53
HOUSE OF REPRESENTATIVES             H.R. NO.              
TWENTIETH LEGISLATURE, 2000                                
STATE OF HAWAII                                            
                                                             
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                     HOUSE  RESOLUTION

REQUESTING THE DEPARTMENT OF BUDGET AND FINANCE, WITH THE
   ASSISTANCE OF THE DEPARTMENT OF BUSINESS, ECONOMIC
   DEVELOPMENT, AND TOURISM, AND THE DEPARTMENT OF TAXATION, TO
   REPORT TO THE LEGISLATURE IN SPECIFIC AND DETAILED MANNER
   THE EFFECT, IF ANY, OF THE INCOME TAX CUTS ADOPTED IN ACT
   157 OF THE NINETEENTH LEGISLATURE, REGULAR SESSION OF 1998,
   HAS HAD ON THE ECONOMY.



 1       WHEREAS, the economy of the State of Hawaii has been
 2   troubled for the past several years; and 
 3   
 4       WHEREAS, in 1998, the Legislature adopted Act 157, which
 5   substantially reduced income tax rates in an effort to spur the
 6   economy; and
 7   
 8       WHEREAS, the Department of Budget and Finance (B&F)
 9   prepares and executes the executive budget of the state
10   government by conducting a systematic and continuous review of
11   the finances, organization, and methods of each department of
12   the State to assist each department in achieving the most
13   effective expenditure of all public funds; and 
14   
15       WHEREAS, B&F having such responsibilities, with the
16   assistance of the Department of Business, Economic Development,
17   and Tourism (DBEDT) is best suited to lead a study on the tax
18   cuts enacted by the 1998 Legislature; and
19   
20       WHEREAS, DBEDT works to support business, create jobs, and
21   improve Hawaii's standard of living through diversifying the
22   economy, expanding existing business, and attracting new
23   economic activity; and
24   
25       WHEREAS, in addition, and perhaps more importantly, DBEDT
26   conducts critical statistical and economic research that is
27   vital to policy makers in determining the best means to regain
28   the State's fiscal revitalization; and
29   
30       WHEREAS, in turn, the Department of Taxation (DoTAX) is
31   also ideally suited to assist B&F and DBEDT by generating
32   necessary state tax data to allow the latter departments to
33   conduct an economic impact analysis; and

 
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                                  H.R. NO.              
                                                            
                                                            



 1       WHEREAS, there is an immediate need to analyze the economic
 2   and other implications of restructuring the State's tax system
 3   to assist in revitalizing the State's economy; now, therefore,
 4   
 5       BE IT RESOLVED by the House of Representatives of the
 6   Twentieth Legislature of the State of Hawaii, Regular Session
 7   of 2000, that B&F, in conjunction with DBEDT and DoTAX, is
 8   requested to conduct a study on the economic impacts of Act
 9   157, 1998; and
10   
11       BE IT FURTHER RESOLVED that in the study, B&F is requested
12   to set the areas of focus in the study; and
13   
14       BE IT FURTHER RESOLVED that the study answer the following
15   questions in specific detail:
16   
17       (1)  How much revenue did the State of Hawaii forego and
18            how much will it forego as a direct result of Act 157,
19            1998;
20   
21       (2)  What cuts in programs, agencies, and departments were
22            made because of the reduced income tax rates;
23   
24       (3)  What impact, if any, have the reduced tax rates had on
25            the economy;
26   
27       (4)  What indicators were used to determine the economic
28            impact;
29   
30       (5)  What was the average income tax cut for individuals in
31            the higher, middle, and lower tax brackets;
32   
33       (6)  What was the aggregate income tax cut for the higher,
34            middle, and lower tax brackets;
35   
36       (7)  What percentage of the aggregate tax cut  constitutes
37            the average individual tax cut for the higher, middle,
38            and lower tax brackets;
39   
40       (8)  Was there an increase or a decrease in the State's
41            treasury, and what is the amount of the increase or
42            decrease, and what is the projected increase or
43            decrease as a result of the reduced income tax rate;
44            and
45       
46       (9)  Any other information that B&F considers to be
47            appropriate to policy makers; 
48   and

 
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                                  H.R. NO.              
                                                            
                                                            



 1       BE IT FURTHER RESOLVED that DoTAX is requested to generate
 2   and supply appropriate tax data as may be necessary to B&F to
 3   allow the latter department to conduct its study; and
 4   
 5       BE IT FURTHER RESOLVED that the study be intended for fact-
 6   finding and information-gathering purposes; and
 7   
 8       BE IT FURTHER RESOLVED that DBEDT is requested to consult
 9   with the Tax Foundation of Hawaii, and other entities including
10   private and public social service agencies as may be necessary
11   in the course of the DBEDT's study; and
12   
13       BE IT FURTHER RESOLVED that B&F submit its finding to the
14   Legislature no later that twenty days before the convening of
15   the Regular Session of 2001; and
16   
17       BE IT FURTHER RESOLVED that certified copies of this
18   Resolution be transmitted to the Governor, the Director of
19   Budget and Finance, the Director of Business, Economic
20   Development, and Tourism, the Director of Taxation, and the Tax
21   Foundation of Hawaii.
22   
23 
24 
25 
26                         OFFERED BY:  ____________________________