Honorable Robert Bunda

President of the Senate

Twenty-First State Legislature

Regular Session of 2001

State of Hawaii

Sir:

Your Committee on Water, Land, Energy and Environment, to which was referred H.B. No. 1345, H.D. 1, entitled:

begs leave to report as follows:

The purpose of this measure is to encourage the use of alternative fuels by adjusting the fuel tax to reflect the energy content of alternative fuels and by reducing the fuel tax rate of alternative fuels.

Testimony in support of this measure was submitted by the Department of Business, Economic Development, and Tourism, The Gas Company, Pacific Biodiesel, Inc., and one individual. The Department of Taxation and the Tax Foundation of Hawaii submitted comments.

Your Committee finds that several alternative fuel vehicles are currently offered by manufacturers. While many of these vehicles are in use in Hawaii, they are not operating on alternative fuels because they are not available. The reductions in this measure would be an incentive for suppliers to consider installing refueling stations and selling alternative fuels.

Your Committee further finds that since the quantity of alternative fuel sold is very small, and is projected to increase slowly, the revenue impact proposed by this measure is expected to be less than $20,000 per year for at least the next two years.

As affirmed by the record of votes of the members of your Committee on Water, Land, Energy and Environment that is attached to this report, your Committee is in accord with the intent and purpose of H.B. No. 1345, H.D. 1, and recommends that it pass Second Reading and be referred to the Committee on Ways and Means.