Honorable Calvin K.Y. Say

Speaker, House of Representatives

Twenty-First State Legislature

Regular Session of 2002

State of Hawaii

Sir:

Your Committee on Energy and Environmental Protection, to which was referred H.B. No. 2001 entitled:

begs leave to report as follows:

The purpose of this measure is to allow a taxpayer to claim one-fifth of the energy conservation tax credit over five consecutive years beginning in the year an energy conservation system is purchased and placed into service.

Your Committee received testimony from the Department of Taxation; the Department of Business, Economic Development, and Tourism; the Hawaii Solar Energy Association; the Tax Foundation of Hawaii; and Bank of Hawaii.

Presently, the energy conservation tax credit is claimed the year a solar or wind energy system, heat pump, or ice storage system is purchased and placed into service. Any tax credit that exceeds the taxpayer's income tax liability may be used as credit in subsequent years until exhausted.

This bill allows a taxpayer to claim one-fifth of the energy conservation tax credit each year over five consecutive years beginning in the year the energy conservation system is purchased and placed into service. Your Committee finds that by spreading the tax credit over five years, this bill allows taxpayers to not only assist the State by hopefully reducing expected budget shortfalls but also enjoy the benefits of a successful tax incentive that encourages energy conservation.

Your Committee has amended the bill by adopting the recommendation made by Bank of Hawaii to rephrase the proposed amendment and by making a technical change that has no substantive effect.

As affirmed by the record of votes of the members of your Committee on Energy and Environmental Protection that is attached to this report, your Committee is in accord with the intent and purpose of H.B. No. 2001, as amended herein, and recommends that it pass Second Reading in the form attached hereto as H.B. No. 2001, H.D. 1, and be referred to the Committee on Finance.