STAND. COM. REP. NO. 75

Honolulu, Hawaii

RE:    S.B. No. 1098

       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 Energy and Environment, to which was referred S.B. No. 1098 entitled:

"A BILL FOR AN ACT RELATING TO ENERGY SELF-SUFFICIENCY,"

begs leave to report as follows:

     The purpose of this measure is to reduce our dependence on petroleum products, encourage the purchase of motor vehicles that operate on alternative fuels, and promote the use of renewable energy in homes.

     The measure attempts to accomplish this purpose by providing a general excise tax exemption for the installation of solar thermal energy systems and the purchase of fuel efficient automobiles.

     Your Committee received a fiscal impact statement from the Department of Taxation indicating that this measure, if passed, would result in a revenue loss to the State of $1.5 million for fiscal year 2008.

     Your Committee received testimony in support of this measure from the Hawaii Solar Energy Association and Hawaii Renewable Energy Alliance.  The Department of Business, Economic Development, and Tourism submitted testimony in support of the intent of this measure.  The Department of Taxation and the Tax Foundation of Hawaii submitted comments on this measure.

     Your Committee finds that promoting the use of solar energy for water heating and energy efficient vehicles is the most cost effective approach to reducing Hawaii's demand for imported fossil fuels.  In addition, your Committee finds that energy conservation can be further advanced by general excise tax exemptions on the sale of biofuels, provided that the end consumer realizes the savings from this exemption.

     Accordingly, your Committee amended this measure by:

     (1)  Defining "solar thermal energy system";

     (2)  Redefining the exemption for "fuel efficient" automobiles to alternative fuel motor vehicles or hybrid vehicles that meet or exceed thirty-five miles per gallon for highway driving and that can also operate using non-petroleum biodiesel;

     (3)  Including a general excise tax exemption for the sale of biofuels with an assurance that the end consumer will benefit from the exemption; and

     (4)  By adopting the Department of Taxation recommendation to clarify that the tax exemptions apply to gross income or gross proceeds received on or after January 1, 2008.

     As affirmed by the record of votes of the members of your Committee on Energy and Environment that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 1098, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 1098, S.D. 1, and be referred to the Committee on Economic Development and Taxation.

Respectfully submitted on behalf of the members of the Committee on Energy and Environment,

____________________________

RON MENOR, Chair