STAND. COM. REP. NO. 100

Honolulu, Hawaii

RE:    S.B. No. 1324

       S.D. 1

Honorable Shan S. Tsutsui

President of the Senate

Twenty-Sixth State Legislature

Regular Session of 2011

State of Hawaii

Sir:

     Your Committee on Commerce and Consumer Protection, to which was referred S.B. No. 1324 entitled:

"A BILL FOR AN ACT RELATING TO RENTAL MOTOR VEHICLE SURCHARGE TAX,"

begs leave to report as follows:

     The purpose and intent of this measure is to ensure sufficient funding for the routine operation and maintenance of the state highway system by extending the current Rental Motor Vehicle Surcharge Tax beyond its sunset date of August 31, 2011, and to make an appropriation from the State Highway Fund to the Department of Transportation for the operation and maintenance of the state highway program.

     Your Committee received testimony in support of this measure from the Department of Transportation and the Department of Taxation.  Your Committee received comments on this measure from Tax Foundation of Hawaii.

     Your Committee finds that under current law, the Rental Motor Vehicle Surcharge Tax will be reduced from $3 per day to $2 per day effective September 1, 2011.  The State Highway Fund finances the maintenance and repair of essential infrastructure including roadways, bridges, drainage systems, landscaping, irrigation, and road safety features such as fencing, walls, traffic signs, guardrails, highway pavement markings, lighting systems, sidewalks, and wheelchair ramps.  Your Committee finds that the imminent reduction in the Rental Motor Vehicle Surcharge Tax will result in a loss of approximately $13,400,000 in revenue to the State Highway Fund.  Therefore, extension of the current amount of the tax is necessary to maintain the State Highway Fund's revenue stream so that the State Highway Fund may continue its operations in funding routine maintenance, special maintenance, capital improvement projects, and emergency expenses.  Your Committee further finds that a reduction in revenue imperils not only the safe conditions of the State's highway system, but also the State's ability to comply with federal maintenance requirements that are a condition for continued receipt of federal transportation funding.

     Your Committee has amended this measure by changing its effective date to July 1, 2011.

     As affirmed by the record of votes of the members of your Committee on Commerce and Consumer Protection that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 1324, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 1324, S.D. 1, and be referred to the Committee on Ways and Means.

Respectfully submitted on behalf of the members of the Committee on Commerce and Consumer Protection,

____________________________

ROSALYN H. BAKER, Chair