shift is only the latest signal that Hawaii is rethinking its relationship with tourism. It’s not just about funding what’s visible; it’s about covering the unseen systems that make travel to the islands possible in the first place.
For some, this feels like a reasonable ask. For others, it’s one more reason to reconsider future trips.
We want to hear from you. Are Hawaii’s rising travel costs changing your plans? Have you noticed new surcharges or fees during your recent stay? Let us know in the comments.
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My extended family has gone to the Big Island every summer for many years, but I’m doubtful people should go where they’re not wanted. This is very sad.
If even a penny of this tax ever makes it to sewer repair, it would be a first.
Whats new. The way Hawaii is going surprised they don’t charge a electric fee for air conditioners or some refrigerant freon fee. Toilet paper fee or 10% surcharge on everything just because the sun comes out. IMO the gate to Disneyland/Hawaii is the minute you enter from the gate. After that Hawaii expects you to surrender your wallet and charge you for everything. Sounds like stuck on an island like a prison with no recourse but to pay. Don’t know whether the tourist asked for this by coming or just became a victim of A fool and his money are soon parted. Hawaii don’t want to be Disneyland but they sure charge tourists like they are.
To Councilman Tommy Waters, the Hotel already amortizes the Sewer, Electric Overhead into their Rates being charged, that bring them to a profitable level per Room/Night! His, is a typical, One-Party Rule, reach into the Tourists pocket for more, where will he source the upside down State Un-Employment, that was $500,000,000.00 upside down as Governor Ige left Office. Maybe smaller Government, less Council, less State Congress and Senate, stream-line instead of Bureaucratic-bloat! Love the reference to much delayed Rail-line, 1975, now 50 years, D’ya think? Then the Sanitation Approval of Restaurants, with Inspections every 3-4 years and no updated Ratings at Doors, that too, must be passed to the Tourists, I’m sure.
One thing I’ve noted about ‘temporary’ taxes like the sewer tax is that they tend to not end up being temporary, and the government agencies get used to the added income, and then they find other ‘uses’ for that money. With the inefficiency of this government’s system of planning and execution, this won’t be the end of it. As has been mentioned, just look at the light rail system, which I observed is not running today, as usual. Stay tuned for the next, exciting chapter.
Have these people in charge ever heard of planing? Why was not a dollar a month added to the sewer bill to set up a fund to maintain the system. Oh I know, with that extra money sitting around, we could use it for other things and replace it later right?
Many of your dollars leave the Islands because you’ve sold properties to foreign companies who take their profits away. You’re passing the tipping point for tourist dollars to push back against selling your lands. Stop selling off Hawaii. You need U.S. dollars for the long investment. Start acting like a U.S. State and encourage the other 49 to help you.
We’ve traveled to Hawaii every year and sometimes twice per year for 23 years and always loved everything about the islands. We started noticing about five years ago that prices were sharply increasing. Now the amount of taxes and fees on rental cars and accomodations and other new fees are outrageous.
We changed our plans last year and did not visit Hawaii but went to Florida. Now we’re seriously considering avoiding Hawaii for a while. With us the issue isn’t affordability but rather fairness. With all the increasing costs and perceived “negativism” towards tourists who helped build and finance nant island things, we feel somewhat “abused” . While we are conflicted I’m certain we will be spending far less time and money in the Islands.
We are from Canada and it cost us a little more to travel there. We have sent the last five years going to Hawaii eight times and this year we won’t be visiting due to the cost of the American dallor and everything trump is doing. It’s so sad because in 2022 we actually got married there and we missed our anniversary dinner in Hawaii. I hope thing change if not we will miss going to Hawaii and seeing all of our friends that we made there. Mahalo
I do not understand why we do not ask our over zealous developers to pay for the sewers. They get away with having never to pay for their ugly highrises. Even if nobody lives in their buildings they should pay something for our infrastructure.
“Developers” never “pay” for the increased costs of their developments nor the increased infrastructure costs their projects require (roads and transportation, materials, labor, electricity, garbage, sewage, surveying, legal fees, marketing, sales and real estate fees, government compliance and permitting fees, etc.) … the list goes on and on and it keeps increasing.
And it’s Always passed along to the buyer/consumer.