STAND

STAND. COM. REP. NO. 313

Honolulu, Hawaii

, 2005

RE: H.B. No. 1590

H.D. 1

Honorable Calvin K.Y. Say

Speaker, House of Representatives

Twenty-Third State Legislature

Regular Session of 2005

State of Hawaii

Sir:

Your Committees on Tourism & Culture and Economic Development & Business Concerns, to which was referred H.B. No. 1590 entitled:

"A BILL FOR AN ACT RELATING TO THE HAWAII FILM AND DIGITAL MEDIA INDUSTRY,"

beg leave to report as follows:

The purpose of this bill is to diversify Hawaii's economy and strengthen Hawaii's film industry by appropriating $700,000 for costs associated with developing and promoting Hawaii's film and digital media industry, provided that of the total appropriation amount, each county film office is allocated $25,000.

The Maui Film Office, Big Island Film Office, and Honolulu Film Office supported this bill. The Department of Business, Economic Development, and Tourism supported the intent of this bill.

Your Committees recognize that appropriations would be beneficial in supporting the local film industry. However, your Committees find that a more effective means of promoting this industry is by improving the Motion Picture and Film Production Tax Credit already established under section 235-17, Hawaii Revised Statutes.

In light of this, your Committees have amended this measure by deleting its contents and inserting provisions that temporarily replace the current Motion Picture and Film Tax Credit (Original Tax Credit) with a Motion Picture, Digital Media, and Film Production Tax Credit (New Tax Credit). As amended, this bill, among other things:

(1) Sets the amount of the New Tax Credit at:

(A) Fifteen percent of qualified production costs incurred by a qualified production in any county of the state with a population of over 700,000; and

(B) Twenty percent of qualified production costs incurred by a qualified production in any county of the state with a population of 700,000 or less;

(2) Repeals the provision in the Original Tax Credit that

establishes a tax credit of up to 7.5 percent of costs

incurred, in the production of motion picture or

television films, for actual expenditures for transient

accommodations;

(3) Establishes qualification requirements for productions

to claim the New Tax Credit;

(4) Establishes reporting and filing requirements for

qualified productions that claim the New Tax Credit;

(5) Limits the New Tax Credit to $8,000,000 per qualified

production;

(6) Prohibits productions that have received financing for

which a credit was claimed under the High Technology

Business Investment Tax Credit from being eligible for

the New Tax Credit in that same tax year;

(7) Applies the New Tax Credit to qualified production costs

incurred after December 31, 2004, and before January 1,

2011; and

(8) Repeals the New Tax Credit and reenacts the Original Tax

Credit on January 1, 2011.

As affirmed by the records of votes of the members of your Committees on Tourism & Culture and Economic Development & Business Concerns that are attached to this report, your Committees are in accord with the intent and purpose of H.B. No. 1590, as amended herein, and recommend that it pass Second Reading in the form attached hereto as H.B. No. 1590, H.D. 1, and be referred to the Committee on Finance.

Respectfully submitted on behalf of the members of the Committees on Tourism & Culture and Economic Development & Business Concerns,

____________________________ ROBERT N. HERKES, Chair		____________________________ JERRY L. CHANG, Chair