SB3230 SD1

SECTION 1. The legislature finds that committed financial resources are necessary to develop a long-term energy strategy to secure a sustainable energy future for Hawaii.

The legislature further finds that for decades the energy program within the strategic industries division of the department of business, economic development, and tourism stewarded Hawaii's federal oil overcharge funds, known as petroleum violation escrow funds, and invested these funds in energy projects and program activities. These funds supported the energy program's ability to develop innovative policy initiatives, including programs that focused on energy emergency preparedness and ethanol and biofuels strategies.

However, the legislature further finds that in recent years, as the energy program's assignments and functions have expanded, it has become much more difficult to maintain and improve the program's effectiveness due to declining federal funding. This has resulted in diminished program budgets and reduced staff positions. Currently, oil overcharge funds support 66.6 per cent of the strategic industries division's energy program budget, but the availability of these funds is diminishing and will be exhausted in approximately four years at the current expenditure rate.

The legislature further finds that the success of achieving Hawaii's energy policy objectives is dependent on adequate funding and staff, and, in light of waning federal funds, increased state funding is necessary to support core energy program functions.

The purpose of this Act is to provide additional funding for the energy program's initiatives by establishing an energy security tax and an energy security special fund.

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

"§ -A Energy security special fund; uses. (a) There is created within the state treasury an energy security special fund, which shall consist of:

(1) Moneys appropriated to the fund by the legislature;

(2) All interest attributable to investment of money deposited in the fund;

(3) Moneys generated by the energy security tax established in section 243-A; and

(4) Moneys allotted to the fund from other sources; provided that when the total balance of the fund exceeds $10,000,000, the department of business, economic development, and tourism shall notify the department of taxation of this fact in writing within ten days. The department of taxation then shall notify all distributors liable for collecting the tax imposed by section 243-A of this fact in writing, and the imposition of the tax shall be discontinued beginning the first day of the second month following the month in which notice is given to the department of taxation. If the total balance of the fund thereafter declines to less than $5,000,000, the department of business, economic development, and tourism shall notify the department of taxation which then shall notify all distributors liable for collecting the tax imposed by section 243-A of this fact in writing, and the imposition of the tax shall be reinstated beginning the first day of the second month following the month in which notice is given to the department of taxation.

(b) Moneys from the fund shall be expended by the department of business, economic development, and tourism for its energy program, including projects that ensure dependable, efficient, and economical energy, promote energy self-sufficiency, and provide greater energy security for the State."

SECTION 3. Chapter 243, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"§243-A Energy security tax; uses. (a) In addition to any other taxes provided by law, subject to the exemptions set forth in section 243-7, there is hereby imposed at times provided in section -A an energy security tax of 15 cents on each barrel or fractional part of a barrel of petroleum product sold by a distributor to any retail dealer or end user, other than a refiner, of petroleum product. The tax imposed by this subsection shall be paid by the distributor of the petroleum product.

(b) Each distributor subject to the tax imposed by subsection (a), on or before the last day of each calendar month, shall file with the director, on forms prescribed, prepared, and furnished by the director, a return statement of the tax under this section for which the distributor is liable for the preceding month. The form and payment of the tax shall be transmitted to the department of taxation in the appropriate district.

(c) The energy security tax collected under this section shall be paid over to the director of finance for deposit into the energy security special fund established by section -A.

(d) Every distributor shall keep in the State and preserve for five years a record in such form as the department of taxation shall prescribe showing the total number of barrels and the fractional part of barrels of petroleum product sold by the distributor during any calendar month. The record shall show such other data and figures relevant to the enforcement and administration of this chapter as the department may require."

SECTION 4. There is appropriated out of the general revenues of the State of Hawaii the sum of $ or so much thereof as may be necessary for fiscal year 2008-2009 for deposit in the energy security special fund.

SECTION 5. There is appropriated out of the energy security special fund of the State of Hawaii the sum of

$ or so much thereof as may be necessary for fiscal year 2008-2009 for the purpose of this Act.

The sum appropriated shall be expended by the department of business, economic development, and tourism for the purposes of this Act.

SECTION 6. In codifying the new sections added by sections 2 and 3 of this Act, the revisor of statutes shall substitute appropriate section numbers for the letters used in designating the new sections in this Act.

SECTION 7. New statutory material is underscored.

SECTION 8. This Act shall take effect on July 1, 2050.

THE SENATE	S.B. NO.	3230
TWENTY-FOURTH LEGISLATURE, 2008		S.D. 1
STATE OF HAWAII