STAND

STAND. COM. REP. 1492

Honolulu, Hawaii

, 2003

RE: S.B. No. 377

S.D. 1

H.D. 2

Honorable Calvin K.Y. Say

Speaker, House of Representatives

Twenty-Second State Legislature

Regular Session of 2003

State of Hawaii

Sir:

Your Committee on Finance, to which was referred S.B. No. 377, S.D. 1, H.D. 1, entitled:

"A BILL FOR AN ACT RELATING TO TAXATION,"

begs leave to report as follows:

The purpose of this bill is to stimulate economic growth and tourism in West Oahu by establishing a nonrefundable tax credit (Tax Credit) for qualified costs incurred in the development of facilities for attractions and educational purposes at Ko Olina Resort and Marina.

The Department of Taxation, Department of Business, Economic Development, and Tourism, Hawaii Tourism Authority, a member of the Hawaii State Senate, Ko Olina Company, Ko Olina Resort and Marina, The Chamber of Commerce of Hawaii, Outrigger Hotels, The Estate of James Campbell, Ocean Sports Productions, LLC, Building Industry Association of Hawaii, Kusao & Kurahashi, Inc., and three concerned individuals supported this bill. A concerned individual opposed this measure. The Tax Foundation of Hawaii offered comments.

The point was raised in testimony that the developers of the Ko Olina project are planning to acquire Makaha Resort to operate a training hotel and other resort training facilities. Although this component is not included in the measure, your Committee notes that further discussion on its possible incorporation should continue through the Conference period.

Your Committee has amended this measure by:

(1) Allowing the Tax Credit to be claimed only upon a declaration by the Governor;

(2) Requiring the Governor to issue a declaration allowing taxpayers to claim the Tax Credit when general fund tax collections at the close of each of two successive fiscal years exceed 7.5 percent of general fund tax collections for each of the prior two fiscal years;

(3) Requiring the Director of Taxation to notify the Governor of general fund tax collections at the close of every year;

(4) Inserting a repeal date of January 1, 2009, for this measure; and

(5) Making technical, nonsubstantive amendments for purposes of style and clarity.

As affirmed by the record of votes of the members of your Committee on Finance that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 377, S.D. 1, H.D. 1, as amended herein, and recommends that it pass Third Reading in the form attached hereto as S.B. No. 377, S.D. 1, H.D. 2.

Respectfully submitted on behalf of the members of the Committee on Finance,

		____________________________ DWIGHT Y. TAKAMINE, Chair