STAND. COM. REP. NO. 528

Honolulu, Hawaii

, 2021

RE: H.B. No. 1146

H.D. 1

Honorable Scott K. Saiki

Speaker, House of Representatives

Thirty-First State Legislature

Regular Session of 2021

State of Hawaii

Sir:

Your Committees on Economic Development and Housing, to which was referred H.B. No. 1146 entitled:

"A BILL FOR AN ACT RELATING TO TAXATION,"

beg leave to report as follows:

The purpose of this measure is to:

(1) Extend the period in which a county may adopt a surcharge on state tax, under certain conditions, from March 31, 2019, to December 31, 2021; and

(2) Authorize the use of county surcharge revenues for affordable and workforce housing infrastructure.

Your Committees received testimony in support of this measure from the Mayor of the County of Maui. Your Committees received comments on this measure from the Department of Taxation, Tax Foundation of Hawaii, and Maui Chamber of Commerce.

Your Committees find that the State is experiencing a severe shortage of affordable housing for local residents, particularly on the neighbor islands. This measure would provide more flexibility to counties with smaller populations in the use of revenues generated from their surcharges on the state general excise tax and use tax for affordable and workforce housing infrastructure.

Your Committees have amended this measure by:

(1) Clarifying that the county surcharge on state tax may not be levied prior to January 1, 2023, if the county surcharge on state tax was established by the adoption of an ordinance on or after March 31, 2019, but prior to December 31, 2021; and

(2) Changing the effective date to January 1, 2055, to encourage further discussion.

As affirmed by the records of votes of the members of your Committees on Economic Development and Housing that are attached to this report, your Committees are in accord with the intent and purpose of H.B. No. 1146, as amended herein, and recommend that it pass Second Reading in the form attached hereto as H.B. No. 1146, H.D. 1, and be referred to your Committee on Finance.

Respectfully submitted on behalf of the members of the Committees on Economic Development and Housing,

____________________________ NADINE K. NAKAMURA, Chair

____________________________ SEAN QUINLAN, Chair