Honorable Robert Bunda

President of the Senate

Twenty-Second State Legislature

Regular Session of 2004

State of Hawaii

Sir:

Your Committees on Economic Development and Commerce, Consumer Protection and Housing, to which was referred H.B. No. 2961, H.D. 2, entitled:

beg leave to report as follows:

The purpose of this measure is to change the ethanol tax credit to a production tax credit that provides an economic incentive based upon the production capacity of a qualifying ethanol production facility.

Testimony in support of the measure was received from the Department of Taxation; Maui Ethanol, LLC; Clean Fuels Hawaii; Oahu Ethanol Corporation; and ILWU, Local 142. The Department of Business, Economic Development, and Tourism offered comments on the measure.

Your Committees find that this measure is designed to reduce Hawaii's dependence on imported fossil fuels by creating an economic incentive for the production of ethanol, a renewable energy source. This measure is also an important component of the State's overarching policy of promoting energy efficiency and sustainability and thus the effective date remains defective in order to promote continuing discussion on the matter.

Your Committees have amended this measure by:

Your Committees wish to emphasize that the effective date of July 1, 2010 is intended to continue the discussion on this measure, and is not a reflection of the Committees' intent regarding an actual implementation date.

As affirmed by the records of votes of the members of your Committees on Economic Development and Commerce, Consumer Protection and Housing that are attached to this report, your Committees are in accord with the intent and purpose of H.B. No. 2961, H.D. 2, as amended herein, and recommend that it pass Second Reading in the form attached hereto as H.B. No. 2961, H.D. 2, S.D. 1, and be referred to the Committee on Ways and Means.