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 S.B. No. 607, S.D. 1, entitled:

begs leave to report as follows:

The purpose of this measure is to provide a tax credit for capital improvements to, or equipment purchases for federally qualified health centers.

Your Committee finds that federally qualified health centers are "safety net" primary health service providers serving predominantly uninsured, poor, and indigent people in Hawaii. Recently, a new federally mandated medicaid prospective payment system has effectively eliminated a mechanism for federally qualified health centers to recoup costs associated with capital improvements, thus severely limiting the ability of health centers to serve the public.

This bill will assist federally qualified health centers by providing a tax credit equal to ten per cent of the qualified capital or equipment costs incurred by a qualified health center for taxable years beginning after December 31, 2002. The tax credit will allow federally qualified health centers to reduce costs and better serve their clientele.

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 S.B. No. 607, S.D. 1, and recommends that it pass Third Reading.