STAND. COM. REP. 3240

Honolulu, Hawaii

, 2004

RE: H.B. No. 2611

H.D. 2

S.D. 2

 

 

Honorable Robert Bunda

President of the Senate

Twenty-Second State Legislature

Regular Session of 2004

State of Hawaii

Sir:

Your Committee on Ways and Means, to which was referred H.B. No. 2611, H.D. 2, S.D. 1, entitled:

"A BILL FOR AN ACT RELATING TO THE ENTERTAINMENT INDUSTRY,"

begs leave to report as follows:

The purpose of this measure is to provide incentives to attract film, video, digital media, and sound recording production companies to the State.

The measure accomplishes this by taking a two-pronged approach to bolster the State's high technology, media industry. The first part of the measure amends the structure and direction of the State's high technology, media industry policy, and the second part refocuses the State's tax credit incentives to include the digital media industry.

Specifically, part I of the measure:

(1) Establishes a findings and purpose section under part IX of Chapter 201, relating to Hawaii television and film development; and

(2) Adds four new sections that:

(A) Expand the title and various sections of part IX of Chapter 201, relating to Hawaii television and film development, to include the digital media industry;

(B) Delete the venture capital investment program established under the Hawaii television and film development law as a source of revenue;

(C) Rename the Hawaii Television and Film Development Board the Hawaii Digital Media Industry Development Board, increase the membership on the board to an unspecified number, and ensure that the digital media industry is represented on the board; and

(D) Rename the Hawaii television and film development special fund the Hawaii digital media industry development special fund, delete venture capital investments as a source of revenue to the fund, and establish a new funding source, which is the moneys deposited to meet the new option by which performing arts production investors may qualify for the high technology business investment tax credit (proposed as section 235-110.9(e)(2)(C), Hawaii Revised Statutes, in this measure, as amended).

Part II of the measure amends sections 235-17 and 235-110.9, Hawaii Revised Statutes (the motion picture and film production income tax credit and the high technology business investment tax credit, respectively). The motion picture and film production income tax credit is amended by:

(1) Renaming it as the "performing arts productions income tax credit";

(2) Replacing the existing four per cent tax credit with fifteen per cent as the amount to be used when qualified performing arts productions are conducted in a county with a population of over 700,000, and twenty per cent as the tax credit percentage amount to be used when qualified performing arts productions are conducted in a county with a population of 700,000 or less;

(3) Establishing an unspecified maximum aggregate amount in tax credits claimable by all productions under the tax credit in a taxable year, and setting a cap on the total amount available under the tax credit in all years at $60,000,000;

(4) Making tax credit certificates issued by the Department of Business, Economic Development, and Tourism public documents; and

(5) Adding definitions for the terms "below-the-line hires", "commercials", "performing arts products", "post production", "production", "qualified performing arts production costs", "qualified taxpayer", and "sound recording".

The high technology business investment tax credit is amended by:

(1) Designating the Department of Business, Economic Development, and Tourism as the lead state agency in negotiating with performing arts production companies;

(2) Requiring that, in order to qualify for the tax credit, a performing arts product must:

(A) Acknowledge the support of the State in a manner negotiated between the production company and the Department of Business, Economic Development, and Tourism that includes, but is not limited to, a single line on-screen credit or acknowledgement in a printed program; and

(B) Create two full-time Hawaii-based jobs for at least one year that pay a salary commensurate to film or sound recording industry standards, as the case may be, for every $1,000,000 in tax credits issued to the performing arts production company;

(3) Allowing performing arts production companies that are unable to meet the employment requirements to qualify for the tax credit by meeting one of the following requirements:

(A) At least twenty-five per cent of the performing arts product's post production shall be conducted in the State as measured by the total post production budget;

(B) At least twenty-five per cent of the performing arts product's digital effects shall be conducted in the State as measured by the project's total digital effects budget; or

(C) The performing arts production company shall deposit an unspecified amount in the Hawaii digital media industry development special fund as an alternative; and

(4) Placing a sunset date of December 31, 2010, on the tax credit.

Your Committee has amended the measure by:

(1) Amending the cap on the total amount available under the performing arts productions income tax credit in all years by deleting the $60,000,000 amount and leaving it blank;

(2) Changing the effective date from upon approval to July 1, 2050 to ensure further discussion; and

(3) Making numerous technical, nonsubstantive amendments for the purposes of clarity, consistency, and style.

As affirmed by the record of votes of the members of your Committee on Ways and Means that is attached to this report, your Committee is in accord with the intent and purpose of H.B. No. 2611, H.D. 2, S.D. 1, as amended herein, and recommends that it pass Third Reading in the form attached hereto as H.B. No. 2611, H.D. 2, S.D. 2.

Respectfully submitted on behalf of the members of the Committee on Ways and Means,

____________________________

BRIAN T. TANIGUCHI, Chair