STAND. COM. REP. NO. 2176

                                   Honolulu, Hawaii
                                                     , 2000

                                   RE:  S.B. No. 2779
                                        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 S.B. No. 2779 entitled: 

     "A BILL FOR AN ACT RELATING TO STATE ENTERPRISE ZONES,"

begs leave to report as follows:

     The purpose of this measure is to expand the types of
businesses that can participate in the State enterprise zones
program and to make nonsubstantive amendments that clarify
enterprise zone administrative procedures.

     Testimony in favor of this measure was submitted by the
Department of Business, Economic Development, and Tourism, the
Department of Taxation, the Estate of James Campbell, and Hawaii
Agriculture Research Center.

     Your Committee finds that certain incentives are available
for businesses in an enterprise zone, including a seven-year
exemption from the general excise tax, state income tax credits,
and reductions in specified county fees and taxes.  Your
Committee further finds that based on the most recent data
available, ninety-five firms in the enterprise zone program have
reported the creation of new jobs at a cost to the State of
approximately $1,500 per job in forgone annual tax revenues.
This is far less than the federal job creation cost guidelines
and the State expects the cost to decrease as the program
matures.


 
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     Your Committee believes that the addition of certain kinds
of call centers and businesses engaged in genetically-engineered
medical, agricultural, or maritime biotechnology research and
production will provide incentives essential to the further
diversification of the State's economic base.

     Your Committee has heard a request to broaden the definition
of call centers to add manufacturing companies, and has amended
the definition accordingly.  Your Committee has also made
technical amendments to correctly reflect the language in the
Hawaii Revised Statutes and preferred drafting style.

     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. 2779, as amended herein, and recommends that it pass
Second Reading in the form attached hereto as S.B. No. 2779,
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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