Honorable Robert Bunda

President of the Senate

Twenty-Third State Legislature

Regular Session of 2005

State of Hawaii

Sir:

Your Committee on Human Services, to which was referred S.B. No. 474 entitled:

begs leave to report as follows:

The purpose of this measure is to extend the individual development account tax credit for five years, authorize financial institutions to claim the tax credit and use part of the private funds contributed for ministerial purposes, and raise the contribution and tax credit ceiling from $1,000,000 to $2,000,000.

Testimony in support of the measure was submitted by the Legal Aid Society and Hawaii Alliance for Community-Based Economic Development. The Department of Taxation and Tax Foundation of Hawaii submitted comments.

Your Committee finds that individual development accounts (IDA) assist individuals with improving their financial understanding and encourages saving toward the goal of homeownership, higher education costs, or start-up costs for a small business. Participants earn less than two hundred per cent of the federal poverty line. In the last six years, over five hundred IDAs were opened in the State and participants saved over $500,000 which was matched by $800,000 in matching funds.

The extension of the tax credit and other proposed amendments will provide the necessary opportunity for IDAs to generate funds through private contributions. Upon further consideration, your Committee has amended this measure to retain the $1,000,000 amount in tax credits for private individuals, businesses, and organizations.

As affirmed by the record of votes of the members of your Committee on Human Services that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 474, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 474, S.D. 1, and be referred to the Committee on Ways and Means.