Honorable Calvin K.Y. Say

Speaker, House of Representatives

Twenty-Second State Legislature

Regular Session of 2003

State of Hawaii

Sir:

Your Committees on Energy and Environmental Protection and Consumer Protection and Commerce, to which was referred H.B. No. 1539 entitled:

beg leave to report as follows:

The purpose of this bill is to encourage fuel diversity and reduce Hawaii's reliance on imported fossil fuel by providing incentives that facilitate the increased use of alternative fuels.

Life of the Land, Pacific Biodiesel, Inc., and an individual supported this measure. The Gas Company and the Department of Business, Economic Development, and Tourism supported the intent of this measure. The Department of Transportation (DOT)opposed this measure. The Tax Foundation of Hawaii and the Department of Taxation (DOTAX) commented on this measure.

DOT initially opposed this measure because the bill would reduce revenues that are currently collected and deposited into the State Highway Fund (Fund). The expected loss of revenue to the Fund was projected to be $23,104.35. However, in subsequent testimony DOT recanted its opposition and indicated support of the measure because of the nominal loss of revenues. DOTAX testified that the expected loss of revenue for the State based on last year's figures would be approximately $435.

Your Committees find that it is imperative that Hawaii move away from its reliance on imported oil; reducing the tax rate on alternative fuels will encourage this. Although this bill may reduce the amount of revenues going to the Fund, to a limited extent, the increased use of alternative fuels have a positive impact on the State's economy and environment.

Your Committees have amended this measure by making technical, nonsubstantive amendments for purposes of clarity and style.

As affirmed by the records of votes of the members of your Committees on Energy and Environmental Protection and Consumer Protection and Commerce that are attached to this report, your Committees are in accord with the intent and purpose of H.B. No. 1539, as amended herein, and recommend that it pass Second Reading in the form attached hereto as H.B. No. 1539, H.D. 1, and be referred to the Committee on Finance.