Honorable Robert Bunda

President of the Senate

Twenty-Third State Legislature

Regular Session of 2005

State of Hawaii

Sir:

Your Committee on Ways and Means, to which was referred H.B. No. 955, H.D. 1, S.D. 1, entitled:

begs leave to report as follows:

The purpose of this measure is to continue the incentive program established to encourage the installation of drought mitigation facilities.

Specifically, this measure extends the tax credit for costs incurred from the construction of water storage facilities from December 31, 2005 to December 31, 2008. The bill also increases the tax credit from four to twenty per cent and includes the cost of new equipment related to the construction or repair of ancillary structures as a cost that qualifies for the tax credit.

Your Committee finds that water storage facilities provide farmers and ranchers with much needed water during periods of drought. Without water storage facilities, a drought can have devastating economic effects, resulting in loss of income and jobs.

This bill provides the necessary incentive to encourage and assist farmers and ranchers to build water storage facilities that will sustain them during droughts.

Your Committee has amended the bill by retaining the tax credit rate at four per cent.

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. 955, H.D. 1, S.D. 1, as amended herein, and recommends that it pass Third Reading in the form attached hereto as H.B. No. 955, H.D. 1, S.D. 2.