Gives a taxpayer tax credit for building a new water storage facility for drought mitigation purposes.

A BILL FOR AN ACT

SECTION 1. The legislature finds that farmers and ranchers during periods of drought suffer from loss of crops and livestock. This results in losses, which often takes farmers and ranchers years to recover from, resulting in loss of income and jobs for hired workers, loss of business for agricultural suppliers, and loss of tax revenues. These losses can be minimized by the construction of water storage facilities to alleviate water problems during times of drought.

The purpose of this Act is to provide a tax credit for the construction of drought mitigating water storage facilities.

SECTION 2. Chapter 235, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"§235- Drought mitigating water storage facility; credit. (a) There shall be allowed to each taxpayer, subject to the taxes imposed by this chapter, for the construction of a new water storage facility or repair or reconstruction of an existing water storage facility necessary for drought mitigation purposes, a tax credit that shall apply to the taxpayer’s net income tax liability, if any, imposed by this chapter for the taxable year in which the credit is properly claimed. The tax credit shall be an amount equal to ten per cent of the cost of construction paid by the taxpayer for construction of the new water storage facility or repair or reconstruction of an existing water storage facility for the taxable year in which the water storage facility was constructed.

(b) The credit allowed under this section shall be claimed against the net income tax liability for the taxable year. For the purpose of this credit, the "net income tax liability" means net income tax liability reduced by all other credits allowed under this chapter.

(c) If the tax credit under this section exceeds the taxpayer’s income tax liability, the excess of the tax credit over liability may be used as a credit against the taxpayer’s income tax liability in subsequent years until exhausted. All claims, included any amended claims, for tax credits under this section shall be filed on or before the end of the twelfth month following the close of the taxable year for which the credit may be claimed. Failure to comply with the foregoing provision shall constitute a waiver of the right to claim the credit.

(d) As used in this section "water storage facility" means a water storage facility with a capacity of more than forty thousand gallons certified pursuant to rules adopted by the department of agriculture under chapter 91 as necessary for drought mitigation purposes."

SECTION 3. New statutory material is underscored.