STAND. COM. REP. NO. 428

Honolulu, Hawaii

RE:    S.B. No. 1086

       S.D. 1

Honorable Ronald D. Kouchi

President of the Senate

Twenty-Ninth State Legislature

Regular Session of 2017

State of Hawaii

Sir:

     Your Committee on Economic Development, Tourism, and Technology, to which was referred S.B. No. 1086 entitled:

"A BILL FOR AN ACT RELATING TO THE MOTION PICTURE, DIGITAL MEDIA, AND FILM PRODUCTION INCOME TAX CREDIT,"

begs leave to report as follows:

     The purpose and intent of this measure is to:

     (1)  Extend the motion picture, digital media, and film production income tax credit for an additional five years;

     (2)  Place a cap on the annual aggregate amount of the credit; and

     (3)  Clarify that qualifying production costs are those costs incurred and expended within the State.

     Your Committee received testimony in support of this measure from the Department of Business, Economic Development, and Tourism; University of Hawaii; ILWU Local 142; Hawaii State AFL-CIO; Motion Picture Association of America; SAG-AFTRA Hawaii Local; I.A.T.S.E. Local 665; A.F.M. Local 677; Teamsters Local 996; and two individuals.  Your Committee received comments on this measure from the Department of Taxation, Office of the Auditor, and Tax Foundation of Hawaii.

     Your Committee finds that the film industry in Hawaii is an important component of a diversified economy.  Your Committee finds that the motion picture, digital media, and film production income tax credit is an effective means of stimulating the economy and creating quality jobs while promoting Hawaii as a visitor destination.  Your Committee further finds that the extension of the motion picture, digital media, and film production income tax credit will provide stability and predictable economic incentives for the film industry and people employed in the film industry in the State.

     Your Committee has amended this measure by:

     (1)  Specifying that taxpayers claiming the tax credit are required to prequalify for the credit by registering with the Film Office of the Department of Business, Economic Development, and Tourism, and are required to obtain certification from the Film Office;

     (2)  Specifying that the Department of Business, Economic Development, and Tourism reporting requirement regarding fiscal impact to the State entails reporting on those film productions receiving the tax credit;

     (3)  Requiring that to qualify for the tax credit, a production must provide evidence of recognition, ability to understand, and efforts to respect and comply with cultural and environmental sensitivities in sensitive locations; including employing or contracting for the services of cultural resources or historical, cultural, or language experts to advise the production;

     (4)  Requiring that to qualify for the tax credit a production must agree that if the production claims a credit of more than $8,000,000, the production will provide an advanced screening of the finished product in the county of the island in which the majority of the production took place;

     (5)  Removing the cap on the annual aggregate amount of the credit; and

     (6)  Making technical, nonsubstantive amendments for the purposes of clarity and consistency.

     As affirmed by the record of votes of the members of your Committee on Economic Development, Tourism, and Technology that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 1086, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 1086, S.D. 1, and be referred to your Committee on Ways and Means.

Respectfully submitted on behalf of the members of the Committee on Economic Development, Tourism, and Technology,

________________________________

GLENN WAKAI, Chair