Honorable Robert Bunda

President of the Senate

Twenty-Third State Legislature

Regular Session of 2005

State of Hawaii

Sir:

Your Committees on Water, Land, and Agriculture and Intergovernmental Affairs, to which was referred H.B. No. 1033, H.D. 1, entitled:

beg leave to report as follows:

The purpose of this measure is to provide a tax credit to farmers who do not have access to a state irrigation project and who are forced to purchase water from the county at higher rates.

The Big Island Farm Bureau, the Hawaii Agriculture Research Center, the Hawaii Farm Bureau Federation, the Land Use Research Foundation of Hawaii, the Maui County Farm Bureau, and the Maui Land and Pineapple Company, Inc. submitted testimony in support of this measure. The Department of Taxation submitted testimony in opposition to this measure. The Department of Agriculture and the Tax Foundation of Hawaii submitted comments on this measure.

The state irrigation systems provide water to many farmers throughout the State. However, they do not provide water to all farmers, and as a result, many of them are forced to purchase water at higher rates from the counties. Your Committees find that offering a tax credit to farmers who must purchase county water equilibrates the difference in price that farmers have to pay for county water, providing equitable treatment to all farmers.

Your Committees have amended this measure by:

As affirmed by the records of votes of the members of your Committees on Water, Land, and Agriculture and Intergovernmental Affairs that are attached to this report, your Committees are in accord with the intent and purpose of H.B. No. 1033, H.D. 1, as amended herein, and recommend that it pass Second Reading in the form attached hereto as H.B. No. 1033, H.D. 1, S.D. 1, and be referred to the Committee on Ways and Means.