STAND. COM. REP. NO. 927-00

                                 Honolulu, Hawaii
                                                   , 2000

                                 RE: S.B. No. 2303
                                     S.D. 2
                                     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 Transportation, to which was referred S.B.
No. 2303, S.D. 2, entitled: 

     "A BILL FOR AN ACT RELATING TO HARBORS,"

begs leave to report as follows:

     The purpose of this bill is to allocate a portion of the
public service company (PSC) taxes collected from American Hawaii
Cruises after December 1, 2000, over a nine-year period, to be
deposited into the Harbor Special Fund to finance necessary
passenger cruise facilities around the State.

     The bill allocates PSC tax revenues to be deposited into the
Harbor Special Fund as follows:

     (1)  For calendar years 2000-2005, 100 percent;

     (2)  For calendar year 2006, 80 percent;

     (3)  For calendar year 2007, 60 percent;

     (4)  For calendar year 2008, 40 percent;

     (5)  For calendar year 2009, 20 percent; and

     (6)  For calendar year 2010 and thereafter, 0 percent.

     The PSC allocation would be used for:

 
 
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     (1)  Berthing ports or harbors providing a pier or wharf
          with designated spaces for vessel assignment at
          Honolulu Harbor, Kahului Harbor, Nawiliwili Harbor,
          Port Allen, Hilo Harbor, Kawaihae Harbor, and
          Kaunakakai Harbor; and

     (2)  Anchor ports or typically small boat harbors under the
          jurisdiction of the Department of Land and Natural
          Resources (DLNR) with a specific location for ships to
          moor at Lahaina, Kikiaola, Hanalei, Wailoa, Kailua-
          Kona, and Manele.

     The Mayor of Maui County, Chair of the Maui County Council,
Maritime Committee of the Chamber of Commerce, Hawaii Island
Chamber of Commerce, Big Island Business Council, CSX Lines,
Hawaii Stevedores, Inc., Retail Merchants of Hawaii, Maui Divers
of Hawaii, the Maui Hotel Association, Hawaii Boaters Political
Action Association, Regal Travel, Rendezvous Tours, Trans
Hawaiian Services, Waldron Steamship Co., Ltd., Aloha Tower
Marketplace, Boats/Hawaii, and Kaneohe Bay Association of
Mariners testified in support of this bill.

     The Department of Transportation, Hawaii Tourism Authority,
Hawaii Island Economic Development Board, Hawaii Attractions
Association, and Young Brothers, Ltd., supported the intent of
this bill.

     American Hawaii Cruises, Matson Navigation Company, Hawaii
Leeward Planning Conference, and the Tax Foundation of Hawaii
submitted comments.

     Your Committee finds that many of Hawaii's harbors suffer
from disrepair.  Your Committee also finds that the cruise
industry is a burgeoning source of income for Hawaii's tourism
industry.  Since this growing industry relies heavily on Hawaii's
harbor facilities, your Committee finds that the cruise industry
would benefit greatly from contributing to the improvement of
Hawaii's harbors.

     Your Committee notes that a similar bill, H.B. No. 2212,
H.D. 1, crossed over to the Senate after public hearings before
the Committees on Transportation and Finance earlier this
session.

     Upon further consideration, your Committee has amended this
bill by:

     (1)  Removing the nine-year limitation of the PSC
          allocation;

 
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     (2)  Changing the allocation of PSC taxes so that the first
          $3,000,000 will be deposited into the general fund;

     (3)  Designating PSC tax revenues in excess of $3,000,000 to
          be deposited into the Harbor Special Fund and the
          Boating Special Fund at a 89:11 ratio for improvements
          and additions to the passenger cruise facilities under
          the jurisdictions of the Harbors Division of the
          Department of Transportation (Harbors Division) and
          DLNR at ports identified in the Leo A. Daly Statewide
          Passenger Cruise Facility Study;

     (4)  Limiting the amount deposited into the Harbor Special
          Fund to the lesser of $86,330,000 or the amount
          reported by the Harbors Division to the Legislature as
          the amount necessary to make the required improvements
          and additions;

     (5)  Limiting the amount deposited into the Boating Special
          Fund to the lesser of $10,670,000 or the amount
          reported by DLNR to the Legislature as the amount
          necessary to make the required improvements and
          additions;

     (6)  Providing that if the maximum amount is reached for
          deposits to either the Harbor Special Fund or the
          Boating Special Fund, the full amount of the tax
          revenue from the gross income of contract carriers
          received from passenger ticket revenue from all vessels
          in service in Hawaii in any year in excess of
          $3,000,000 will be deposited into the other special
          fund until the maximum amount for that special fund is
          reached;

     (7)  Providing that if the maximum amount is reached for
          deposits to both the Harbor Special Fund and the
          Boating Special Fund, any excess amounts from tax
          revenue, from the gross income of contract carriers
          received from passenger ticket revenue from all vessels
          in service in Hawaii in any year, will be deposited
          into the general fund;

     (8)  Changing the effective date to July 1, 2020, to
          facilitate further discussion; and

     (9)  Making other technical, nonsubstantive amendments for
          purposes of style, clarity, and conformity.


 
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     As affirmed by the record of votes of the members of your
Committee on Transportation that is attached to this report, your
Committee is in accord with the intent and purpose of S.B. No.
2303, S.D. 2, as amended herein, and recommends that it pass
Second Reading in the form attached hereto as S.B. No. 2303, S.D.
2, H.D. 1, and be referred to the Committee on Finance.

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



                                   ______________________________
                                   KENNETH T. HIRAKI, Chair