Honorable Calvin K.Y. Say

Speaker, House of Representatives

Twenty-First State Legislature

Regular Session of 2001

State of Hawaii

Sir:

Your Committee on Consumer Protection and Commerce, to which was referred H.B. No. 436 entitled:

begs leave to report as follows:

The purpose of this bill is to exempt publicly-owned public utilities from the Public Service Company (PSC) tax.

Testimony in support of the bill was received from the County of Kauai, Office of the Mayor. Comments were received from the Tax Foundation of Hawaii and the Kauai Island Utility Co-op. The Department of Taxation testified in opposition to the bill.

Your Committee finds that there is a possibility that the County of Kauai may buy the local electric company and operate it as a county enterprise. Since the PSC tax is imposed on public utilities, in lieu of general excise and real property taxes, concerns were raised that if Kauai County owns and operates the utility, it may become subject to regulation by the Public Utilities Commission, and possibly become subject to PSC or general excise taxes.

It is the understanding of your Committee that the County of Kauai is currently investigating these concerns.

As affirmed by the record of votes of the members of your Committee on Consumer Protection and Commerce that is attached to this report, your Committee is in accord with the intent and purpose of H.B. No. 436 and recommends that it be referred to the Committee on Finance.