STAND. COM. REP. NO. 394

                                 Honolulu, Hawaii
                                                   , 1999

                                 RE: H.B. No. 377
                                     H.D. 1




Honorable Calvin K.Y. Say
Speaker, House of Representatives
Twentieth State Legislature
Regular Session of 1999
State of Hawaii

Sir:

     Your Committees on Tourism and Economic Development and
Business Concerns, to which was referred H.B. No. 377 entitled: 

     "A BILL FOR AN ACT RELATING TO ECONOMIC DEVELOPMENT,"

begs leave to report as follows:

     The purpose of this bill is to foster the growth of
knowledge-based industries in Hawaii by:

     (1)  Requiring tourism market plans to target information
          industries and be integrated with existing and
          potential communications and information networks and
          services;

     (2)  Offering a tax incentive through a technology-training
          or job creation tax credit;

     (3)  Establishing the Hawaii Internet Exchange to serve as a
          catalyst for the development of Internet-focused
          businesses;

     (4)  Providing for high speed access to the Internet for the
          University of Hawaii and the public schools; and

     (5)  Accelerating work force development programs to create
          a pool of information technology professionals.

     The Department of Education and the Democratic Party of
Hawaii submitted testimony in support of the measure.  The

 
 
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                                 Page 2

 
Department of Business, Economic Development, and Tourism and the
High Technology Development Corporation submitted testimony in
support of the intent of the measure.  The Department of Taxation
also testified in support of the measure but only as it related
to tax incentives for technology.

     Your Committees have amended this bill by:

     (1)  Providing a tax credit for investing in high technology
          businesses, to be applicable to taxable years beginning
          after December 31, 1999, and before January 1, 2003;

     (2)  Providing a tax credit for increased expenditures in
          certain technological and scientific research and
          development, to be applicable to taxable years
          beginning after December 31, 1999;

     (3)  Modifying the technology-training or job creation tax
          credit to be a technology-related job creation tax
          credit, to be applicable to taxable years beginning
          after December 31, 1998; and

     (4)  Making technical, nonsubstantive amendments for
          clarity, consistency, and style.

     As affirmed by the records of votes of the members of your
Committees on Tourism and Economic Development and Business
Concerns that are attached to this report, your Committees are in
accord with the intent and purpose of H.B. No. 377, as amended
herein, and recommend that it pass Second Reading in the form
attached hereto as H.B. No. 377, H.D. 1, and be referred to the
Committee on Finance.

                                   Respectfully submitted on
                                   behalf of the members of the
                                   Committees on Tourism and
                                   Economic Development and
                                   Business Concerns,



_____________________________      _______________________________
ROBERT N. HERKES, Chair            JERRY L. CHANG, Chair