STAND. COM. REP. NO.  172

Honolulu, Hawaii

                , 2015

RE:   H.B. No. 502

Honorable Joseph M. Souki

Speaker, House of Representatives

Twenty-Eighth State Legislature

Regular Session of 2015

State of Hawaii

Sir:

     Your Committee on Agriculture, to which was referred H.B. No. 502 entitled:

"A BILL FOR AN ACT RELATING TO IRRIGATION,"

begs leave to report as follows:

The purpose of this measure is to provide additional funding for needed improvements to irrigation systems throughout the State by authorizing the issuance of general obligation bonds and appropriating proceeds therefrom to the Department of Agriculture for that purpose.

The Hawaii Farm Bureau Federation, Hawaii Cattlemen's Council, Hawaii Farmers Union United, HARC, and Kauai County Farm Bureau supported this measure.  The Department of Agriculture and the Hawaii Crop Improvement Association supported the intent of this measure.  The Department of Budget and Finance submitted comments.

     Your Committee notes that the Department of Budget and Finance in its testimony commented that federal tax law requires, among other things, that tax-exempt general obligation bond proceeds be used to finance projects that serve governmental public purposes.  If private entities derive a benefit from the improvements made to the irrigation systems, tax-exempt general obligation bonds cannot be used to finance the improvements.  The issuance of taxable general obligation bonds at a higher cost may be necessary to allow the Department of Agriculture to provide financing assistance to private entities.

     As affirmed by the record of votes of the members of your Committee on Agriculture that is attached to this report, your Committee is in accord with the intent and purpose of H.B. No. 502 and recommends that it pass Second Reading and be referred to the Committee on Water & Land.

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

____________________________

CLIFT TSUJI, Chair