STAND. COM. REP. NO. 3900

Honolulu, Hawaii

RE: H.B. No. 137

H.D. 1

S.D. 2

Honorable Ronald D. Kouchi

President of the Senate

Thirty-First State Legislature

Regular Session of 2022

State of Hawaii

Sir:

Your Committees on Judiciary and Ways and Means, to which was referred H.B. No. 137, H.D. 1, S.D. 1, entitled:

"A BILL FOR AN ACT RELATING TO LIQUOR,"

beg leave to report as follows:

The purpose and intent of this measure is to:

(1) Provide that violations of liquor tax laws shall be referred to the Director of Taxation for investigation;

(2) Repeal the general right of inspection without a warrant for potential violations of liquor tax laws;

(3) Repeal the discretionary power of the liquor commissions to deny a license to any person the commission finds is not fit and proper to hold a license;

(4) Require applications for liquor licenses to be notarized;

(5) Provide the administrator of the liquor commission discretion over whether to refer applications for further investigation; and

(6) Repeal the requirement that investigative reports to the liquor commissions include any and all matters that are relevant to the application or license in the judgment of the investigator.

Your Committees received testimony in support of this measure from the Honolulu Liquor Commission. Your Committees received testimony in opposition to this measure from the Tax Foundation of Hawaii and two individuals. Your Committees received comments on this measure from the Department of Taxation and Department of Budget and Fiscal Services of the City and County of Honolulu.

Your Committees find that the investigators of the Honolulu Liquor Commission do not have the training or experience in forensic accounting and lack the background to competently investigate possible violations of tax laws. Your Committees further find that there are over ninety different types of applications which often require proper forms to be submitted. Your Committees believe that removing these applications from the investigator's workload would greatly streamline the process for the applicant. This measure will allow for the timely processing of more complex licensing applications by clarifying the Department of Taxation's role while still maintaining sufficient safeguards and community considerations.

Your Committees have amended this measure by:

(1) Deleting language that would have provided the Administrator of the Liquor Commission discretion over whether to refer applications for investigation;

(2) Inserting an effective date of July 30, 2075, to encourage further discussion; and

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

As affirmed by the records of votes of the members of your Committees on Judiciary and Ways and Means that are attached to this report, your Committees are in accord with the intent and purpose of H.B. No. 137, H.D. 1, S.D. 1, as amended herein, and recommend that it pass Third Reading in the form attached hereto as H.B. No. 137, H.D. 1, S.D. 2.

Respectfully submitted on behalf of the members of the Committees on Judiciary and Ways and Means,

________________________________ DONOVAN M. DELA CRUZ, Chair

________________________________ KARL RHOADS, Chair