STAND. COM. REP. NO. 1569

Honolulu, Hawaii

, 2005

RE: H.B. No. 1309

H.D. 2

S.D. 2

 

 

Honorable Robert Bunda

President of the Senate

Twenty-Third State Legislature

Regular Session of 2005

State of Hawaii

Sir:

Your Committee on Ways and Means, to which was referred H.B. No. 1309, H.D. 2, S.D. 1, entitled:

"A BILL FOR AN ACT RELATING TO TAXATION,"

begs leave to report as follows:

The purpose of this measure is to allow the counties to establish, by ordinance, a county surcharge on the state excise and use taxes to fund public transportation.

Among other things, the measure:

(1) Requires counties that choose to establish a county surcharge to do so by an ordinance adopted after a duly noticed public hearing;

(2) Prohibits the counties from setting the county surcharge at a rate greater than one per cent of:

(A) The value of property taxable under the use tax;

(B) All gross proceeds and gross income taxable under the general excise tax; and

(3) Allows rental car dealers to pass on the surcharge to lessees.

Your Committee finds that the capital costs for a fixed rail system with an initial trunk line extending from Kapolei in West Oahu to Iwilei in the central business district was estimated in 2004 to be in excess of $2 billion by the Department of Transportation. A portion of the costs is anticipated to be paid with federal funds. Based on this cost estimate, your Committee believes that a fixed rail mass transit system is not possible without additional dedicated funding from a county mass transit surcharge.

However, your Committee is concerned over the financial impact the imposition of a county surcharge will have on resident taxpayers. As such, your Committee also believes that a tax credit that offsets the burden of the surcharge for resident taxpayers is appropriate.

Your Committee has amended the measure by:

(1) Deleting the majority of the purpose section;

(2) Lowering the maximum amount of the county surcharge on state tax from one per cent to one-half per cent;

(3) Establishing a county surcharge on state tax credit to offset the tax burden incurred by taxpayers who reside in a county that adopts a surcharge;

(4) Requiring that the county surcharge on state tax credits be paid with a portion of the revenues generated by the surcharge;

(5) Narrowing the scope of allowable uses for surcharge proceeds in counties with a population greater than five hundred thousand to only fixed rail rapid transit system projects and expenses associated with Americans with Disabilities Act of 1990 compliance;

(6) Requiring that, in order to initiate the surcharge, a county must adopt an enabling ordinance by December 31, 2005;

(7) Requiring that, prior to the state Director of Taxation assessing, levying, and collecting any surcharge adopted by a county, the authorizing county must first notify the Governor, who in turn must direct the state Director of Taxation to begin assessing, levying, and collecting the surcharge;

(8) Establishing that, in addition to the ordinance adoption and other requirements, no surcharge adopted by a county with a population of greater than five hundred thousand shall become effective unless federal moneys have been committed to the mass transit project to be funded by the surcharge;

(9) Establishing that no surcharge shall take effect prior to January 1, 2007;

(10) Changing the time frame in which the proceeds of the surcharge are required to be paid over to the counties from a monthly or quarterly to an annual basis;

(11) Changing the effective date to July 1, 2050, and repealing the measure on June 30, 2060; and

(12) Making technical nonsubstantive amendments for the purposes of clarity and style.

Your Committee believes that the amended measure provides the counties with the necessary authority to finance their mass transit design, planning, and construction needs while concomitantly respecting each county's diverse transportation requirements.

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 H.B. No. 1309, H.D. 2, S.D. 1, as amended herein, and recommends that it pass Third Reading in the form attached hereto as H.B. No. 1309, H.D. 2, S.D. 2.

Respectfully submitted on behalf of the members of the Committee on Ways and Means,

____________________________

BRIAN T. TANIGUCHI, Chair