Honorable Robert Bunda

President of the Senate

Twenty-Second State Legislature

Regular Session of 2004

State of Hawaii

Sir:

Your Committees on Science, Arts, and Technology and Economic Development, to which was referred S.B. No. 3024 entitled:

beg leave to report as follows:

The purpose of this measure is to enact various capital formation tools.

Specifically, these capital formation tools include: enacting the State Private Investment Fund, modeled after a similar and highly successful Oklahoma model, to stimulate increased venture capital investment; providing tax credits for qualifying research activities, technology infrastructure renovations, and high technology business investments; retaining the federal definition of "research and development," as defined in the Internal Revenue Code, to limit research and development related tax credits to qualified high technology businesses; and making an appropriation for the state private investment fund.

Testimony in support of the measure was received from the Department of Business, Economic Development, and Tourism; the Department of Taxation; the Hawaii Technology Trade Association; Hawaii Venture Capital Association; Broadband iTV Inc.; HiBEAM; and seven individuals.

Your Committees find that Hawaii is at a crossroads in determining its economic future. To obtain sustained and balanced economic growth, the State must establish critical private-public partnerships, encourage research and high technology related development in Hawaii, provide necessary venture capital for start-ups, and provide access to financing for Hawaii's technology and high growth firms. This measure, while still a work in progress, is a critical first step in providing a blue print guiding Hawaii's economy. By adopting a multifaceted approach, as this measure does, Hawaii can achieve a diversified economy, increased tax revenues, and sustained economic growth.

Your Committees have amended the measure by:

As affirmed by the records of votes of the members of your Committees on Science, Arts, and Technology and Economic Development that are attached to this report, your Committees are in accord with the intent and purpose of S.B. No. 3024, as amended herein, and recommend that it pass Second Reading in the form attached hereto as S.B. No. 3024, S.D. 1, and be referred to the Committee on Ways and Means.