SB2452 SD1.DOC

SECTION 1. The purpose of this Act is to:

(1) Increase the state fuel tax and direct a portion of the state fuel tax revenue into the school transportation revolving fund; and

(2) Require the department of education to provide or subsidize the cost of suitable transportation to and from school for children in kindergarten to grade twelve or in special education classes who attend public schools, except public schools in the Honolulu departmental district, using school transportation revolving funds; and

(3) Allow the department of education to provide or subsidize the cost of suitable transportation to and from school and for educational field trips for all children in kindergarten to grade twelve or in special education classes, with any remaining available funds using any remaining school transportation revolving funds.

SECTION 2. Section 243-4, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

"(a) Every distributor, in addition to any other taxes provided by law, shall pay a license tax to the department of taxation for each gallon of liquid fuel refined, manufactured, produced, or compounded by the distributor and sold or used by the distributor in the State or imported by the distributor, or acquired by the distributor from persons who are not licensed distributors, and sold or used by the distributor in the State. Any person who sells or uses any liquid fuel, knowing that the distributor from whom it was originally purchased has not paid and is not paying the tax thereon, shall pay such tax as would have applied to such sale or use by the distributor. The rates of tax imposed are as follows:

(1) For each gallon of diesel oil, 2 cents;

(2) For each gallon of gasoline or other aviation fuel sold for use in or used for airplanes, 2 cents;

(3) For each gallon of naphtha sold for use in a power‑generating facility, 2 cents;

(4) For each gallon of liquid fuel, other than fuel mentioned in paragraphs (1), (2), and (3), and other than an alternative fuel, sold or used in the city and county of Honolulu, or sold in any county for ultimate use in the city and county of Honolulu, [17] cents state tax, and in addition thereto an amount, to be known as the "city and county of Honolulu fuel tax", as shall be levied pursuant to section 243-5;

(5) For each gallon of liquid fuel, other than fuel mentioned in paragraphs (1), (2), and (3), and other than an alternative fuel, sold or used in the county of Hawaii, or sold in any county for ultimate use in the county of Hawaii, [17] cents state tax, and in addition thereto an amount, to be known as the "county of Hawaii fuel tax", as shall be levied pursuant to section 243-5;

(6) For each gallon of liquid fuel, other than fuel mentioned in paragraphs (1), (2), and (3), and other than an alternative fuel, sold or used in the county of Maui, or sold in any county for ultimate use in the county of Maui, [17] cents state tax, and in addition thereto an amount, to be known as the "county of Maui fuel tax", as shall be levied pursuant to section 243-5; and

(7) For each gallon of liquid fuel, other than fuel mentioned in paragraphs (1), (2), and (3), and other than an alternative fuel, sold or used in the county of Kauai, or sold in any county for ultimate use in the county of Kauai, [17] cents state tax, and in addition thereto an amount, to be known as the "county of Kauai fuel tax", as shall be levied pursuant to section 243-5.

If it is shown to the satisfaction of the department, based upon proper records and from any other evidence as the department may require, that liquid fuel, other than fuel mentioned in paragraphs (1), (2), and (3), is used for agricultural equipment that does not operate upon the public highways of the State, the user thereof may obtain a refund of all taxes thereon imposed by this section in excess of 1 cent per gallon. The department shall adopt rules to administer such refunds."

SECTION 3. Section 243-6, Hawaii Revised Statutes, is amended to read as follows:

"§243-6 [~~Fuel~~] State and county fuel taxes, dispositions. (a) The "city and county of Honolulu fuel tax" shall be paid by the department of taxation into the state treasury, and shall, by the state director of finance, be paid over to the director of finance of the city and county of Honolulu for deposit into the fund known as the "highway fund" created by section 249-18.

The "county of Kauai fuel tax" shall be paid by the department into the state treasury, and shall, by the state director of finance, be paid over to the director of finance of the county of Kauai for deposit into the fund known as the "highway fund" created by section 249-18.

