STAND. COM. REP. NO. 359

Honolulu, Hawaii

RE:    S.B. No. 1182

       S.D. 1

Honorable Colleen Hanabusa

President of the Senate

Twenty-Fourth State Legislature

Regular Session of 2007

State of Hawaii

Madam:

     Your Committee on Economic Development and Taxation, to which was referred S.B. No. 1182, S.D. 1, entitled:

"A BILL FOR AN ACT RELATING TO NEEDS ALLOWANCE,"

begs leave to report as follows:

     The purpose of this measure is to raise the needs allowance for persons in institutional care settings.

     Specifically, this measure establishes a needs allowance of up to fifty dollars, to be increased annually in an amount equal to the social security income benefit increase for persons residing in community care homes and other long-term care facilities.

     Testimony in support of this measure was submitted by the Department of Human Services, the Mayor of the County of Hawaii, Hawaii Disability Rights Center, Healthcare Association of Hawaii, Kokua Council, National Association of Social Workers, and two individuals.  The Department of Taxation, Hawaii Coalition of Care Home Administrators, and Tax Foundation of Hawaii submitted comments.

     Your Committee finds that the current needs allowance of thirty dollars is insufficient and has not been raised since 1988.  This allowance is intended to pay for clothing, toiletries, bus fare, personal postage costs, snacks, and other incidental expenses of day-to-day living.  Your Committee finds this amount is too low to meet basic necessities for a minimally acceptable daily quality of life.  Therefore, it is fitting to raise the needs allowance for individuals living in long-term care facilities and community care home residents.

     Your Committee has received a revenue impact statement from the Department of Taxation (Department) that indicates a revenue loss of an estimated $512,000, for fiscal year 2008, and an increase in general fund expenditures by an unspecified amount of monies in fiscal year 2008.

     In its methodology, the Department used data from the Data Center on Hawaii's Aging for the Executive Office on Aging.  The number of beds provided by long-term care facilities was (8,524) multiplied by the annual allowance ($600), resulting in $5.1 million per year.  The Department then calculated the income tax exemption to be $307,000, applying the average income tax rate of six per cent, and the GET exemption, to be $205,000, applying the GET rate of four per cent.  These exemptions total $512,000.

     As affirmed by the record of votes of the members of your Committee on Economic Development and Taxation that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 1182, S.D. 1, and recommends that it be referred to the Committee on Ways and Means.

Respectfully submitted on behalf of the members of the Committee on Economic Development and Taxation,

____________________________

CAROL FUKUNAGA, Chair