STAND. COM. REP. NO. 507

Honolulu, Hawaii

RE:    S.B. No. 940

       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 Higher Education, to which was referred S.B. No. 940 entitled:

"A BILL FOR AN ACT RELATING TO THE STATE OF HAWAII SECTION 529 COLLEGE SAVINGS PROGRAM,"

begs leave to report as follows:

     The purpose and intent of this measure is to help Hawaii families save for college instead of having to take out educational loans by establishing a tax deduction for eligible contributions made to Hawaii's Section 529 College Savings Program that will apply to contributions made in calendar year 2018 and beyond.

     Your Committee received testimony in support of this measure from the Department of Budget and Finance and two individuals.  Your Committee received comments on this measure from the Department of Taxation.

     Your Committee finds that as higher education costs continue to rise, saving for higher education is increasingly becoming a burden on families that are trying to juggle saving for higher education with daily living expenses.  Your Committee additionally finds that it is important to help Hawaii families save for college instead of having to take out educational loans.

     Your Committee notes that currently forty-eight states have at least one state-sponsored 529 plan and over eighty percent of those states that also have income taxes provide an additional in-state tax incentive.  This measure follows efforts nationwide to help families avoid burdensome educational debt by creating an incentive for Hawaii taxpayers to participate in Hawaii's College Savings Program.

     Your Committee has amended this measure by:

     (1)  Removing the tax deduction for eligible contributions made to Hawaii's Section 529 College Savings Program from section 235-7, Hawaii Revised Statutes, and inserting the language that establishes the tax deduction as a new section in chapter 235, Hawaii Revised Statutes;

     (2)  Inserting an effective date of May 12, 2059, to encourage further discussion; and

     (3)  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 Higher Education that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 940, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 940, S.D. 1, and be referred to your Committee on Ways and Means.

Respectfully submitted on behalf of the members of the Committee on Higher Education,

________________________________

KAIALI'I KAHELE, Chair