STAND. COM. REP. NO. 2906

                                   Honolulu, Hawaii
                                                     , 2000

                                   RE:  H.B. No. 2023
                                        H.D. 2
                                        S.D. 1




Honorable Norman Mizuguchi
President of the Senate
Twentieth State Legislature
Regular Session of 2000
State of Hawaii

Sir:

     Your Committee on Economic Development, to which was
referred H.B. No. 2023, H.D. 2, entitled: 

     "A BILL FOR AN ACT RELATING TO AGRICULTURAL INFRASTRUCTURE,"

begs leave to report as follows:

     The purpose of this measure is to allow an agricultural
infrastructure improvement tax credit.

     Your Committee received testimony in support of this measure
from the Mayor of Maui, Maui Department of Water Supply, two Maui
County Council Members, Hawaii Farm Bureau, Big Island Farm
Bureau, Maui County Farm Bureau, Pineapple Growers Association of
Hawaii, Kula Community Association, and a private individual.
Testimony in opposition was received from the Department of
Taxation.  Informational testimony was provided by the Ulupalakua
Ranch, Inc., and Tax Foundation of Hawaii.

     This measure is intended to expand agricultural
opportunities in the aftermath of the drastic decline of the
sugar industry.  Your Committee finds that farmers need to
improve or construct adequate agricultural infrastructures by
which to support new agricultural endeavors.  An agriculture
infrastructure improvement income tax credit would serve to
stimulate agriculture by enabling farmers to expand the variety
of crops they could grow.


 
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                                   STAND. COM. REP. NO. 2906
                                   Page 2


     Your Committee further finds that in addition to an
infrastructure improvement tax credit, farmers are desperately in
need of financial relief from the current drought.  A drought
mitigation water storage facility tax credit is also necessary to
help farmers overcome the present drought and to plan for future
droughts.

     Your Committee has amended this measure by:

     (1)  Inserting ten per cent as the amount of the agriculture
          infrastructure improvement tax credit;

     (2)  Adding a drought mitigation water storage facility
          income tax credit of ten per cent for the new
          construction or the repair or improvement of an
          existing water storage facility; 

     (3)  Clarifying the purpose clause to accurately reflect the
          amended measure; and

     (4)  Renumbering sections of the measure.

     As affirmed by the record of votes of the members of your
Committee on Economic Development that is attached to this
report, your Committee is in accord with the intent and purpose
of H.B. No. 2023, H.D. 2, as amended herein, and recommends that
it pass Second Reading in the form attached hereto as
H.B. No. 2023, H.D. 2, S.D. 1, and be referred to the Committee
on Ways and Means.

                                   Respectfully submitted on
                                   behalf of the members of the
                                   Committee on Economic
                                   Development,



                                   ______________________________
                                   LORRAINE R. INOUYE, Chair

 
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