HB2288

SECTION 1. Act 245, Session Laws of Hawaii 2002, (Act 245) enacted the Hawaii Long-Term Care Financing Act, H.B. No. 2638; C.D. 1, codified as chapter 346C, Hawaii Revised Statutes. Act 245 was commonly referred to in its original form as the care plus program. Act 245 created the long-term care benefits fund into which was to be deposited proceeds from a long-term care income tax. However, H.B. No. 2638, S.D. 1, deleted provisions imposing the long-term care income tax. Therefore, the long-term care benefits fund is presently without a means of revenue deposit.

The legislature finds that the general excise tax is currently imposed upon medical services and health care products. The legislature further finds that rather than exempting medical services from the general excise tax, the general excise tax proceeds derived from taxing medical services should be deposited into the long-term care benefits fund for future use.

The purpose of this Act is to deposit amounts realized as general excise tax revenues on health products and health services into the long-term care benefits fund.

SECTION 2. Chapter 237, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"§237- Proceeds from tax on health services and health products; deposit into the long-term care benefits fund. (a) Beginning January 1, 2009, the department shall segregate the tax revenues collected under this chapter that are derived from the provision of health services or the sale of health products. The department shall pay over on a monthly basis all tax revenues derived from the provision of health services or the sale of health products to the director of finance for immediate deposit into the long-term care benefits fund under section 346C-5. Any revenues realized pursuant to a surcharge established under section 46-16.8 and imposed under section 237-8.6 shall not be subject to this section.

(b) The department shall report to the governor, the legislature, and the department of budget and finance the amount of the general excise tax revenues paid over to the director of finance, within ten days of each payment as provided in subsection (a). The director of finance shall report to the governor and the legislature the amount of general excise tax revenues deposited into the long-term care benefits fund under section 346C-5, within ten days of each deposit as provided under subsection (a), as well as the current balance in the fund.

"Health product" means over-the—counter, non-prescription items generally used for ameliorative health purposes, not including cosmetics, that is generally sold in a pharmacy such as bandages, canes, herbal supplements, pain killers, laxatives, and itch ointments.

"Health services" means services provided by:

(1) A person licensed to practice:

(A) Medicine and surgery under chapter 453;

(B) Dentistry under chapter 448;

(D) Osteopathy under chapter 460;

(E) Naturopathy under chapter 455;

(F) Optometry under chapter 459; and

(G) Podiatry under chapter 463E; or

(2) A hospital, as defined in section 327-1.

(d) The department shall adopt rules pursuant to chapter 91 necessary for the purposes of this section."

SECTION 3. Section 346C-5, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

"(a) There is established in the state treasury the long-term care benefits fund, into which shall be deposited moneys collected as long-term care taxes[.] and as general excise taxes on health services and health products pursuant to section

237- . The department of budget and finance shall deposit the moneys in federally insured financial institutions in Hawaii to preserve the balance and ensure a reasonable return under prevailing interest rates. Investments of the moneys may be made subject to the requirements of this chapter."

SECTION 4. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 5. This Act, upon its approval, shall apply to gross income or gross proceeds received after December 31, 2008.

INTRODUCED BY:	_____________________________

HOUSE OF REPRESENTATIVES	H.B. NO.	2288
TWENTY-FOURTH LEGISLATURE, 2008
STATE OF HAWAII