STAND. COM. REP. NO. 2012

                                   Honolulu, Hawaii
                                                     , 2000

                                   RE:  S.B. No. 2008
                                        




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 S.B. No. 2008 entitled: 

     "A BILL FOR AN ACT RELATING TO AGRICULTURE,"

begs leave to report as follows:

     The purpose of this measure is to establish an agricultural
water storage tax credit for farmers or ranchers, not to exceed
$10,000 per year and carried forward for a maximum of ten years.

     Testimony in favor of this measure was submitted by the
Department of Agriculture, the Mayor of Maui County, the Council
Chair and a member of the Maui County Council, Hawaii Farm
Bureau, Maui County Farm Bureau, and the Hawaii Cattle Producers
Cooperative.  The Department of Taxation submitted testimony in
opposition.  The Tax Foundation of Hawaii submitted comments.

     Your Committee finds that in the past four years, the State
has been severely impacted by low rainfall and drought
conditions.  Drought mitigation has been difficult due to the
lack of water storage facilities in remote regions, and on small
farms and ranches.  Under normal conditions, these agricultural
operations do not include costs of such facilities as part of
their capitalization plans, due to the extremely high costs of
water storage facilities.  In addition, the impact on county
water supplies can be severe in the case of widespread drought,
such as Maui County has experienced.  Your Committee further
finds that encouraging the private sector to invest in water

 
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                                   STAND. COM. REP. NO. 2012
                                   Page 2


storage facilities will help resolve water use problems facing
the counties and the State.

     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 S.B. No. 2008 and recommends that it pass Second Reading 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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