STAND

STAND. COM. REP. NO. 42

Honolulu, Hawaii

, 2005

RE: H.B. No. 239

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 Committee on Human Services, to which was referred H.B. No. 239 entitled:

"A BILL FOR AN ACT RELATING TO INDIVIDUAL DEVELOPMENT ACCOUNTS,"

begs leave to report as follows:

The purpose of this bill is to promote homeownership among low-income individuals by:

(1) Establishing an Individual Development Account (IDA) Contribution Tax Credit of 50 percent of the amount contributed by financial institutions;

(2) Authorizing fiduciary organizations to expend up to 25 percent of the private funds collected pursuant to IDAs to defray operating expenses of its IDA program;

(3) Extending to taxable years beginning before January 1, 2010, the IDA Tax Credit available to individuals;

(4) Raising the IDA contribution ceiling to $2,000,000 over a 5-year period;

(5) Increasing to $2,000,000, the amount of available IDA tax credits; and

(6) Limiting to 25 percent, the amount of private contributions allowed to be used for administrative purposes.

The Hawaii Alliance for Community Based Economic Development, Legal Aid Society of Hawaii, Aloha United Way, and a concerned individual testified in support of this measure. The Department of Taxation and Tax Foundation of Hawaii provided comments.

Your Committee finds that IDA programs in Hawaii have assisted many low-income individuals in purchasing their first homes, pursuing further education, and opening or expanding a small business. The financial impact to the state is estimated to be up to $400,000 annually.

Your Committee has amended this bill by:

(1) Changing to $1,000,000, the amount of available tax credits; and

(2) Making technical, nonsubstantive amendments for clarity and style.

As affirmed by the record of votes of the members of your Committee on Human Services that is attached to this report, your Committee is in accord with the intent and purpose of H.B. No. 239, as amended herein, and recommends that it pass Second Reading in the form attached hereto as H.B. No. 239, H.D. 1, and be referred to the Committee on Finance.

Respectfully submitted on behalf of the members of the Committee on Human Services,

		____________________________ ALEX M. SONSON, Chair