STAND. COM. REP. NO. 1260
Honolulu, Hawaii
, 2005
RE: S.B. No. 1879
S.D. 2
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 Committees on Agriculture and Economic Development & Business Concerns, to which was referred S.B. No. 1879, S.D. 2, entitled:
"A BILL FOR AN ACT RELATING TO STATE ENTERPRISE ZONES,"
beg leave to report as follows:
The purpose of this bill is to address specific issues of agricultural businesses operating under the State Enterprise Zone (EZ) Program by establishing that agricultural businesses shall remain eligible for all EZ tax incentives during any period caused by a force majeure event, such as pest outbreaks or damaging weather. In addition, this bill, among other things:
(1) Extends the eligibility period for agricultural businesses under the EZ Program by the duration, in months, of the force majeure event;
(2) Allows agricultural businesses to meet annual gross revenue requirements if the businesses are unable to meet annual full-time employee requirements of the EZ Program; and
(3) Includes leased employees and employees under a joint employer relationship in the definition of "full-time employee".
The Department of Business, Economic Development, and Tourism (DBEDT), Department of Agriculture, Department of Taxation, Hawaii Agriculture Research Center, Hawaii Crop Improvement Association, Hawaii Aquaculture Association, Hawaii Farm Bureau Federation, supported this bill. The Tax Foundation of Hawaii offered comments.
Your Committees have amended this measure by deleting its contents and inserting the substantive contents of H.B. No. 1200, H.D. 2, Regular Session of 2005. As amended, this bill differs from the bill as referred to your Committees by:
(1) Including a specific provision allowing DBEDT to extend all tax incentives provided under the EZ Program to existing qualified agricultural businesses for no more than the number of months of the duration of the force majeure event;
(2) Clarifying that if an agricultural business is wholly or partially prevented from maintaining eligibility requirements of the EZ Program, then the agricultural business shall not be disqualified from the EZ Program;
(3) Removing agricultural businesses that are engaged in processing agricultural products from the definition of "agricultural business";
(4) Clarifying the definition of "leased employee" to mean an employee under a professional employment organization arrangement who is assigned to a client company on a full-time basis for at least one year;
(5) Changing the effective date to July 1, 2010, to promote further discussion; and
(6) Making technical, nonsubstantive amendments for style, clarity, and consistency.
Your Committees note that questions were raised regarding whether certain events, such as dock strikes, would qualify as "force majeure" events. Your Committees also recognize that concerns were raised regarding force majeure events in which agricultural businesses are "partially" prevented from maintaining their eligibility under the EZ Program.
In addition, your Committees note that agricultural businesses engaged in the processing of agricultural products are not included under the definition of "agricultural business" in the bill as amended. Your Committees support future legislative efforts to address all of these concerns.
As affirmed by the records of votes of the members of your Committees on Agriculture and Economic Development & Business Concerns that are attached to this report, your Committees are in accord with the intent and purpose of S.B. No. 1879, S.D. 2, as amended herein, and recommend that it pass Second Reading in the form attached hereto as S.B. No. 1879, S.D. 2, H.D. 1, and be referred to the Committee on Finance.
Respectfully submitted on behalf of the members of the Committees on Agriculture and Economic Development & Business Concerns,
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____________________________ ROBERT N. HERKES, Chair |
____________________________ FELIPE P. ABINSAY, JR., Chair |
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