STAND. COM. REP. NO. 3142

Honolulu, Hawaii

RE: H.B. No. 2587

H.D. 1

S.D. 1

Honorable Ronald D. Kouchi

President of the Senate

Twenty-Ninth State Legislature

Regular Session of 2018

State of Hawaii

Sir:

Your Committees on Transportation and Energy and Public Safety, Intergovernmental, and Military Affairs, to which was referred H.B. No. 2587, H.D. 1, entitled:

"A BILL FOR AN ACT RELATING TO TAXATION,"

beg leave to report as follows:

The purpose and intent of this measure is to extend the period that a county may adopt a surcharge on state tax, under certain conditions, by six months, from March 31, 2018, to September 30, 2018.

Your Committees received testimony in support of this measure from the Hawaii County Mayor and Pacific Resource Partnership. Your Committees received comments on this measure from the Department of Taxation and Tax Foundation of Hawaii.

Your Committees find that counties are permitted to establish a surcharge on state tax for operating or capital costs of public transportation, but the ordinance to establish this surcharge must be adopted prior to March 31, 2018. Your Committees note that some counties are working to establish a surcharge, but because the counties are holding public hearings, any proposed ordinances are unlikely to be adopted in time to meet the March 31 deadline.

Your Committees heard the Department of Taxation's concerns about having sufficient time to prepare for the collection of the county surcharge. Your Committees note that the companion to this measure, S.B. No. 3088, S.D. 2, which was previously passed by the Senate, is a substantially similar measure that addresses this concern. In addition, S.B. No. 3088, S.D. 2, contains language clarifying how proceeds from the surcharge can be spent.

Accordingly, your Committees have amended this measure by:

(1) Deleting its contents and inserting contents of S.B. No. 3088, S.D. 2, a substantially similar measure, which:

(A) Extends the period that a county may adopt a surcharge on state tax, under certain conditions, from March 31, 2018, to June 30, 2018, rather than September 30, 2018; and

(B) Requires that for counties with a population equal to or less than five hundred thousand that adopts a county surcharge on state tax that:

(i) No less than sixty percent of the surcharge shall be used for transportation purposes; and

(ii) Up to two percent of the surcharge can be used on any roadway used by the general public; and

(2) Inserting an effective date of January 1, 2100, to encourage further discussion.

As affirmed by the records of votes of the members of your Committees on Transportation and Energy and Public Safety, Intergovernmental, and Military Affairs that are attached to this report, your Committees are in accord with the intent and purpose of H.B. No. 2587, H.D. 1, as amended herein, and recommend that it pass Second Reading in the form attached hereto as H.B. No. 2587, H.D. 1, S.D. 1, and be referred to your Committee on Ways and Means.

Respectfully submitted on behalf of the members of the Committees on Transportation and Energy and Public Safety, Intergovernmental, and Military Affairs,

________________________________ CLARENCE K. NISHIHARA, Chair

________________________________ LORRAINE R. INOUYE, Chair