SB1278.DOC

SECTION 1. Section 46-16.8, Hawaii Revised Statutes, is amended as follows:

1. By amending subsection (b) to read:

"(b) Each county that has established a surcharge on state tax prior to [[]July 1, 2015,[]] under authority of subsection (a) may extend the surcharge [~~from January 1, 2023,~~] until December 31, [~~2027,~~] 2047, at the same rates. A county electing to extend this surcharge shall do so by ordinance; provided that:

(1) No ordinance shall be adopted until the county has conducted a public hearing on the proposed ordinance; and

(2) The ordinance shall be adopted prior to July 1, [~~2016,~~] , but no earlier than July 1, 2015.

A county electing to exercise the authority granted under this subsection shall notify the director of taxation within ten days after the county has adopted an ordinance extending the surcharge on state tax. Beginning on January 1, 2023, the director of taxation shall levy, assess, collect, and otherwise administer the extended surcharge on state tax."

2. By amending subsection (e) to read:

"(e) Each county with a population greater than five hundred thousand that adopts or extends a county surcharge on state tax ordinance pursuant to subsection (a) or (b) shall use the surcharges received from the State for:

(1) Capital costs of a locally preferred alternative for a mass transit project; [~~and~~] provided that the county shall submit quarterly reports to the legislature on the mass transit project's progress, including but not limited to percentage of total infrastructure complete and cost overruns;

(2) Expenses in complying with the Americans with Disabilities Act of 1990 with respect to paragraph (1)[.];

(3) Infrastructure to accommodate affordable housing projects; provided that per cent of the surcharges received shall be used for the purposes of this paragraph; and

(4) Infrastructure construction costs associated with transit-oriented development; provided that for the purposes of this paragraph, the county shall match thirty per cent of state funds for infrastructure construction costs associated with transit-oriented development.

The county surcharge on state tax shall not be used to build or repair public roads [or], highways, or bicycle paths, unless related to affordable housing projects or transit-oriented development, or support public transportation systems already in existence prior to July 12, 2005."

SECTION 2. Section 237-8.6, Hawaii Revised Statutes, is amended by amending subsection (b) to read as follows:

"(b) Each county surcharge on state tax that may be adopted or extended pursuant to section 46-16.8 shall be levied beginning in the taxable year after the adoption of the relevant county ordinance; provided that no surcharge on state tax may be levied:

(1) Prior to:

(A) January 1, 2007, if the county surcharge on state tax was established by an ordinance adopted prior to December 31, 2005; or

(B) January 1, 2018, if the county surcharge on state tax was established by the adoption of an ordinance after June 30, 2015, but prior to July 1, 2016; and

(2) After December 31, 2027[.], unless the county extends the surcharge on state tax pursuant to section 46‑16.8(b)."

SECTION 3. Section 238-2.6, Hawaii Revised Statutes, is amended by amending subsection (b) to read as follows:

"(b) Each county surcharge on state tax that may be adopted or extended shall be levied beginning in the taxable year after the adoption of the relevant county ordinance; provided that no surcharge on state tax may be levied:

(1) Prior to:

(A) January 1, 2007, if the county surcharge on state tax was established by an ordinance adopted prior to December 31, 2005; or

(B) January 1, 2018, if the county surcharge on state tax was established by the adoption of an ordinance after June 30, 2015, but prior to July 1, 2016; and

(2) After December 31, 2027[.], unless the county extends the surcharge on state tax pursuant to section 46‑16.8(b)."

SECTION 4. Section 248-2.6, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

"(a) If adopted by county ordinance, all county surcharges on state tax collected by the director of taxation shall be paid into the state treasury quarterly, within ten working days after collection, and shall be placed by the director of finance in special accounts[.] unless, upon receiving the quarterly reports provided by the county pursuant to section 46-16.8(e)(1), the legislature disapproves by adoption of a concurrent resolution prior to adjournment sine die of the legislative session of the first year of the biennium. If the legislature disapproves by adoption of a concurrent resolution, the revenues that would have otherwise been placed in special accounts shall be deposited into . Out of the revenues generated by county surcharges on state tax paid into each respective state treasury special account, the director of finance shall deduct [~~ten~~] twenty-five per cent of the gross proceeds of a respective county's surcharge on state tax; provided that:

(1) Five per cent shall be used to reimburse the State for the costs of assessment, collection, and disposition of the county surcharge on state tax incurred by the State[.]; and

(2) Twenty per cent shall be used to assist in the construction of transit-oriented development and other related transportation projects.

Amounts retained shall be general fund realizations of the State."

SECTION 5. Act 247, Session Laws of Hawaii 2005, as amended by Act 240, Session Laws of Hawaii 2015, is amended by amending section 9 to read as follows:

"SECTION 9. This Act shall take effect upon its approval; provided that:

(1) If none of the counties of the State adopt an ordinance to levy a county surcharge on state tax by December 31, 2005, this Act shall be repealed and section 437D-8.4, Hawaii Revised Statutes, shall be reenacted in the form in which it read on the day prior to the effective date of this Act;

(2) If any county does not adopt an ordinance to levy a county surcharge on state tax by December 31, 2005, it shall be prohibited from adopting such an ordinance pursuant to this Act, unless otherwise authorized by the legislature through a separate legislative act; and

(3) If an ordinance to levy a county surcharge on state tax is adopted by December 31, 2005:

(A) The ordinance shall be repealed on December 31, 2022; provided that the repeal of the ordinance shall not affect the validity or effect of an ordinance to extend a surcharge on state tax adopted pursuant to Act 240, Session Laws of Hawaii 2015[;], or Act , Session Laws of Hawaii 2017;

(B) This Act shall be repealed on December 31, [~~2027;~~] 2047; and

(C) Section 437D-8.4, Hawaii Revised Statutes, shall be reenacted in the form in which it read on the day prior to the effective date of this Act; provided that the amendments made to section 437D-8.4, Hawaii Revised Statutes, by Act 226, Session Laws of Hawaii 2008, as amended by Act 11, Session Laws of Hawaii 2009, and Act 110, Session Laws of Hawaii 2014, shall not be repealed."

SECTION 6. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 7. This Act shall take effect on July 1, 2017.

INTRODUCED BY:	_____________________________

THE SENATE	S.B. NO.	1278
TWENTY-NINTH LEGISLATURE, 2017
STATE OF HAWAII