Honorable Robert Bunda

President of the Senate

Twenty-Second State Legislature

Regular Session of 2003

State of Hawaii

Sir:

Your Committee on Transportation, Military Affairs, and Government Operations, to which was referred H.B. No. 91, H.D. 1, entitled:

begs leave to report as follows:

The purposes of this measure are to exempt sales of goods and services to the State from the general excise tax, to change the central service assessment for special funds to five per cent of all costs rather than five per cent of all revenues, and to repeal all special fund exemptions from the central service assessment.

Your Committee received testimony in support of this measure from the Subcontractors Association of Hawaii.

Testimony in opposition to this measure was submitted by the Department of Taxation, the Department of Budget and Finance, the the Board of Land and Natural Resources, the Judiciary, the Public Utilities Commission, the Housing and Community Development Corporation of Hawaii, the University of Hawaii, the Hawaii Tourism Authority, the Hawaii Community Development Authority, the High Technology Development Corporation, the President and two Board members of the Hawaii Health Systems Corporation, Hilo Medical Center, the Kauai Regional CEO of the Hawaii Health Systems Corporation, Leahi Hospital, Kona Community Hospital, and Maui Memorial Hospital.

The Department of the Attorney General submitted comments.

Your Committee is concerned about the potentially adverse economic impacts this measure would have on various public agencies in the State. Nonetheless, your Committee understands that your Committee on Ways and Means would like to review this measure further, and therefore is passing this measure with reservations.

As affirmed by the record of votes of the members of your Committee on Transportation, Military Affairs, and Government Operations that is attached to this report, your Committee is in accord with the intent and purpose of H.B. No. 91, H.D. 1, and recommends that it pass Second Reading and be referred to the Committee on Ways and Means.