Providing funds for the construction of new public school facilities.

A BILL FOR AN ACT

SECTION 1. The legislature finds that there is a substantial backlog of new construction projects for public schools across the State. Estimates for construction projects to build new school facilities average well over $150,000,000 per fiscal year with an approximate total backlog of $3,000,000,000 in capital improvement projects.

The legislature further finds that no public school complex in the State is ever given sufficient funds to cover all of its construction needs to meet expanding school populations. The general practice has been to allocate funds only to the most critically overcrowded school complex areas, or to authorize placement of portable units in order to keep facilities operating in a minimally acceptable manner.

The governor has proposed that the sum of $100,000,000 be included in the capital improvement projects budget each of the next two fiscal years for the planning, design, and construction. While clearly a substantial sum is needed, this amount will not accommodate the total new facilities requirements of the school system.

As a consequence, if those moneys are handled in the manner that is typical of the system, they will be governed by the priority matrix and handled in a way that disperses them throughout the whole of the system and leaves no single school complex completed and prepared to provide the physical environment required to meet its expected school population. The impact will be marginalized and no school complex area will receive the critical infusion necessary to fully address all construction needs. No school complex will receive much more than crisis management treatment. There will be no visible or obvious impact in any locale, and no campus will be developed into a fully intact and healthy learning environment.

The legislature understands that education is universally recognized as the key to Hawaii’s future in a global, high-tech economy. However, except for the State's most modern campuses, such as at Kapolei, Kapaa, or Keeau, the legislature finds that schools statewide will never support the kind of teaching our children deserve if facilities continue to be overcrowded and underequipped for today’s needs.

The legislature further finds that one of the components of school construction is the development of a "design-build" program, that consists of contributions and donations of funds, labor, and materials by local businesses, the military, and other community organizations, that would enable needed new school facilities to be developed within school complex areas throughout the State. The intent of this program is to place those most directly involved in developing new communities on the front line for providing the school facilities for those communities.

Accordingly, the purpose of this Act is to begin to work towards eliminating the public school construction backlog for Hawaii's public schools by:

SECTION 2. Chapter 235, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"§235-   Credit for new school construction. (a) There shall be allowed to each taxpayer who is subject to the tax imposed by this chapter, and does not owe the State delinquent taxes, penalties, or interest, a credit for contributions of money or in-kind services for the construction of new public schools. The credit shall be deductible from the taxpayer's net income tax liability, if any, imposed by this chapter for the taxable year in which the credit is properly claimed.

(b) The amount of tax credit determined under this section shall be as follows:

(c) For purposes of this section:

"Public schools" has the same meaning as defined in section 302A-101.

"Net income tax liability" means net income tax liability reduced by all other credits allowed under this chapter.

"Value of contributions of in-kind services" means the fair market value of uncompensated services, labor, or materials as determined and certified by the department of accounting and general services.

(d) The credit allowed under this section shall be claimed against net income tax liability for the taxable year. A tax credit under this section which exceeds the taxpayer's income tax liability may be used as a credit against the taxpayer's income tax liability in subsequent years until exhausted.

(e) All claims for tax credits under this section, including any amended claims, shall be filed on or before the end of the twelfth month following the close of the taxable year for which the credits may be claimed. Failure to comply with the foregoing provision shall constitute a waiver of the right to claim the credit.

(f) The department of education shall maintain records of the names of taxpayers eligible for the credit and the total value of in-kind services contributed for the construction of new public school facilities for the taxable year. All contributions shall be verified by the department of education. The department of education shall total all contributions that the department of education certifies. Upon each determination, the department of education shall issue a certificate to the taxpayer certifying:

(g) The State shall provide not more than $           in tax credits for contributions of in-kind services in Hawaii for the construction of new public school facilities.

(h) The director of taxation shall prepare any forms that may be necessary to allow a credit to be claimed under this section."

SECTION 3. Chapter 302A, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"§302A-   New school construction special fund. (a) There is established within the department a special fund to be known as the new school construction special fund, which shall be administered by the department and into which shall be deposited all revenues from appropriations made by the legislature to the fund, interest on investments attributable to development of the public school system, and other contributions, donations, income, receipts, and revenues received by the department from the operation of the public school system. Moneys in the new school construction special fund shall be expended by the department for the acquisition, planning, design, improvement, construction, equipping, furnishing, administering, operating, and maintaining of new public school facilities and any other purpose deemed necessary by the department for the purpose of constructing and operating new public school facilities. The department may utilize contributions of money, labor, materials, and property that may be otherwise available from any person or instrumentality.

(b) No expenditure, use, or transfer of funds from the new school construction special fund by the department shall be subject to chapter 42F, 103, or 103D."

SECTION 4. The department of education shall submit an annual report of the progress of the new school construction special fund no later than twenty days prior to the convening of each regular session of the legislature.

SECTION 5. The superintendent of education may hire a coordinator to manage the public and private efforts of constructing new public schools. The coordinator shall be exempt from chapter 76, Hawaii Revised Statutes, and shall serve at the pleasure of the superintendent.

SECTION 6. There is appropriated out of the general revenues of the State of Hawaii the sum of $          , or so much thereof as may be necessary for fiscal year 2005-2006, and the sum of $          , or so much thereof as may be necessary for fiscal year 2006-2007, for the new school construction special fund.

The sums appropriated shall be expended by the department of education for the purposes of this Act.

SECTION 7. There is appropriated out of the general revenues of the State of Hawaii the sum of $          , or so much thereof as may be necessary for fiscal year 2005-2006, for a position in the department of education to coordinate public and private efforts to construct new public schools.

The sum appropriated shall be expended by the department of education for the purposes of this Act.

SECTION 8. If any provision of this Act, or the application thereof to any person or circumstance is held invalid, the invalidity does not affect other provisions or applications of the Act, which can be given effect without the invalid provision or application, and to this end the provisions of this Act are severable.

SECTION 9. It is the intent of this Act not to jeopardize the receipt of any federal aid nor to impair the obligation of the State or any agency thereof to the holders of any bond issued by the State or by any such agency, and to the extent, and only to the extent, necessary to effectuate this intent, the governor may modify the strict provisions of this Act, but shall promptly report any such modification with reasons therefor to the legislature at its next session thereafter for review by the legislature.

SECTION 10. New statutory material is underscored.

SECTION 11. This Act shall take effect on July 1, 2005; provided that section 2 of this Act shall apply to taxable years beginning after December 31, 2004.