The "county of Hawaii fuel tax" shall be paid by the department into the state treasury, and shall, by the state director of finance, be paid over to the director of finance of the county of Hawaii for deposit into the fund known as the "highway fund" created by section 249-18.

The "county of Maui fuel tax" collected on account of liquid fuel sold or used on the island of Lanai or sold elsewhere for ultimate use on the island of Lanai, shall be paid by the department into the state treasury, and shall, by the state director of finance, be paid over to the director of finance of the county of Maui for deposit into the fund known as the "highway fund" created by section 249-18, for expenditure on the island of Lanai. The "county of Maui fuel tax" collected on account of liquid fuel sold or used on the island of Molokai or sold elsewhere for ultimate use on the island of Molokai, shall be paid by the department into the state treasury, and shall, by the state director of finance, be paid over to the director of finance of the county of Maui for deposit into the fund known as the "highway fund" created by section 249-18, for expenditure on the island of Molokai. The remainder of the "county of Maui fuel tax" shall be paid by the department into the state treasury, and shall, by the state director of finance, be paid over to the director of finance of the county of Maui for deposit into the fund known as the "highway fund" created by section 249-18.

Each of the foregoing taxes shall be expended for the following purposes, for the island for which the tax revenue is specially indicated, or, if none, for the county for which the tax revenue is indicated:

(1) For payment of interest on and redemption of any bonds duly issued or sold on or after July 1, 1951, under chapter 47 for the financing or aiding in financing the construction of county highway tunnels, approach roads thereto, and highways. Such payments of interest and principal on the bonds when due, shall be first charges on such moneys so deposited in the fund.

(2) For acquisition, designing, construction, reconstruction, improvement, repair, and maintenance of county main and general thoroughfares, highways, and other streets, street lights, storm drains, and bridges, including costs of new land therefor, when expenditures for the foregoing purposes cannot be financed under state-federal aid projects.

(3) In the case of the city and county of Honolulu, for payment of the city and county's share in an improvement district initiated by the city and county for an improvement listed in (2) above which is permitted to be constructed in the city and county.

(4) For the construction of county highway tunnels, overpasses, underpasses, and bridges, where such improvement cannot be made under state-federal aid projects.

(5) For purposes and functions connected with county traffic control and preservation of safety upon the public highways and streets.

(6) For purposes and functions in connection with mass transit.

(7) For acquisition, design, construction, improvement, repair, and maintenance of bikeways.

(8) No expenditure shall be made, out of the revenues paid into any such fund, which will jeopardize federal aid for highway construction.

(b) For each gallon of liquid fuel for which state license taxes are collected pursuant to section 243-4(a)(4), (5), (6), and (7), cents of the state tax collected shall be paid by the department of taxation into the school transportation revolving fund established under section 302A-407.5. The remaining portion of the state tax collected shall be deposited by the department of taxation as provided in section 248-8."

SECTION 4. Section 248-8, Hawaii Revised Statutes, is amended to read as follows:

"§248-8 Special funds in treasury of State. There are created in the treasury of the State three special funds to be known, respectively, as the state highway fund, the airport revenue fund, and the boating special fund. [~~All~~] Except for that portion of state tax collected pursuant to section 243‑4(a)(4), (5), (6), and (7), that shall be deposited into the school transportation revolving fund as provided in section 243‑6(b), all other taxes collected under chapter 243 in each calendar year, except the "county of Hawaii fuel tax", "city and county of Honolulu fuel tax", "county of Maui fuel tax", and "county of Kauai fuel tax", shall be deposited in the state highway fund; provided that:

(1) All taxes collected under chapter 243 with respect to gasoline or other aviation fuel sold for use in or used for airplanes shall be set aside in the airport revenue fund; and

(2) All taxes collected under chapter 243 with respect to liquid fuel sold for use in or used for small boats shall be deposited in the boating special fund.

As used in this section, "small boats" means all vessels and other watercraft except those operated in overseas transportation beyond the State, and ocean-going tugs and dredges. The chairperson of the board of land and natural resources, from July 1, 1992, and every three years thereafter, shall establish standards or formulas that will as equitably as possible establish the total taxes collected under chapter 243 in each fiscal year that are derived from the sale of liquid fuel for use in or used for small boats. The amount so determined shall be deposited in the boating special fund.

