Honorable Robert Bunda

President of the Senate

Twenty-Third State Legislature

Regular Session of 2005

State of Hawaii

Sir:

Your Committees on Media, Arts, Science, and Technology and Business and Economic Development, to which was referred S.B. No. 1695 entitled:

beg leave to report as follows:

The purpose of this measure is to increase and authorize the issuance of contingent tax credits by the Hawaii Strategic Development Corporation, authorize the corporation to extend guarantees and incur debt, and authorize the corporation to transfer the credits as needed.

Testimony in support of this measure was submitted by the Department of Business, Economic Development, and Tourism; the Hawaii Strategic Development Corporation; Hawaii Venture Capital Association; Hawaii Technology Trade Association; Economic Development Alliance of Hawaii; and Oceanit.

Your Committees find that there is a critical shortage of seed and venture capital resources in the State, which emerging technology firms and expansion-oriented companies need to succeed. Your Committees support the intent of this measure, and find that increasing the amount of the authorized tax credits and the annual aggregate limit on the transfer of tax credits that may be claimed will more effectively attract new venture capital investments in Hawaii's emerging and expanding companies. Your Committees find, however, that this measure should incorporate the provisions of S.B. No. 720 with respect to the inclusion of insurance premium taxes as a tax for which credits may be provided. Your Committees believe this provision will add an additional pool of taxpayers to whom the credits may be sold, which will support additional investment in Hawaii's high growth businesses.

Your Committees have amended this measure by incorporating language from Senate Bill No. 720. As amended, this measure:

As affirmed by the records of votes of the members of your Committees on Media, Arts, Science, and Technology and Business and Economic Development that are attached to this report, your Committees are in accord with the intent and purpose of S.B. No. 1695, as amended herein, and recommend that it pass Second Reading in the form attached hereto as S.B. No. 1695, S.D. 1, and be referred to the Committee on Ways and Means.