STAND. COM. REP. NO. 117-00

                                 Honolulu, Hawaii
                                                   , 2000

                                 RE: H.B. No. 2434
                                     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 Economic Development and Business
Concerns, to which was referred H.B. No. 2434 entitled: 

     "A BILL FOR AN ACT RELATING TO STATE FINANCES,"

begs leave to report as follows:

     The purpose of this bill is to authorize and appropriate
funds from: 

     (1)  The Hawaii Community-Based Economic Development (CBED)
          Revolving Fund; and

     (2)  The Hawaii Strategic Development Corporation (HSDC)
          Revolving Fund;

for fiscal year 2000-2001 to be deposited into the general fund.

     The Department of Business, Economic Development, and
Tourism (DBEDT) submitted testimony in strong support of this
measure.  Testimony in opposition to this measure was received
from the Office of Hawaiian Affairs, the Hawaii Alliance for
Community-Based Economic Development, the Big Island Sustainable
Communities Association, Hamakua District Development Council,
the Hilo-Hamakua Community Development Corporation, Pacific
Gateway Center, and several individuals.  Comments were received
from the Hawaii Small Business Development Center Network, Hale
Ku`ai Cooperative, and Molokai Community Service Council.


 
 
 
                                 STAND. COM. REP. NO. 117-00
                                 Page 2

 
     Your Committee deliberated at length on maintaining the
integrity of the HSDC Revolving Fund, which was created to
provide incentives to encourage private investment activity.

     While your Committee expressed reservation about depositing
moneys from the HSDC Revolving Fund to the general fund, your
Committee recognizes the merits of facilitating and having
continued discussion on the financial ramifications of such
action.

     Your Committee is concerned about the lack of a plan
regarding the availability of funds for future venture capital
endeavors with regard to the HSDC Revolving Fund.  Therefore,
your Committee urges DBEDT to come up with a plan as discussion
continues on this issue.

     Your Committee has amended this bill by:

     (1)  Deleting the provision appropriating and authorizing
          the deposit of funds from the Hawaii CBED Revolving
          Fund into the general fund;

     (2)  Changing the amount of the appropriation to be
          deposited from the HSDC Revolving Fund to the general
          fund from $1,000,000 to $1 for the purpose of
          facilitating further discussion on the measure; and

     (3)  Making a technical, nonsubstantive amendment for
          clarity.

     As affirmed by the record of votes of the members of your
Committee on Economic Development and Business Concerns that is
attached to this report, your Committee is in accord with the
intent and purpose of H.B. No. 2434, as amended herein, and
recommends that it pass Second Reading in the form attached
hereto as H.B. No. 2434, H.D. 1, and be referred to the Committee
on Finance.

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



                                   ______________________________
                                   ROBERT N. HERKES, Chair