STAND. COM. REP. NO. 833-00

                                 Honolulu, Hawaii
                                                   , 2000

                                 RE: H.B. No. 2212
                                     H.D. 1




Honorable Calvin K.Y. Say
Speaker, House of Representatives
Twentieth State Legislature
Regular Session of 2000
State of Hawaii

Sir:

     Your Committee on Finance, to which was referred H.B. No.
2212, H.D. 1, entitled: 

     "A BILL FOR AN ACT RELATING TO HARBORS,"

begs leave to report as follows:

     The purpose of this bill is to support the cruise ship
industry by setting aside funds for improving passenger terminal
infrastructure and facilities.

     This bill sets aside a portion of the public service company
(PSC) tax revenue stream of interisland cruise ships to finance
improvements and additions to passenger cruise facilities.
Currently, the PSC revenues are deposited into the general fund. 

     Under this bill:

     (1)  The first $3,000,000 of tax revenues from the gross
          income of contract carriers received from passenger
          ticket revenue from all vessels in service in Hawaii
          will be deposited into the general fund;

     (2)  All revenues in excess of $3,000,000 will be deposited
          into the Harbor Special Fund (Fund) and:

          (a)  Expended for making improvements and additions to
               passenger cruise facilities as identified in the
               Leo A. Daly Statewide Passenger Cruise Facility
               Study; or

 
 
                                 STAND. COM. REP. NO. 833-00
                                 Page 2

 
          (b)  Reimbursed to the Fund for expenditures made for
               such purposes,

          until the necessary improvements are made or the
          deposits reach $97,200,000, whichever is lesser.

     Supporting testimony was submitted by the Mayor of the
County of Hawaii, the Office of the Mayor of the County of Maui,
two members of the Maui County Council, the Hawaii State
Association of Counties, American Hawaii Cruises, United States
Lines, American Classic Voyages Co., The Chamber of Commerce of
Hawaii, the Visitor Industry Coalition, the Big Island Business
Council, the Kona-Kohala Chamber of Commerce, the Hawaii Island
Economic Development Board, the Retail Merchants of Hawaii, Maui
Divers of Hawaii, Hawaii Stevedores, Inc., CSX Lines, Aloha Tower
Marketplace, the Kona Historical Society, the Daughters of
Hawaii, Kahua Naau Ao ma Puuhonua o Honaunau NHP, Inc., Atlantis
Adventures, Liferaft and Marine Safety Equipment, Inc., Aala Ship
Service, Paradise Cruise, Ltd., Pomare, Ltd., and Charley's Taxi
and Limousine.  The Department of Transportation (DOT), the
Hawaii Tourism Authority, the Hawaii Attractions Association, and
Young Brothers, Limited, supported the intent of this bill.  The
Chair of the County of Hawaii County Council and the Hawaii
Boaters Political Action Association also supported the bill with
amendments.  The Tax Foundation of Hawaii offered comments.

     Your Committee is concerned that this bill relies totally on
the Leo A. Daly study to prioritize the initiatives to be funded.
The disadvantages are that:

     (1)  Not all of the small boat harbors were included in the
          study; and

     (2)  This may hamper the DOT's flexibility to realize its
          own priorities.

     As affirmed by the record of votes of the members of your
Committee on Finance that is attached to this report, your
Committee is in accord with the intent and purpose of H.B. No.
2212, H.D. 1, and recommends that it pass Third Reading.

                                   Respectfully submitted on
                                   behalf of the members of the
                                   Committee on Finance,



                                   ______________________________
                                   DWIGHT Y. TAKAMINE, Chair