Honorable Robert Bunda

President of the Senate

Twenty-Third State Legislature

Regular Session of 2005

State of Hawaii

Sir:

Your Committee on Education and Military Affairs, to which was referred S.B. No. 1705 entitled:

begs leave to report as follows:

The purpose of this measure is to reduce the amount of general excise tax revenues deposited into the state educational facilities improvement special fund by the amount of certificates of participation authorized for that fiscal year.

Testimony in support of the measure was submitted by an individual. The Department of Education testified in opposition the measure. The Department of Taxation and the Tax Foundation of Hawaii submitted comments.

Your Committee finds that the scarcity of funding provided to public school facilities may easily become a crisis if the State does not explore alternative funding sources. As facility needs increase, your Committee recognizes that it may be beneficial to have alternatives to traditional general bond financing available. However, the Department of Education has expressed concerns regarding the reduction of revenues to the special fund which provides funding for public school facilities.

Upon further consideration, your Committee would like to continue exploring this alternative funding source.

Your Committee has amended the bill by changing its effective date to June 30, 2005.

As affirmed by the record of votes of the members of your Committee on Education and Military Affairs that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 1705, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 1705, S.D. 1, and be referred to the Committee on Ways and Means.