Protecting, enhancing educators’ financial security is top HSTA priority

T​he Hawaiʻi State Teachers Association (HSTA) has established the protection and enhancement of educators’ financial security as its top priority for the 2026 legislative session, which begins later this month. A critical component of this effort is a landmark proposal for temporary hazard pay, which recognizes the extraordinary commitment of teachers who worked in our schools and communities throughout the public health crisis. This initiative is part of HSTA’s broader top six priorities, which also include protecting campus health and safety, securing affordable teacher housing, funding Hawaiian cultural education, supporting vulnerable student populations, and establishing a teacher seat on the Hawaiʻi Board of Education.

HSTA advocates for temporary hazard pay initiative

HSTA’s top priority bill this session establishes the Teacher Temporary Hazard Pay Special Fund to honor those who served students across the state during the pandemic. This legislation proposes a total bonus of $20,000 for eligible members of Bargaining Unit 05 who were employed at any time between March 4, 2020, and March 25, 2022. To ensure fiscal sustainability, the bonus is currently structured to be distributed in four equal installments of $5,000, with payments scheduled annually each June from 2027 through 2030.

While classroom teachers do not have a hazard pay provision in their contract (unlike Bargaining Unit 06 public school administrators and Bargaining Unit 07 University of Hawaiʻi faculty) the Hawaiʻi State Department of Education has paid hundreds of employees outside any bargaining unit COVID-19 bonuses, even though they also lack hazard pay agreements.

In December of 2024, the Board of Education approved $20,000 and $10,000 COVID-19 bonuses for 247 HIDOE employees who are excluded from collective bargaining agreements. Unlike classroom teachers, most of them did not work directly with students during the pandemic but worked from their homes or offices, or in other areas where health risks were nowhere near as high as in classrooms.

Closing the rental car tax loophole

To fund these bonuses without straining the state’s existing budget, the legislation introduces a strategic revenue generator by reforming the General Excise Tax (GET) on the purchase of rental motor vehicles. Currently, the sale of vehicles to rental companies is treated as a wholesale transaction, which allows for a tax rate of 0.5%. This bill closes that loophole by excluding such sales from the wholesale classification, ensuring these large-scale corporate purchases are subject to the standard retail rate of 4.712%.

Similar loopholes have been closed in other states. Oregon considers rental vehicles to be revenue-generating assets rather than inventory for immediate resale and has closed the loophole accordingly. Maryland just instituted a similar tax that went into effect on July 1, 2025. Importantly for Hawaiʻi, this tax reform is focused on the visitor industry and does not increase taxes on our local working families. By aligning this tax with standard retail practices, the state will generate the necessary revenue to support its educators.

Creating a sustainable financial future

This funding mechanism is designed to provide immediate support for teachers while offering long-term benefits to the state’s economy. From July 1, 2026, until July 1, 2030, the additional tax revenue generated by this reform will be deposited directly into the Teacher Temporary Hazard Pay Special Fund. Once the hazard pay installments are completed, the special fund will be abolished on July 1, 2030. Thereafter, all revenues generated by this act—estimated at approximately $80 million annually—will be permanently directed into the State General Fund to support future public needs.