STAND. COM. REP. NO.  458

Honolulu, Hawaii

                , 2011

RE:   H.B. No. 1373

      H.D. 1

Honorable Calvin K.Y. Say

Speaker, House of Representatives

Twenty-Sixth State Legislature

Regular Session of 2011

State of Hawaii

Sir:

     Your Committee on Transportation, to which was referred H.B. No. 1373 entitled:

"A BILL FOR AN ACT RELATING TO FUEL TAXATION,"

begs leave to report as follows:

     The purpose of this bill is to maintain the solvency of the State Highway Fund and improve the State's ability to construct, operate, and maintain the State Highway System by:

     (1)  Assessing the state fuel tax based on a percentage of the weighted wholesale price per gallon of gasoline and average wholesale price per gallon of diesel oil rather than cents per gallon;

     (2)  Requiring the Public Utilities Commission (PUC) to determine the weighted wholesale price per gallon of gasoline and gallon of diesel oil on a monthly basis; and

     (3)  Establishing a formula for the PUC to use when determining the weighted wholesale price for gasoline.

     The Department of Taxation and Tax Foundation of Hawaii provided comments on this bill.

     Hawaii's highway system, which consists of over 2,400 lane miles of roadway, is facing numerous repair and maintenance issues.  With the downturn in both the national and State economies over the last several years, State Highway Fund monies have continued to be negatively impacted, with revenues failing to keep pace with expenditures for the operation, maintenance, and construction of State highways.  As a result, our land transportation system has failed to address increased transportation demands with project needs far outpacing available resources.  Although recent indicators have suggested that economic recovery is beginning, expectations are that the economic recovery will be slow and may take several years.  Without additional funding, the State Highway Fund will lack the necessary revenues for even routine maintenance and operation of our roadways, let alone the construction of new and necessary roadways and appurtenances.

     While questions remain as to the positive financial impact this measure will have on the State Highway Fund, it deserves further consideration.  Accordingly, your Committee has amended this bill by changing its effective date to July 1, 2050, to encourage further discussion.

     As affirmed by the record of votes of the members of your Committee on Transportation that is attached to this report, your Committee is in accord with the intent and purpose of H.B. No. 1373, as amended herein, and recommends that it pass Second Reading in the form attached hereto as H.B. No. 1373, H.D. 1, and be referred to the Committee on Finance.

Respectfully submitted on behalf of the members of the Committee on Transportation,

____________________________

JOSEPH M. SOUKI, Chair