STAND. COM. REP. NO. 256

Honolulu, Hawaii

RE:    S.B. No. 224

       S.D. 1

Honorable Donna Mercado Kim

President of the Senate

Twenty-Eighth State Legislature

Regular Session of 2015

State of Hawaii

Madam:

     Your Committee on Agriculture, to which was referred S.B. No. 224 entitled:

"A BILL FOR AN ACT RELATING TO FARMS,"

begs leave to report as follows:

     The purpose and intent of this measure is to create an exclusion from income tax for the first $50,000 of income earned by new, small, and diversified farming businesses.

     Your Committee received testimony in support of this measure from the Department of Agriculture, Hawaii Farm Bureau, and one individual.  Your Committee received comments on this measure from the Department of Taxation.

     Your Committee finds that the two largest trade imbalances in the State are in the areas of energy and agriculture.  Over the past few years, Hawaii has been addressing its over-reliance on imported fossil fuel and now needs to address the imbalance in agricultural trade by significantly expanding local food production.  Your Committee further finds that the growth of small, diversified farming businesses will add to and diversify Hawaii's economy and help redress the imbalance in agricultural trade.

     Your Committee also finds, as raised in testimony, that many farmers in Hawaii receive income from non-food production and therefore a large number may not qualify for the tax credit in this measure under the current definitions.

     Accordingly, your Committee has amended this measure by:

     (1)  Replacing the terms "family farm", "family farm community", and "family farm cooperative" with the term "farmer";

     (2)  Defining "farmer" as an individual with seventy-five per cent of annual gross income earned from farm products sold within the State;

     (3)  Requiring a farmer to have an annual gross income of $200,000 or less to qualify for the tax credit; and

     (4)  Making a technical, nonsubstantive amendment for the purposes of clarity and consistency.

     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 S.B. No. 224, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 224, S.D. 1, and be referred to the Committee on Ways and Means.

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

____________________________

RUSSELL E. RUDERMAN, Chair