STAND. COM. REP. NO. 3221

Honolulu, Hawaii

RE: H.B. No. 1631

H.D. 1

S.D. 1

Honorable Ronald D. Kouchi

President of the Senate

Thirty-First State Legislature

Regular Session of 2022

State of Hawaii

Sir:

Your Committee on Water and Land, to which was referred H.B. No. 1631, H.D. 1, entitled:

"A BILL FOR AN ACT RELATING TO WATER CONSERVATION,"

begs leave to report as follows:

The purpose and intent of this measure is to create a nonrefundable water catchment income tax credit for homeowners who install a water catchment system meeting certain requirements on residential property in the State owned by the homeowner.

Your Committee received testimony in support of this measure from the Department of Land and Natural Resources and Honolulu Board of Water Supply. Your Committee received comments on this measure from the Department of Budget and Finance, Department of Taxation, and Tax Foundation of Hawaii.

Your Committee finds that water catchment systems can be cost-effective, reliable, and safe fresh water sources that reduce consumer demand on existing fresh water. Factors such as population growth, climate change, resource depletion, drought, and risks to groundwater are considerable threats to Hawaii's existing fresh water, prompting a need for innovative solutions to incentivize conservation and protection of water resources. Currently, the Hawaii Water Conservation Plan recognizes various rebate programs offered by municipal water departments as a proven and effective way to reach its customers and reduce their water demands and water bills. While a tax credit is not identified as one of the recommended programs within the Hawaii Water Conservation Plan, the creation of a tax credit may incentivize water conservation efforts in Hawaii for residential property owners who may not be customers of the Honolulu Board of Water Supply, County of Maui Department of Water Supply, County of Kauai Department of Water, and County of Hawaii Department of Water Supply.

Accordingly, your Committee has amended this measure by:

(1) Making the tax credit applicable to taxable years after December 31, 2022; and

(2) Inserting an effective date of July 1, 2022.

As affirmed by the record of votes of the members of your Committee on Water and Land that is attached to this report, your Committee is in accord with the intent and purpose of H.B. No. 1631, H.D. 1, as amended herein, and recommends that it pass Second Reading in the form attached hereto as H.B. No. 1631, 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 Committee on Water and Land,

________________________________

LORRAINE R. INOUYE, Chair