STAND

STAND. COM. REP. 2471

Honolulu, Hawaii

, 2004

RE: S.B. No. 2687

S.D. 1

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 S.B. No. 2687 entitled:

"A BILL FOR AN ACT RELATING TO SMALL BUSINESSES,"

beg leave to report as follows:

The purpose of this measure is to provide small businesses with greater rights under the Hawaii Public Procurement Code.

This measure:

(1) Prohibits requiring small businesses to disclose financial data for purpose of obtaining a government contract;

(2) Requires the government to award at least fifty per cent of total contracts to small businesses;

(3) Allows small businesses to request a contested case hearing on an adverse action of an agency, such as a denial or refusal to issue a license or permit;

(4) Requires an agency to timely notify a small business of the disposition of an application;

(5) Requires automatic renewal of a license, permit, or certification at the time of expiration, unless denied for good cause;

(6) Defines "business advocate" for purposes of the Small Business Regulatory Flexibility Act; and

(7) Requires liability insurers to provide coverage to any small business upon request and prohibits the cancellation or refusal to renew based on the sole ground of too small a premium.

Testimony in support of the measure was received from the National Federation of Independent Business-Hawaii, the Hawaii Business League, and Hawaii Reserves Inc. Testimony in opposition to the measure was received from the Hawaii County Planning Department. Offering comments on the measure were the Department of Accounting and General Services, the Department of Business, Economic Development, and Tourism, the Department of Commerce and Consumer Affairs, and the State Procurement Office.

The issue of small business development in Hawaii is of the utmost concern to your Committees. Your Committees find that small businesses make up over ninety-five per cent of all businesses in Hawaii and employ almost sixty per cent of the State's working population. Yet, most business surveys are unflattering to Hawaii. A frequent criticism is that Hawaii is inhospitable to small business. This measure is an attempt to ameliorate those concerns by improving the small business climate.

Your Committees find that this measure represents an important first step in protecting and addressing the concerns of Hawaii's small businesses. Small businesses employ the majority of Hawaii's people, generate a significant amount of revenue in the State, and are an important catalyst for economic growth in the State.

Your Committees have amended this measure by changing the effective date to July 1, 2020 to make the bill defective in order to promote continuing discussion. Your Committees recognize the tireless efforts of the small business community, in particular the Small Business Regulatory Review Board, in bringing these concerns to the attention of the Legislature. Your Committees understand that a number of concerns remain-including how to define small businesses and the issue of automatic approvals, among others-and urge the parties to continue working on resolving this and other remaining issues in this important measure.

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 S.B. No. 2687, as amended herein, and recommend that it pass Second Reading in the form attached hereto as S.B. No. 2687, S.D. 1, and be referred to the Committee on Ways and Means.

Respectfully submitted on behalf of the members of the Committees on Economic Development and Commerce, Consumer Protection and Housing,

____________________________ RON MENOR, Chair		____________________________ CAROL FUKUNAGA, Chair