Honorable Robert Bunda

President of the Senate

Twenty-Third State Legislature

Regular Session of 2006

State of Hawaii

Sir:

Your Committee on Ways and Means, to which was referred H.B. No. 1723, H.D. 2, S.D. 1, entitled:

begs leave to report as follows:

The purpose of this measure is to increase the authorized amount of tax credits in the state private investment fund to allow the Hawaii Strategic Development Corporation to increase the availability of venture capital in the State.

Specifically, the amount of tax credits authorized is increased from $36,000,000 to $120,000,000 and the applicability of the tax credit is expanded to include tax liability under the State's insurance code.

Your Committee finds that the state private investment fund administered by the Hawaii Strategic Development Corporation provides a significant advancement in capital formation for Hawaii's emerging technology firms and other fledgling, expansion-oriented companies. The tax credits are used to secure corporation loans to invest in venture capital funds. By increasing return-driven, venture capital investments in emerging enterprises, the state private investment fund helps to diversify the State's economic base and assists local venture capital companies by helping them build strong track records to attract additional capital.

Your Committee has amended the measure by:

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. 1723, 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. 1723, H.D. 2, S.D. 2.