STAND. COM. REP. NO. 2435

                                   Honolulu, Hawaii
                                                     , 2000

                                   RE:  S.B. No. 2939
                                        S.D. 1




Honorable Norman Mizuguchi
President of the Senate
Twentieth State Legislature
Regular Session of 2000
State of Hawaii

Sir:

     Your Committee on Ways and Means, to which was referred S.B.
No. 2939 entitled:

     "A BILL FOR AN ACT RELATING TO THE INTEGRATED TAX
     INFORMATION MANAGEMENT SYSTEMS ACQUISITION BY THE DEPARTMENT
     OF TAXATION,"

begs leave to report as follows:

     The purpose of this measure is to ensure that the Department
of Taxation can meet its financial obligations to expediently
implement its Integrated Tax Information Management Systems
(ITIMS) performance-based contract by extending the authorization
to expend funds already appropriated for this project by one
year.

     Testimony in favor of the measure was received from the
Department of Taxation.  The Tax Foundation provided comments.

     Your Committee finds that Act 155, Session Laws of Hawaii
1999 (Act 155), provided the Department of Taxation with an
appropriation to meet its financial obligations for the ITIMS
performance-based contract.  However, Act 155 did not provide the
Department of Taxation with the flexibility to carry forward any
unexpended balance from the appropriation to a succeeding fiscal
year.

     Under the provisions of the ITIMS performance-based
contract, the contractor will not be paid until actual increased
revenues generated by the system are realized.  The State should

 
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have moneys available to pay the contractor when the increased
revenue realization occurs, thereby enabling the Department of
Taxation to pay the contractor in a timely manner and minimizing
any interest that may accrue against the State due to a payment
delay.

     Your Committee has amended the measure by:

     (1)  Deleting the proposed amendatory language that allows
          the Department of Taxation to carryover any excess
          funds that may remain from Act 155 into the 2001-2002
          fiscal year;

     (2)  Amending the amounts appropriated for fiscal years
          1999-2000 ($17,750,828) and 2000-2001 ($7,480,428) to
          $8,303,558 and $16,296,090, respectively, to more
          accurately reflect contract costs; and

     (3)  Amending sections 1 and 3 of the measure to reflect
          these amendments.

     Your Committee believes that the amended measure provides
the Department of Taxation with the moneys necessary to meet its
financial obligations for the ITIMS performance-based contracts
for the upcoming fiscal year.

     As affirmed by the record of votes of the members of your
Committee on Ways and Means that is attached to this report, your
Committee is in accord with the intent and purpose of S.B.
No. 2939, as amended herein, and recommends that it pass Second
Reading in the form attached hereto as S.B. No. 2939, S.D. 1, and
be placed on the calendar for Third Reading.

                                 Respectfully submitted on behalf
                                 of the members of the Committee
                                 on Ways and Means,



                                 ________________________________
                                 CAROL FUKUNAGA, Co-Chair



                                 ________________________________
                                 ANDREW LEVIN, Co-Chair

 
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