Honorable Calvin K.Y. Say

Speaker, House of Representatives

Twenty-Third State Legislature

Regular Session of 2005

State of Hawaii

Sir:

Your Committee on Finance, to which was referred S.B. No. 1410, S.D. 1, entitled:

begs leave to report as follows:

The purpose of this bill as received is to establish a refundable state earned income tax credit (EITC).

Your Committee received testimony on a proposed H.D. 1 that was made available to the public prior to the hearing. The purpose of the proposed H.D. 1 is also to establish a refundable state EITC, and requires the refundable portion of the EITC to be reimbused by federal Temporary Assistance for Needy Families (TANF) or state TANF Maintenance of Effort (MOE) funds.

The Hawaii State AFL-CIO, Aloha United Way, Good Beginnings Alliance, Hawaii HomeOwnership Center, Hawaiian Homestead Technology, Inc., Family Independence Initiative – Hawaii, and several concerned individuals testified in support of this bill as received.

The Department of Human Services, League of Women Voters of Hawaii, and a concerned individual testified in support of the proposed H.D. 1. The Department of Taxation opposed the proposed H.D. 1. The Attorney General and Tax Foundation of Hawaii provided comments with respect to the proposed H.D. 1.

The Hawaii Alliance for Community Based Economic Development and 3Point supported the bill as received, but took no position on the proposed H.D. 1. A concerned individual supported the bill as received, but opposed the proposed H.D. 1. The National Association of Social Workers supported the intent of the bill as received, but opposed the proposed H.D. 1.

Your Committee recognizes that there is strong support for the EITC, and notes that this measure and its use of TANF and MOE moneys to fund portions of the EITC is a work in progress.

Accordingly, your Committee has amended this bill as received by replacing it with the contents of the proposed H.D. 1, and:

As affirmed by the record of votes of the members of your Committee on Finance that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 1410, S.D. 1, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 1410, S.D. 1, H.D. 1, and be placed on the calendar for Third Reading.