An amount equal to 0.3 per cent of the highway fuel tax but not more than $250,000 collected under chapter 243 shall be allocated each fiscal year to the special land and development fund for purposes of the management, maintenance, and development of trails and trail accesses under the jurisdiction of the department of land and natural resources established under section 198D-2."

SECTION 5. Section 302A-406, Hawaii Revised Statutes, is amended to read as follows:

"[[]§302A-406[]] Transportation of school children. (a) [~~The~~] To the extent that funds are appropriated for the purposes of this subsection or available in the school transportation revolving fund for the purposes of this subsection, the department [~~may~~] shall provide or subsidize the cost of suitable transportation to and from school [~~and for educational field trips~~] for [~~all~~] children in [~~grades~~] kindergarten to grade twelve and in special education classes[. The department shall adopt such policy, procedure, and program as it deems necessary to provide suitable transportation. In formulating the policy, procedure, and program, the department shall consider the school district; the school attendance area in which a school child normally resides; the distance the school child lives from the school; the availability of public carriers or other means of transportation; the frequency, regularity, and availability of public transportation; and the grade level, physical handicap, or special learning disability of a school child, and it may also consider such conditions and circumstances unique or peculiar to a county or area.] who attend public schools, except public schools located within the third departmental district (Honolulu), as designated in section 13‑1(d).

(b) To the extent that there are funds remaining in the school transportation revolving fund after the amount necessary for the purposes of subsection (a) is expended, the department may provide or subsidize the cost of suitable transportation to and from school and for educational field trips for all children in kindergarten to grade twelve and in special education classes.

[~~(b)~~] (c) The department shall adopt rules under chapter 91 governing the supervision and administration of the transportation of school children under this section. In formulating rules, policies, procedures, and programs to effectuate this section, the department shall consider the school district; the school attendance area in which a school child normally resides; the distance the school child lives from the school; the availability and cost of public carriers or other means of transportation; the frequency, regularity, and availability of public transportation; and the grade level, physical handicap, or special learning disability of a school child, and it may also consider such conditions and circumstances unique or peculiar to a county or area."

SECTION 6. Section 302A-407, Hawaii Revised Statutes, is amended by amending subsection (f) to read as follows:

"(f) All moneys received from students and parents or guardians of students by public schools for state-provided school [~~busing~~] transportation services, as authorized by section 302A-406, if any, shall be deposited into the school [~~bus fare~~] transportation revolving fund. Except as otherwise provided by the legislature, expenditures for the operation of state‑contracted school [~~bus~~] transportation services, as authorized by section 302A‑406, shall be made from this fund."

SECTION 7. Section 302A-407.5, Hawaii Revised Statutes, is amended to read as follows:

"[[]§302A-407.5[]] School [~~bus fare~~] transportation revolving fund. (a) There is established in the state treasury the school [~~bus fare~~] transportation revolving fund, into which shall be deposited:

(1) [~~all~~] All moneys received from students and parents or guardians of students by public schools for state-provided school [~~busing~~] transportation services, as authorized by section 302A-406[.];

(2) That portion of moneys received from state fuel taxes, as authorized by section 243-6; and

(3) All other moneys appropriated for school transportation services.

(b) Except as otherwise provided by the legislature, moneys in the school [~~bus fare~~] transportation revolving fund shall be used for school [~~busing~~] transportation costs and services, as authorized by section 302A-406."

SECTION 8. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 9. This Act shall take effect upon its approval; provided that the amendments made to section 243-4, Hawaii Revised Statutes, by section 2 of this Act shall not be repealed when that section is reenacted on December 31, 2012, by section 3 of Act 198, Session Laws of Hawaii 2009.

THE SENATE	S.B. NO.	2452
TWENTY-FIFTH LEGISLATURE, 2010		S.D. 1
STATE OF HAWAII